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Taxation in Delaware

Taxation in Delaware

Delaware is a respected business jurisdiction in the USA and a tax shelter for those looking to register their offshore companies and protect their money. There are several tax advantages offered in Delaware, an American state open to all sorts of businesses. Our company formation agents in USA can provide you with in-depth information about how you can open a company here and about the tax structure in Delaware.

What types of taxes are imposed in Delaware?

The franchise tax and the corporate income tax are imposed for limited liability companies, and general and limited partnerships in Delaware. It is good to know that the taxation on the personal state tax return is made only if the company’s revenues pass through individually.

Foreign entrepreneurs who want to set up a branch in USA have our services at their disposal. Our team of company formation agents in USA has an extensive experience in a wide range of aspects related to the incorporation of a company in any American state. It is important to have support by your side when preparing the documents, registering with the tax authorities, and obtaining the necessary business licenses. Contact us as soon as you decide on this type of structure.

Traditional corporations and the franchise tax in Delaware

The franchise tax is calculated in two different ways: the Authorized Shared Method and the Assumed Capital Value Method, as seen in the tables below:

  • The franchise tax and the Authorized Share Method – the flat fee is imposed on the number of the authorized shares in the corporation in Delaware.
SharesFlat Fee
Up to 5,000$175
Between 5,001 and 10,000 $250
10,000 and more $250 plus $85 for each additional 10,000 or for a fraction of it
  • The franchise tax and the Assumed Capital Value Method – the flat fee depends on the amount of the assumed no-par capital, plus a fee for the assumed par value capital for corporations in Delaware.
CapitalFlat Fee
Up to $500,000  $175
Between $500.001 and $1 million$250
More than $1 million$250 plus $85 for each additional $1 million or a fraction of it

Tax reliefs for offshore companies in Delaware

Delaware offshore limited liability companies with no business activities in this state are not subject to taxation, meaning that there is no federal or state income taxes, no inheritance tax and no fees for the transfer of shares. However, a license fee is imposed by the government for offshore LLCs in Delaware.

Is there a sales tax imposed in Delaware?

No, there is no sales tax in Delaware. The state is among the few others in USA which does not impose a sales tax on goods and services provided. We invite you to solicit information about how to create an offshore company in Delaware and find out details about the advantages of opening a business in this state. You can also request support if you want to start a business in USA regardless of the chosen state for future operations.

Corporate tax for companies in Delaware

Without VAT and sales tax, Delaware is among the favored states for doing business from a taxation point of view. LLCs in Delaware are subject to incomes that are divided among the shareholders. Each of them must pay the personal income tax, besides considering the corporate income tax which represents 8.7%, as a member of a company.

Depending on the business plans you have, you can open a branch in USA, taking into account the required formalities. with the help offered by our local agents, you can prepare the paperwork and submit it to the relevant authorities. Also, they can help you with opening a bank account and obtaining the EIN that proves that the company is registered for paying taxes.

How tax returns are filled in Delaware

The corporate tax in Delaware can be paid one time but also in four parts, as mentioned below:

•    50% which is payable on/before the first day of the 4th month of the taxable year; 
•    20% which is payable on/before the 15th day of the 6th month of the taxable year; 
•    20% which is payable on/before the 15th day of the 9th month of the taxable year;
•    10% which is payable on/before the 15th day of the 12th month of the taxable year.

Please consider that penalties will be imposed if the payment terms are not respected by companies in Delaware.

Entrepreneurs who want to set up an LLC company in Delaware can do so with USD 1 as minimum share capital. Only one shareholder is needed to establish this structure and to open a bank account. Among the benefits of this structure, we mention the quick incorporation, the advantageous tax system, and the possibility of doing business outside the USA. We invite you to contact our team of company formation agents in the USA to benefit from support in terms of formalities.

The personal income tax in Delaware

In Delaware, the personal income tax for sums over $60,000 is set a 6.75% rate, which also represents the maximum personal income tax. As for the profits which are lower than $60,000, the imposed tax can be paid in 5 tranches, by both residents and non-residents in Delaware.

Penalties for companies in Delaware

If companies will not respect the period in which the taxes must be paid, these are subject to a 1% penalty each day or 5% per month but may vary. Also, interests of 1% are added to the entire sum until it is paid. One should also consider that a penalty of ½ % but not above 25% can be imposed for enterprises in USA which do not pay the fees for the submitted returns. 

We invite you to contact our specialists for assistance in USA company formation and in tax compliance for each state.