Your Country Decides How Exposed Your US LLC Is

TL;DR

Your country of residence changes the analysis more than your entity or your state does. US treaties fall into three tiers: modern treaties with an unconditional storage and delivery exclusion, older treaties with no exclusion at all, and no treaty. And because the US is not an MLI party, none of them were touched by BEPS.

Why this matters more than the entity

Non-resident LLC owners spend a great deal of attention on Wyoming versus Delaware versus New Mexico. That choice affects state filings and fees and nothing else.

The question that actually determines US exposure is whether you are engaged in a US trade or business — and if you are, whether a treaty limits what the US can tax. The first question is federal and fact-specific. The second depends entirely on where you are resident.

Two people with identical Wyoming LLCs, identical Amazon FBA operations and identical revenue can have materially different positions because one lives in Belgium and the other in Brazil.

The three tiers

Tier 2 is the one nobody writes about, and it is the one that inverts the usual advice.

Tier 1: what an unconditional exclusion looks like

The US–Belgium treaty (signed 2006, in force 28 December 2007), Article 5(4):

“Notwithstanding the preceding provisions of this Article, the term ‘permanent establishment’ shall be deemed not to include: a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise; b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;”

The US–Italy treaty (signed 1999, in force 16 December 2009) carries the same two exclusions at Article 5(3)(a) and (b).

Neither is conditioned on the activity being “preparatory or auxiliary.” In both treaties that phrase appears only in a later, residual subparagraph. Subparagraphs (a) and (b) stand on their own.

This is the pre-2017 OECD architecture, and it is better for the taxpayer than what most of the rest of the world now has.

The operative word is “solely.” If the facility or the stock serves any purpose beyond storage, display or delivery, the exclusion is unavailable.

The US–Turkey treaty (signed 28 March 1996, effective 1 January 1998) carries the same unconditional exclusion at Article 5(3)(a) and (b), and pairs it with an unusually demanding agency rule: a stock-holding agent only creates a permanent establishment if it is proved that the arrangement exists to avoid US tax and that the agent handles virtually all sale-related activity short of signing the contract — with the burden on the IRS, not the taxpayer. See Turkey and your US LLC for the full analysis.

Tier 2: the treaty that has no exclusion

The US–Greece convention was signed in 1950 and entered into force in 1953. It predates the OECD Model entirely.

Searching the full text, the words “storage”, “display”, “delivery”, “preparatory” and “auxiliary” appear zero times. There is no negative list. The only carve-out is for a fixed place of business “exclusively for the purchase of goods or merchandise.”

And its agency clause runs the other way. Article II(1)(i) provides that a permanent establishment does include an agency where the agent:

“has, and habitually exercise, a general authority to negotiate and conclude contracts on behalf of such enterprise or has a stock of merchandise from which he regularly fills orders on behalf of such enterprise”

A Greek resident therefore starts from a materially different place than a Belgian or Italian one. See Greece and your US LLC for the full analysis and where the counter-argument sits.

Tier 3: no treaty at all

Verified against IRS Table 3 — List of Tax Treaties, the IRS Income Tax Treaties A to Z page, and the State Department’s Treaties in Force.

A TIEA is not a treaty. A FATCA agreement is not a treaty. Both move information in one direction. Neither reduces tax, allows a credit, or creates a permanent establishment threshold. A shipping-and-aircraft exemption covers exactly what it says and nothing else.

The United States has an income tax treaty with no Gulf state — not the UAE, Saudi Arabia, Qatar, Kuwait, Bahrain or Oman.

South America: only Chile (in force 19 December 2023, effective from 1 January 2024) and Venezuela (in force 1999) have treaties. Argentina, Bolivia, Brazil, Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname and Uruguay do not. (One geographic footnote: French Guiana is an overseas department of France, and the US–France treaty defines “France” to include the Overseas Departments — so it is covered, unlike its neighbours.)

Taiwan is often described as having “a new US tax agreement.” It does not, yet. The United States–Taiwan Expedited Double-Tax Relief Act exists as pending legislation (H.R. 33 / S. 199, 119th Congress), which passed the House 423–1 in 2025 but has not been enacted. The decisive check: 26 U.S.C. §894A, the section it would create, does not exist. Even if enacted, the benefits are contingent on reciprocity and a separate negotiated agreement would need a Senate vote.

