Before choosing a state for an LLC, before comparing Dubai with Panama, before anything that sounds like a structure, one question decides the outcome: which system does the country you live in use to tax you. Not the company’s country: yours. Everything else, the LLC included, rests on that answer.
Most guides count four systems. I count five, because the remittance basis gets confused with territorial taxation all the time, and that confusion is the one that costs the most money.
Why the system decides everything
A single-member LLC is transparent: in the United States it pays no corporate tax, its profit is yours, and it is taxed wherever you are taxed. That turns the question “how much does my LLC pay?” into a different one: “which income does my country of residence tax, and at what rate?”.
A UK resident with an LLC that earns 100,000 dollars abroad pays income tax on those 100,000 at the usual bands. A Paraguay resident with the same LLC and the same work done abroad pays nothing on that profit. Same company, same client, same invoice. The only thing that changed is the system of the country where the owner lives.
That is why the correct order is residence first, structure second. I develop that in tax residency for founders; here I stay with the systems.
Worldwide taxation
The majority system: a resident is taxed on all income, wherever it is earned. The UK, Ireland, Germany, France, Italy, the Netherlands, Spain, Portugal, Canada, Australia, Mexico, Colombia, Argentina, Chile, Brazil. Of the 39 countries in the calculator, 22.
What prevents double taxation is the credit: if you paid tax in the source country, your country of residence deducts it up to the amount it would have charged you. Double tax treaties decide who taxes first. With a transparent LLC the split is simple because nothing was paid in the United States: there is nothing to credit and the whole profit lands in your return.
Within the worldwide system there are differences that matter to a founder:
- How the LLC is characterised. The UK, after Anson, tends to treat an LLC as opaque, so the profit may be taxed as a dividend when distributed rather than as your income when earned. Spain looks at it through place of effective management and its controlled-foreign-company rule. Colombia taxes dividends from a foreign company at 35% first, which makes any opaque company lose against a transparent LLC. The label “worldwide” hides three different answers.
- Whether dividends are taxed at scale or at a flat rate. Argentina, Chile and Peru have their own rates for foreign dividends; the UK has dividend bands; Spain integrates them into its savings base at 19-30%.
- Whether there is a regime for new residents. Portugal (IFICI, formerly NHR), Italy (flat tax for high net worth), Spain (Beckham), Chile (three years without foreign income), the UK (four-year FIG regime since April 2025) are temporary exceptions inside a worldwide system. They do not make the country territorial: they give you a window.
Territorial taxation
Only local-source income is taxed. Residents’ foreign-source income is not. Panama, Paraguay, Costa Rica, Guatemala, El Salvador, Honduras, Nicaragua, Bolivia, Georgia, Hong Kong, Singapore. Of the 39 in the calculator, 16 carry this label, and they are not all alike.
The word that rules is source. And the source of active income is where the work is performed, not where the client sits or where the money is paid. All 17 territorial jurisdictions in our table treat a service performed from their territory as local income. Guatemala writes it into the law, article 4.1.c of Decree 10-2012: “the export of services from Guatemala” is Guatemalan-source. Panama, Paraguay and Costa Rica apply the same test in different words.
The second distinction is passive income. There are strict territorial systems, where the dividends and interest you receive from abroad are not taxed either (Panama, Paraguay, Georgia, Hong Kong, Singapore), and territorial systems with exceptions, where active income stays out but passive income comes in: Uruguay (12% unless the tax holiday applies), the Dominican Republic (from the third year of residence), Malaysia (exempt only if taxed at source). That difference decides whether the LLC profit, once distributed, is taxed or not.
All of this has its own guide: what territorial taxation is.
Remittance basis
Foreign income is taxed only when it is brought into the country. While it stays outside, it is not. This is Malta’s system for resident non-domiciled individuals, Ireland’s for non-doms, the one the UK had until April 2025 (replaced by a four-year regime for new arrivals), and the one Thailand adopted in practice on 1 January 2024 with Revenue Department Orders Por. 161/2566 and 162/2566.
It gets confused with territorial taxation because, in practice, if you do not bring the money in you pay zero. But the difference is structural: under a territorial system foreign income is never taxed; under a remittance system it is taxed as soon as you bring it in, and bringing it in includes paying with a foreign card inside the country. Malta adds a minimum tax of EUR 5,000 a year if your unremitted foreign income reaches EUR 35,000. A founder who lives off an LLC has to bring money in to live, so a remittance-basis 0% is always a percentage, never a zero.
Citizenship-based taxation
Nationals are taxed on their worldwide income wherever they live. Only two countries do it: the United States and Eritrea. For a US citizen, moving to Paraguay does not end the obligation to file with the IRS; what exists are exclusions (the foreign earned income exclusion, around 130,000 dollars for 2025) and credits for tax paid abroad. The only complete exit is renouncing citizenship, with its exit tax.
For everyone else this matters in one way: if you hold a US passport, the LLC is not transparent “for you” in the same way, and you need US advice, not this article.
No income tax
There is no personal income tax at all. The United Arab Emirates, the Bahamas, the Cayman Islands, Bermuda, Monaco (except French nationals), Qatar, Kuwait, Bahrain, Vanuatu, Saint Kitts and Nevis. This is not territorial: there is no personal tax to territorialise.
