One Big Beautiful Bill Act – Does Trump’s new tax law affect you or your LLC?

In today’s article, we analyze the tax changes in Trump’s Big Beautiful Bill Act and how they impact (or don’t) foreign owners of LLCs in the US. In any case, we can tell you in advance that the effects are non-existent in most cases.

The One Big Beautiful Bill Act (BBB, short for Big Beautiful Bill) is a new and very broad bill from Trump’s second administration. After the US House of Representatives passed the bill in May 2025, the Senate also approved it by a narrow majority. As a budget reform (Reconciliation Bill), it only needed a simple majority, but even so, due to opposition from prominent figures such as Elon Musk and some critics within the party itself, such as Senator Rand Paul, its approval was not yet assured. We had already assumed that most of the relevant laws would be passed in one form or another. Although the issues were of little relevance to foreign owners of US LLCs, they have now been softened or even removed altogether.

For many, the new package of laws raises some uncertainties, but without reason. Here’s why.

The law, often referred to as Trump’s second round of tax cuts, aims to extend or expand numerous provisions of the Trump administration’s 2017 tax reform. That is why the Big Beautiful Bill is also known as “TCJA 2.0,” i.e., a continuation and expansion of the tax cuts of the 2017 TCJA. Background: The TCJA was the Trump administration’s first “Tax Cuts and Jobs Act.” However, many of Trump’s temporary tax breaks will now be made permanent. These include, for example, the reduction in corporate income tax to 21%, which was actually supposed to rise back to 28% under the Democrats.

The aim of the BBB is, both then and now, to ease the tax burden on US taxpayers (e.g., by extending the 20% deduction for income from certain transfer companies, increasing the standard deduction, etc.) while generating additional revenue. This will be achieved, among other things, by taxing certain cash flows abroad, although a large part is likely to be financed by debt.

The effects of the Big Beautiful Bill

So what exactly lies behind this “nice” name for foreign investors or owners of a US LLC? We take a closer look, but we can already give you the good news.

The BBB wanted to introduce some new features that could have been relevant for international entrepreneurs. The most notable changes were, above all:

• the “remittance tax,” initially planned at 3.5% on certain transfers abroad from the US, is reduced to 1% and affects LLC owners even less than it already did
• the so-called “punitive tax” (more accurately: “additional withholding tax under section 899”) on income (dividends, interest, license fees, etc.) of investors from countries with “unfair” taxes, which has, however, been completely eliminated

Remittance Tax: tax on transfers abroad

One of the most talked-about changes is the introduction of the so-called “Remittance Tax,” a tax on transfers from the US abroad. Specifically, the Big Beautiful Bill provides in section 112104 for the new “special tax on remittance transfers.” The law defines “remittance transfer” as transfers abroad made by individuals from the US to recipients abroad (usually money transfers from, for example, migrants to their families in their country of origin). The remittance tax will no longer be the planned 3.5%, but only 1% of the amount transferred.

The debtor is the sender of the transfer, but the relevant payment service provider (bank, money transfer provider, etc.) must collect the tax and pay it to the tax authorities. US citizens, true to the motto “America first,” are exempt from this tax. Payment institutions can register as “qualified providers” and check the nationality of the sender of transfers so that transfers by US citizens are exempt from tax. In other words, in future, non-US citizens will pay a surcharge when they withdraw money from the US. But that doesn’t mean it affects you.

In the meantime, it has been clarified once and for all whether this affects the banking system. After all, illegal immigrants do not have US accounts, but use “remittance providers” such as Western Union. These are not transfers, but cash remittances to countries of origin.

Reduction from 3.5% to 1%: The final version only provides for a tax of 1%, compared to the 3.5% originally planned. This is a considerable relief for transfers abroad.

Important exceptions: The Senate version has introduced significant exceptions:

• Bank transfers are excluded: Transfers from US bank accounts and through other regulated financial institutions are not subject to the tax.
• Card transactions excluded: Transfers made with US credit or debit cards are exempt.
• Only cash transfers are affected: The tax applies primarily to cash transfers, money orders, and bank checks.

What does this mean specifically for your US LLC?

