Delaware Holding Company Taxation
Summary
Dividends paid from a UK company to a foreign holding company may be subject to UK withholding tax. Delaware does not tax foreign-source income, so the holding company’s income from UK dividends may not be taxed at the state level. As a pass-through entity, the income will be reported on your personal tax returns, and you and your wife may have to pay U.S. Federal income tax on the dividends. Consult with a tax advisor in both the UK and the US regarding specific international tax treaties that may apply.Full Conversation
I have a business in the uk and I want to set up a holding company in the state of Delaware, the Delaware holding will be a pass through entity owned by me and my wife. My question is regarding the tax implications on the dividend payment from the uk company to the holding company and subsequently to me and my wife.
General Information
- **UK Taxation**: Dividends paid from a UK company to a foreign holding company may be subject to UK withholding tax.
- **Delaware Taxation**: Delaware does not tax foreign-source income. Therefore, the holding company’s income from UK dividends may not be taxed at the state level.
- **U.S. Federal Taxation**: As a pass-through entity, the income will be reported on your personal tax returns. You and your wife may have to pay U.S. federal income tax on the dividends.
Questions
*. Have you consulted with a tax advisor in both the UK and the US regarding the specific international tax treaties that may apply?
*. Are there any other jurisdictions involved in your business operations?
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