The nuance almost nobody mentions: the UAE has had a 9% corporate tax since 2023 on profit above AED 375,000, and a US LLC effectively managed from the UAE can be treated as tax resident there and pay it. The 0% belongs to the person; the company has its own question. I develop it in US LLC vs a Dubai company.
The real cost of these countries is not the rate: it is the visa, the housing, the minimum presence and the substance it takes for your previous country to accept that you have left.
The 39 countries in the calculator, by system
The US LLC tax calculator classifies 39 residences. This is the picture, with the warning that the label summarises and each country card qualifies:
Worldwide (22): Spain, Portugal, Mexico, Colombia, Argentina, Chile, Peru, Germany, France, Italy, the United Kingdom, Ireland, the Netherlands, Bulgaria, Estonia, Romania, Andorra, Brazil, Ecuador, Thailand, Türkiye, Morocco.
Territorial (16): Uruguay, Paraguay, Panama, Costa Rica, Georgia, the United Arab Emirates, Malta, the Dominican Republic, Guatemala, Bolivia, El Salvador, Honduras, Nicaragua, Malaysia, Singapore, Hong Kong.
No tax residence (1): the option that exists so you can see it is not an option.
Two warnings about that list. The UAE sits under “territorial” to keep the calculator’s ladder simple, but it is a no-income-tax system. Malta sits there for the same reason and is remittance-based. And Thailand sits under “worldwide” because, under the 2024 rule, what you bring in is taxed. The territorial tax countries table makes the fine distinction, with each country’s statute.
Not sure how this applies to your case?
Eleven questions and we tell you whether the LLC fits, and if it does not, that too.
What no system changes
Three things are the same in all five systems, and they are what actually makes a structure hold.
Work done from the country is the country’s income. Whatever the system. If your laptop, your hours and your decisions are in Asunción, Panama City or Tbilisi, the local authority has an argument that the source is local. The territorial 0% is earned with work done outside, and “outside” is proven with facts: travel, clients, where things are signed, where decisions are made.
Residence is proven, not declared. Each country has its day threshold (120 in Paraguay, 183 in most, 200 in El Salvador) and almost all add a centre-of-interests test. Your previous country, if it is a worldwide one, keeps treating you as resident while you keep a home, family or business there. The UK’s statutory residence test, with its ties, is written for exactly that case.
The LLC has to be run from somewhere, and that somewhere rules. A Wyoming LLC managed from London is, in HMRC’s eyes, a UK-resident company. Managed from Dubai, a UAE-resident company for the 9%. Managed from Paraguay, a company whose profit is yours and territorial. The country’s system sets the rate; substance decides whether it applies.
In short
- Five systems: worldwide, territorial, remittance basis, citizenship-based and no income tax. Yours is the one of the country you live in, not the company’s.
- Under worldwide, the LLC profit is taxed as your income. Under territorial, it is not, if the work is done outside. Under remittance, when you bring it in. Under citizenship, always. Under zero, never at the personal level.
- Territorial and remittance basis are not the same. Malta and Thailand are remittance-based.
- The UAE is not territorial: it is a no-income-tax system with a 9% corporate tax.
- No system makes work done from inside the country free, and none replaces the proof of residence.
If you want the number for your case, the calculator gives it with a source and a date. If you want to know whether the LLC is even the right structure for your residence, the assessment tells you in ten minutes, and sometimes the answer is no.
Explore the full guide
Frequently asked questions
How many tax systems are there in the world?
Five ways of deciding which income a country taxes its residents on: worldwide (all of it), territorial (only local-source income), remittance basis (foreign income only if brought into the country), citizenship-based (all of it, because of nationality) and no income tax. Many countries combine two: territorial for active income and worldwide for capital income, as Uruguay does.
Which system do the UK, Canada and Australia use?
Worldwide, all three. A resident is taxed on all income including the profit of a US LLC, with a credit for tax paid abroad. The UK replaced its non-dom remittance basis in April 2025 with a four-year regime for new arrivals; Australia and Canada have temporary-resident rules with narrow scope. None of them is territorial.
Does living in a territorial country mean my LLC pays 0%?
Not by itself. The LLC profit stays out if the work that produces it is done outside that country. If you work from there, it is local-source income in every territorial system. And some, such as Uruguay or the Dominican Republic, also tax the dividends and interest you receive from abroad.
Are remittance basis and territorial the same thing?
No. Under a territorial system foreign income is never taxed, whether you bring it in or not. Under a remittance system it is taxed the moment you bring it in. Malta and Thailand (since 2024) are remittance-based and are often sold as territorial.
Can I be tax resident nowhere?
You can try, and it almost always goes wrong. No country recognises "resident nowhere" as a status, and your previous country keeps treating you as resident until you prove you are resident somewhere else. Without another country's tax residence certificate, the burden of proof is yours.
Where do I see what I would pay from each country?
In the US LLC tax calculator: 14 residences verified against official sources, 2025-2026 brackets and a dated exchange rate. Each country card explains what happens to the profit, to the dividends, and if you work from the country.