US expat investing through a LLC

[bxny16]

Hi everyone,

I recently asked a question to help understand my options to invest as a US expat living in the EU assuming that I don't have a physical US address. My emphasis was on investing in US index funds and ETFs.

https://www.reddit.com/r/ExpatFinance/comments/p6rscg

The easiest and cheapest options that were suggested in the comments to that post, IMO, were to invest through a retirement account if possible in my country of residence, and otherwise to create my own pseudo-index with an international online brokerage, e.g. Charles Schwab International. (Remember that EU residents cannot purchase US-based index funds unless they are recognized officially as professional investors, and US citizens usually want to avoid buying non-US domiciled funds due to PFIC rules.)

I recently thought of another possibility: create a LLC in the US and invest in index funds through the LLC.

What are the advantages and disadvantages of doing this? Is it even possible?

Thanks everyone.

 

[eee27]

@bxny16 How are LLCs taxed on capital gains in the US? My only experience is with Australia, where they pay the full company tax rate, without the benefit of long term discounts that individuals get.

 

[bxny16]

@eee27 It's a good question. Presumably, a US LLC is taxed as a pass-through entity, meaning that the LLC owners report LLC profits/losses on their personal tax returns.

I need to do more research to determine how and whether capital gains tax changes in this situation.

https://www.nolo.com/legal-encyclopedia/how-llcs-are-taxed-29675.html

 

[ceed7]

@bxny16 Im in the same situation. I would to hear more if anyone have any ideas or suggestions.