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Differences in Taxation of LLCs in Four Countries

Contributed by BridgeWest
04 July, 2017

The private limited liability company (LLC) is a very common type of business entity chosen by foreign investors worldwide. Its main characteristic, namely the fact that the founders are only liable to the amount they have invested in the company, makes it a preferred business form. However, if this trait regarding liability is largely unchanged no matter the country, the LLC is taxed differently according to the jurisdiction in which it is located. Let's take a look at the tax requirements for this type of company in four different countries.

LLC taxation in Malaysia

There are two types of limited liability companies in Malaysia: private and public and the differences are found in the types of shares and whether or not they can be listed. Private limited liability companies are suited for small or medium-sized businesses. Their taxation is based on the same principles, those related to corporate residency: a company is a resident Malaysian company if it has its management and control takes place in the country.

The standard corporate tax rate for LLCs in Malaysia is 24%. Small and medium-sized companies are taxed at a lower rate of 18% applied on the first 500,000 MYR, starting from their first year of assessment. Other taxes include the capital duty, payroll tax, real property tax, social security (both for the employer and the employee) and the stamp duty.

Company taxation for LLCs in Ireland

The private limited company and the public limited company have the same characteristics in Ireland, however, the taxation is different. A notable difference in this jurisdiction is that two types of private limited companies exist in Ireland: the private company limited by shares and the designated activity company.

The corporate income tax rate for limited liability companies in Ireland is 12.5% for trading income and 25% for non-trading income. A residential real estate tax applies in Ireland and social security payments are mandatory for employers. There is no payroll tax, no stamp duty or transfer tax. Shipping companies in Ireland can choose to follow a different taxation regime: they can pay a tonnage tax instead of the usual corporate income tax.

Principles of taxation for LLCs in Norway

The public or private limited liability companies (the ASA and the AS) are the usual business forms preferred by investors in Norway. The ASA has different minimum share capital requirements and can make its shares freely available to the public, unlike the private limited company.

Corporate taxation in Norway is levied on the company's profits (from business, trading, passive income and capital gains). The standard corporate income tax rate in Norway for limited liability companies is 25%. Other taxes for corporations include the property tax, the stamp duty, the transfer tax (only in some cases) and the social security contributions for employers.

The Dutch taxation system for LLCs

The Dutch BV is the private limited liability company and the Dutch NV is the public limited liability company. BVs have lower requirements for a share capital and lighter reporting requirements. Resident BV companies in the Netherlands are taxed on their worldwide income, which consists of the business profits, foreign-source income or passive income.

The standard corporate income tax for limited liability companies in the Netherlands is 20% for the first 200,000 EUR of taxable profits and 25% for the taxable profits that exceed this amount. Dutch companies also pay real property tax, a payroll tax, social security and a real estate transfer tax, when applicable.

Differences in branch taxation may appear, based on the provisions of the double tax treaties signed by these countries and other jurisdictions.

We advise you to seek professional tax consultancy for complete information on corporate taxation in these jurisdictions.


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