Canadian (in Canada) receiving dividends in the U.S.

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Moving2Canada
Posts: 20
Joined: Thu Jun 25, 2015 12:58 pm

Canadian (in Canada) receiving dividends in the U.S.

Post by Moving2Canada »

I live and work in Canada (self-employed). I would like to invest in a U.S. company and receive profits in the form of dividends (or other). What type of company (S-Corp, etc.) should I request my U.S. associates to set up to receive my Canadian investment (would be made in U.S. dollars but coming from Canada, obviously).

Is there a better structure that I am not yet considering?

Thank you.
Moving2Canada
Posts: 20
Joined: Thu Jun 25, 2015 12:58 pm

Re: Canadian (in Canada) receiving dividends in the U.S.

Post by Moving2Canada »

I found this...

"To receive pass-through profit distributions, a foreign citizen may form a limited liability company. In contrast, all profit distributions (called dividends) made by a C corporation are subject to double taxation. (Under US tax law, a nonresident alien may own shares in a C corporation, but may not own any shares in an S corporation.) For this reason, many foreign citizens form a limited liability company (LLC) instead of a corporation."

It sounds like the only options would be 1) invest in a C-Corporation or 2) invest in an LLC instead of a corporation.

Are dividends in Canada received from a US C-Corporation (subject to double taxation) able to claim a foreign tax credit?

Are dividends in Canada received from a US LLC taxed in the U.S. or Canada?
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