For most European or foreign LLC owners, this means an even smaller impact than initially expected. Since most use a European bank account, they were already completely exempt from the tax in the first, stricter version. However, for our customers, the new change does not mean any change either. Most of our customers with LLCs in the US have, as already mentioned, a business account with a European provider such as Wise. For your US LLC linked to a SEPA account in euros, this issue is irrelevant, as no money is transferred to the US or subsequently withdrawn from the US. In summary: the remittance tax does not affect you at all in this case. However, this shows once again that those who diversify their lives and go where they are treated best can get the best out of every country. We have been advising our clients on the Flag Theory since 2017, and the above example clearly illustrates this principle: anyone who operates a business in the US but keeps their account in the SEPA zone is not affected by the new regulations. This is a prime example of the Flag Theory in practice.

Furthermore, the tax applies exclusively to cash transfers or money orders (i.e., in cases where the sender hands over cash for transfer, money orders, checks, or similar). Electronic transfers from current accounts (including SWIFT transfers via banks or credit/debit cards) are expressly exempt. In practice, this means that if you send money from a German SEPA account or by bank transfer, you will not pay the remittance tax. The tax will be collected by the transfer service provider, but only if the sender hands over cash.

In short, you are not affected!

The approved text no longer contains any special exemption for US citizens (the idea of “qualified providers” checking citizenship has not been accepted). In practice, the tax mainly affects non-resident senders making cash transfers (usually migrants without a bank account in the US). For foreign users of LLCs, the situation remains relaxed: transfers abroad from an EU account are still tax-exempt, as they do not fall under the definition of “remittance transfers.”

It is also important to understand that, in reality, the tax was not intended to affect you politically as a business owner. The main reason for its introduction is, in fact, a deterrent against illegal immigration. The Republican majority in the US Congress argues that the ability to send money abroad easily and cheaply is an incentive for migration, especially for people without legal residence status. By making these transfers more expensive, it was hoped that the appeal of the United States as a destination for (illegal) immigrants would be reduced. Therefore, the political target of this tax has not been foreign entrepreneurs with US limited liability companies (US LLCs) at all, and will certainly not be in the future.

On the initially planned punitive tax on income from investors in countries with “unfair taxes”

As we have explained, this no longer applies (you can skip this section if you are not interested), but we will explain it anyway. Strictly speaking, the punitive tax would have been a countermeasure to new foreign taxes, such as the planned global minimum tax. However, the punitive tax has been completely removed. The House version included section 899 with the punitive tax, but the Senate version no longer includes it. Therefore, the punitive tax has been removed from the text.

What was planned but is no longer relevant:

The punitive tax that concerns us was hidden in section 899 of the Big Beautiful Bill. This clause is aimed at so-called “unfair foreign taxes” that other countries levy on US individuals or companies. It refers in particular to new digital taxes (taxes on digital services, etc.) or rules on global minimum taxation (keywords: Pillar 2 of the OECD, Undertaxed Profits Rule, etc.) or similar extraterritorial taxes. In particular, the uniform digital tax across Europe for digital companies is a thorn in the side of the US. In “retaliation,” the United States wants to be able to demand higher taxes at source from foreign investors from these countries in the future.

Section 899 would have affected individuals and companies from countries that the United States considers “discriminatory.” These are likely to include many European countries (which want to introduce the Pillar 2 minimum tax rate) as well as, for example, India, Brazil, and the United Kingdom.

The bill referred to “resident individuals (other than US citizens) of a discriminatory foreign country.” Therefore, the relevant factor here should have been tax residence or habitual residence. Thus, anyone officially residing in Germany, France, Spain or any other country supporting the global minimum tax would certainly have been included. However, those who had completely deregistered and live, for example, in Paraguay or have tax residence there would surely have been excluded.

What would have been taxed? For those affected, section 899 provided for a surcharge of up to 20 percentage points to be applied to the existing withholding tax on various US income. These include dividends, interest, royalties, and other FDAP income (fixed and recurring annual income) from US sources, as well as, where applicable, gains from the sale of real estate in the US. The sectoral profits tax (additional tax on the profits of US branches of foreign companies) could also have been increased.

The increase would have been implemented gradually: from the entry into force of the law, the withholding tax rate would increase by 5%, with a possible maximum of 20%.

Take dividends as an example: a Spanish private investor holding US shares is normally subject to a US withholding tax of 30% on dividends, which is however reduced to 15% under the existing double taxation agreement. BBB would add a 5% surcharge, resulting in an effective withholding tax of 20% instead of 15%. In extreme cases, the law allows for a gradual increase to 20% (i.e., a total tax burden of 35%) after a few years.

Without the double taxation agreement (e.g., if someone is no longer officially tax resident in Germany and therefore cannot benefit from the advantages of the agreement), the tax would have been up to 50% (30% standard + 20% surcharge). License fees or interest paid to German beneficiaries, which were previously subject to a withholding tax of 0-15%, would be correspondingly more expensive.