Two Tier 3 countries deserve their own analysis because their domestic rules do more work than the missing treaty:

• UAE / Dubai — Federal Decree-Law 47 of 2022 can make a US LLC a UAE resident taxed at 9% on worldwide income, and neither the participation nor the foreign-PE exemption reaches a disregarded LLC.
• Brazil — Receita Federal lists the foreign-owned US LLC by name as a privileged tax regime, which routes it into Law 14.754/2023 and an annual 15% charge on undistributed profits.

Why BEPS did not change any of this

BEPS Action 7 rewrote the storage and delivery exclusions in treaties worldwide, making them conditional on the activity being preparatory or auxiliary, and adding an anti-fragmentation rule. It was implemented through the Multilateral Instrument.

The United States is neither a signatory nor a party to the MLI.

MLI Article 2(1)(a) requires that a Covered Tax Agreement be in force between MLI Parties and be notified to the depositary. A US bilateral treaty fails both conditions. No US income tax treaty is a Covered Tax Agreement, and MLI Article 13 cannot reach any of them.

This holds regardless of your own country’s MLI status. Belgium is an MLI party; Italy has signed but not ratified; Greece is a party. None of that touches their US treaties. The unconditional exclusions stand as written.

What a treaty does NOT do

• It does not remove filing obligations. A treaty-based position must be disclosed on Form 8833, with a $1,000 penalty for an individual under §6712. If you conclude you are engaged in a US trade or business but treaty-exempt, the Form 1040-NR is mandatory, not optional.
• It does not bind the states. States are not parties to US tax treaties and most do not conform. A defensible federal position can coexist with state obligations.
• It does not answer the Form 5472 question. That is an information return triggered by related-party transactions, entirely independent of treaties. See “no activity” almost never means “no Form 5472”.
• It does not decide how your own country taxes you. That is domestic law in your jurisdiction. See how your home country sees your US LLC.
• It is not selected by choosing a state. Treaty access follows your residence, not your LLC’s.

A trap when researching this yourself

Two IRS URLs serve superseded treaties:

• irs.gov/pub/irs-trty/belgium.pdf serves the 1970 convention, replaced in 2008. The treaty in force is at belgiumtt06.pdf.
• irs.gov/pub/irs-trty/italy.pdf serves the 1984 convention, replaced in 2010. The 1999 treaty in force is not on irs.gov at all — the IRS page links out to treasury.gov.

Anyone quoting Article 5 from those two files is citing a treaty that no longer has effect.

How to use this

1. Find your country on the IRS treaty list first. Everything downstream depends on it.
2. If there is a treaty, read Article 5 itself — and confirm you have the version in force.
3. Check whether the storage exclusion exists and whether it is conditional. Do not assume the modern form.
4. Test your facts against “solely.” Any additional function narrows the exclusion.
5. If there is no treaty, the trade-or-business question is the whole analysis. See does Amazon FBA make a non-resident taxable in the US.
6. Decide the filings before the year closes, not after a notice.

Frequently Asked Questions

Q: Can I choose a better treaty by moving my LLC? A: No. Treaty access follows the residence of the person, not the place of formation of the entity. Moving a Wyoming LLC to Delaware changes nothing here.

Q: My country has a treaty. Am I safe? A: It gives you a second line of argument, not immunity. The exclusion has to fit your facts — particularly the word “solely” — and the position must be disclosed.

Q: What if I am resident in a country with no treaty? A: You argue the trade-or-business question on its merits, and you file. There is no treaty relief to fall back on, which makes the primary analysis and the protective return more important, not less.

Q: Does the UAE’s zero income tax help me in the US? A: No. Your domestic rate is irrelevant to whether the US may tax you. And with no US treaty, there is no permanent establishment threshold to rely on.

Next Steps

Establishing which tier you are in takes minutes and changes everything that follows — which arguments exist, which forms are required, and how much the primary trade-or-business analysis has to carry. It is the first question worth answering, and the one most guidance skips.

Treaty positions verified against the treaty texts published by the IRS and the US Treasury, and against the OECD MLI signatory list. This is general information, not tax advice.