The past decades have seen governments around the world step up, in a big way, their fight against tax base erosion. While the effects have been numerous, the reduction in privacy is, in my opinion, one of the most severe. That is, in large part, due to the pressure and restrictions which have made registering a company in one of the high privacy jurisdictions impractical for most entrepreneurs. Thankfully, not all is dark and a few options still exist for those who wish to keep their name off public registers. In this post, I cover two of them, the US LLC and the BC LLP.
It will probably come as a surprise to some to learn that one of the best jurisdictions in the world, privacy-wise, is the United States. At least, some states of the United States, more specifically New Mexico (NM) and Wyoming (WY).
Both states have some of the best business and assets protection laws on their books. Of great importance here is that in both cases, there are no requirements to disclose the ownership structure of an LLC with the Secretary of State (the registry). This means that no one, except for the owner, knows who owns an LLC formed in those states (unless the owner chooses to disclose this information, of course).
This sounds too good to be true, and it probably would be if New Mexico and Wyoming were located in any other country. They are part of the US, however, and this means that normal rules do not apply and that they get to avoid being targeted in the same way other tax and privacy havens are. An excellent example of this is the OECD’s Common Reporting Standard. Most countries now participate in the program, which requires all their financial institutions to collect and share financial data on their customers. The United States, on the other hand, does not participate and has made it clear that it is not interested in signing up as it already gets data on its citizens via FATCA. It is also infamously uncooperative when it comes to international tax matters, especially when it relates to non-US citizens / residents.
So it is possible to register an LLC anonymously in those two states but what about ongoing compliance? An annual report must be filed in Wyoming (not New Mexico) but there is no need to disclose the ownership structure on it, or any financial information. Unless work is physically performed from within the United States, there is no need to file a federal tax return with the IRS. Form 5472 will likely have to be filed but if a proper structure is in place between the LLC and its UBO, the details of the UBO can be kept off the form.
This anonymity and tax treatment makes the LLCs registered in both states ideal for a wide range of location independent businesses. It also is ideal as a vehicle to hold assets, especially real assets.
The BC LLP is another structure that can be registered anonymously as BC registries does not require the filing of the ownership details and a BC LLP with no operations within Canada does not typically have to register with the CRA (Canada’s federal tax agency). As with the Wyoming LLC, an annual report must be filed annually but there is no need to disclose the ownership structure on it, or any financial information.
The BC LLP is ideal for businesses with multiple owners (it is a partnership after all), does not require the use of holding entities (as there is no equivalent to form 5472 in Canada) and it has an advantage when it comes to overall reputation as Canada is not usually associated with tax optimization the way states like New Mexico and Wyoming are.
It is important to understand that a name and address must be provided to the state as part of the registration process, for correspondence purposes. This means that an authorized agent must be appointed to avoid having to use the details of the owner (or one of the owners if there are many).
It is also important to keep in mind that while the company itself can be registered anonymously, it will not be possible to open bank accounts anonymously (or other types of financial accounts). If your business can operate in crypto only, you can get around this issue but otherwise you will have to reveal the ownership details to the banks, fintech etc.