I mean if it's possible, then every online business should incorporate in HongKong and avoid Taxes, VAT and several other complications that the IRS put.
Just so long as you report foreign income paid out to yourself. The foreign corporation doesn't have to report anything (this might have changed, i'm not a lawyer). That's why you see all those shady collector coin ads on latenight TV and they are always based out of Liberia.
additionally, he will need to file a TD 90-22.1 with the department of treasury by june 30th of the year after the account has more than USD 50K in it.
tax avoidance is a complex beast and simply incorporating a business in another jurisdiction does not in any way exempt you from US tax liability.
Nitpick, but the TD 90-22.1 threshold ("FBAR") is $10,000. As an expat with a foreign bank account, I only really know about it because TurboTax flagged it, which was pretty fortunate.
Note, though that theres still nothing illegal with it (unless you try to explicitly hide what you're doing) - it may "just" impact your tax bill.
If the company hosts it's service in Europe, sells to European customers and otherwise does not have much of a footprint in the US, chances are good they'd accept that the company is foreign.
Of course any income he takes out - whether salary or dividends - will still be taxable in the US (subject to any tax treaties if he were to do the work in the EU too).
Any money repatriated to the U.S. (e.g. if he pays himself) is taxable income.