Myths and lies about the Big Beautiful Bill

There are a number of rumors circulating about the Big Beautiful Bill that we would like to clarify once again with objective facts:

Myth 1: “U.S. bank accounts of foreigners will be blocked.”

False. Neither the Big Beautiful Bill nor other US laws currently in force contain a general account freeze for foreigners. US banks routinely carry out KYC checks and sanctions are imposed on certain countries/individuals, but a blanket freeze on the accounts of German nomads is nonsense. The recently debated registration of beneficial owners could, in theory, have led to the closure of accounts if companies remained anonymous, but, as already mentioned, the reporting obligation for US LLCs has been put on hold. If you keep your banking documents in order (current address, compliance with any bank requests), there is no risk of automatic closure. On the contrary, it is in the US’s interest to continue attracting capital, so LLCs and bank accounts for foreigners remain legal and desirable. In fact, this has become much easier in recent years. Every month, new and increasingly attractive options for opening a business account as an LLC are emerging.

Myth 2: “It will be more complicated to maintain an LLC as a non-resident, or they will even be banned.”

False. The BBB does not prohibit foreigners from creating or maintaining an LLC. In fact, the legal situation remains the same: anyone can register their LLC in states such as Florida, New Mexico, etc., regardless of their nationality. The US promotes itself as an easy place to set up a business, even for non-residents, and it is not for nothing that we regularly call it the world’s largest tax haven. The only thing that changes are the tax conditions (e.g., tax on money transfers), but this will not affect any of our clients.

Myth 3: “All transfers abroad from the US will be blocked.”

This is completely absurd. Transfers will not be stopped, only taxed (1% for non-citizens). There is no clause in the BBB that prevents or limits transfers abroad. The law also does not include capital controls, i.e., quantitative restrictions or authorization requirements for transfers. In practice, starting in 2026, you will be able to send money from your US account abroad at any time and without additional costs. With a SEPA account in euros, this issue would not have been relevant.

Myth 4: “Now I have to pay US taxes on my LLC profits.”

This is also false. Provided that you do not change the basic setup and no relationship with the US is established (substance, etc.). The BBB does not introduce a general income tax for owners of foreign LLCs. The basic principle of the exempt single-member LLC remains the same as it has been for decades: no US taxes are levied on profits not earned in the US. The US continues to levy no income tax or corporate tax on the income of these LLCs, provided that there are no permanent establishments in the US. In this respect, the tax burden on profits in the US remains at 0%. This is in line with the classic principles of common law, which taxes (or does not tax) partnerships in all English-speaking countries according to the same criteria.

Important: Even after the BBB, the IRS does not routinely share information with foreign tax authorities; the US still does not participate in the automatic exchange of information (CRS).

Myth 5: “The overall stability of a US LLC for international founders under the current Trump/MAGA administration is declining.”

In reality, quite the opposite is true. There have been no negative changes; on the contrary, the climate is generally even more favorable for businesses than before. Under the current Trump administration, international founders in the US are experiencing a kind of return to economic clarity. Intrusions into the privacy of entrepreneurs, such as the transparency registry, which was previously harmless because it was not public, have been completely stopped. Perhaps only the reputation has been tarnished in some respects, but this will survive another Trump term. And since there are no US companies per se, but only companies in the respective federal states, this issue should not be given too much importance. Those who fear that customers will reject you for this reason can set up their companies in more democratic states such as New Mexico or Colorado.

The United States represents more than ever a culture of welcoming entrepreneurs, even non-Americans who arrive with capital, structure, and ideas. The US LLC remains a legally secure, agile vehicle with little bureaucracy and plenty of room for maneuver. Trump has never made a secret of the fact that he values entrepreneurship, even from abroad, as long as it benefits the US economy. This is precisely what continues to make the US LLC interesting today, especially compared to many overly regulated structures in the EU. The US LLC is predictable, transparent, and straightforward. For all these reasons, the US LLC is (rightly) one of the most widely used and popular legal forms among those who apply the Flag Theory.

Do you want to finally focus on your business without having to worry about accounting or taxes?

If you too are thinking about finally setting up your tax-free, no-accounting US LLC, or if you have any other questions about setting up a business in the US, contact us or check out our US LLC registration and maintenance service. We will help you set up your US business with a complete, worry-free package. We have helped thousands of entrepreneurs, business owners, digital nomads, and investors achieve more personal freedom. Take control of your future.