Significant Tax Rate Reduction
Moving from a Turkish anonim şirketi to a Wyoming LLC could potentially reduce your effective tax rate from 36.25% to as low as 0% (with no permanent establishment).
Executive Summary
Moving from a Turkish public company (anonim şirketi) to a Wyoming LLC structure for a SaaS business with $30,000 monthly recurring revenue could result in significant tax benefits, with annual tax savings of up to $52,200 under optimal conditions.
Turkish Anonim Şirketi
36.25%
Effective Tax Rate
Wyoming LLC
0.00%
Effective Tax Rate (No PE)
Wyoming LLC
21.00%
Effective Tax Rate (With PE)
Financial Impact
- Annual Tax Savings: Up to $52,200
- Net Income Increase: 56.9%
- 5-Year Savings: Up to $261,000
Key Considerations
- Permanent Establishment Risk
- IP Transfer and Exit Taxation
- Compliance Requirements
Key Tax Benefits
Increased Net Income
Based on $30,000 monthly recurring revenue, your annual net income after all taxes could increase from $91,800 to $144,000, representing a 56.9% increase.
State-Level Tax Advantages
Wyoming offers numerous tax advantages including no state income tax, no franchise tax, no state-level tax on intangible assets, and no sales tax on SaaS services.
Asset Protection Benefits
Wyoming LLCs provide strong privacy protections for owners, limited liability protection, protection from creditors through charging order protection, and minimal information sharing with foreign countries.
Tax System Comparison
Turkish Anonim Şirketi Tax System
Corporate Income Tax
25% corporate tax rate on worldwide income
Dividend Taxation
15% withholding tax on dividends paid to non-residents
Value Added Tax (VAT)
20% standard VAT rate on most goods and services
Digital Services Tax
7.5% on online advertising and digital content
Wyoming LLC Tax Structure
State Taxation
No state income tax, franchise tax, or tax on intangible assets
Federal Taxation
Pass-through taxation by default (income passes to owners)
Sales Tax
SaaS is not subject to Wyoming sales tax (classified as a service)
Foreign-Owned Considerations
Form 5472 and pro-forma Form 1120 filing requirements
International Tax Considerations
US-Turkey Tax Treaty
Reduced withholding rates: dividends (15-20%), interest (10-15%), royalties (5-10%)
Permanent Establishment
Key factor in determining US tax liability for foreign-owned businesses
Foreign Income Taxation
Foreign-owned LLCs can avoid US income tax if no Permanent Establishment in the US
Transfer Pricing
Arm's length principle applies to transactions between related entities
Interactive Tax Calculator
Estimate your potential tax savings by adjusting the parameters below:
Turkish Anonim Şirketi
Annual Revenue:
$360,000
Profit Before Tax:
$144,000
Corporate Tax:
$36,000
Dividend Tax:
$16,200
Effective Tax Rate:
36.25%
Net Income:
$91,800
Wyoming LLC
Annual Revenue:
$360,000
Profit Before Tax:
$144,000
Corporate Tax:
$0
Dividend Tax:
$0
Effective Tax Rate:
0.00%
Net Income:
$144,000
Potential Tax Savings
$52,200 per year
5-Year Projection:
$261,000
Key Considerations and Challenges
Permanent Establishment Risk
Creating a permanent establishment in the US would trigger US taxation. This requires careful structuring to avoid US office, employees, or dependent agents. Digital operations must be managed to avoid PE classification.
IP and Transfer Pricing Issues
Transfer of IP may trigger exit taxation in Turkey. Arm's length principle must be followed for related-party transactions. Documentation requirements exist for cross-border transactions.
Compliance Requirements
US reporting requirements for foreign-owned LLCs (Form 5472, pro-forma 1120). Beneficial ownership reporting under Corporate Transparency Act. Annual reporting requirements in Wyoming.
Practical Implementation Challenges
Banking relationships and payment processing. Currency conversion costs. Customer contracts and legal agreements may need updating. Potential exit tax considerations when moving from Turkey.
Implementation Recommendations
Phased Approach
Consider a gradual transition rather than immediate full migration. Test structure with new customers or product lines first. Develop clear timeline for full implementation.
Professional Support
Engage qualified international tax professionals in both jurisdictions. Consider legal counsel for corporate restructuring. Accounting support for ongoing compliance.
Operational Structure
Carefully document business activities and decision-making locations. Consider using nominee directors and virtual office services. Develop clear protocols for avoiding US permanent establishment.
Ongoing Monitoring
Regular review of tax law changes in both jurisdictions. Periodic assessment of structure effectiveness. Compliance calendar for all filing requirements.
Conclusion
Moving from a Turkish Anonim Şirketi to a Wyoming LLC structure offers substantial tax advantages for a SaaS business with $30,000 monthly recurring revenue. With careful planning and implementation, the effective tax rate could potentially be reduced from 36.25% to 0%, resulting in annual tax savings of $52,200.
However, this restructuring requires careful consideration of permanent establishment risks, IP transfer issues, and compliance requirements in both jurisdictions. A phased approach with professional guidance is recommended to maximize benefits while ensuring full compliance with all applicable laws and regulations.