I've been reading a bit about the Hong Kong and Singapore company structures, which both offer low tax and flexibility. I would like to hear more about it from experienced people.
Thanks.
Lots of variables there.
Tax offices in most countries have ways of ignoring cute little "bulletproof" accounting setups, throwing the book at you even retroactively (money, even jail time).
I mean, if you're a small fish, you may well slip under the radar. But obviously you're asking for trouble if you set up a company somewhere, hoping for the best, because someone on HN suggested "country XYZ, low taxes!".
For what it's worth, I "digitally nomaded" through Asia on tourist visas, acting as my normal, home legal entity. No problems. But don't take that as legal advice :)
For example you don't charge VAT for intra-EU invoices and in practically every EU country you're liable to pay taxes there in case you stay there for more than 183 days. There's just no blanket solution here - at least not at the small-fish level.
From Panama City it's a 2.5 hour flight to Miami, 5 hours to New York / Toronto, about 7 hours to LA / Vegas, 10 hours to Amsterdam. Copa airlines has its base in Panama city and operates direct flights to many US and South American destinations.
A lot of people in Panama speak English so it's fairly easy to get by even if you don't know much Spanish. I found people in Panama City to be very friendly and helpful. Panama City also has great infrastructure, Internet, roads, apartments..
If you're a citizen of one of the 48 "friendly" countries you can be a legal permanent resident in Panama is a matter of months for under $5000.
And if your profession / business is global and online, you can likely break free of highway-robbery tax rates and the mind-numbing, time-wasting accounting / reporting requirements of your home country by moving to Panama.
Unfortunately for US citizens, they're still on the hook for US taxes even if non-resident in the US. But for citizens of 47 other countries, Panama is just about the #1 easiest and most practical residence option on the planet at the moment.
Search for "Panama Friendly Nations Visa".
Notice also that I left my home country 15 years ago, and have been a legal resident of 3 other countries during that time. I wonder if I just forget about residency altogether. I can't find a clear answer for that.
Once to file an application and then it will take up to 14 days for them to perform a background check. After which you will again have to physically appear at a police station in Estonia.
In the future this can supposedly be done through Estonian embassies but those are not exactly everywhere either.
[1]: https://www.cro.ie/Registration/Overview [2]: https://www.cro.ie/New-Act-2014/Overview
Americans have it different than most others, because they are taxed globally.
A true 'digital nomad' without set residency somewhere might also encounter problems, because certain countries might challenge the tax treatment of certain transactions. (depends on if you're selling your own stuff, or doing consulting, for example)
Talk to a lawyer (or law firm), see legal500.com (-> tax) for some recommendations. A firm in the country you're currently residing in is a good starting point.
We're taxed on personal income worldwide, with small exemptions for living overseas/based on tax treaties, etc.
But on the corporate side, can you incorporate in a 0% tax location, then leave the money in the corporation? You'll be taxed when you pull it out, but if you leave it in then you have a larger capital base to re-invest, and can grow the money faster. Then worry about taxes when you take the money out.
Is this plausible? Can you own the corporation outright without any tax implications, or would it be more ideal to put it in a trust or foundation type of ownership structure?
And obviously a lot of here us are doing digital/mostly online businesses. Could you open a US based LLC that is a subsidiary of the foreign company, for passing through Stripe payments, and for managing your salary payments?
Here in Boliva we typically complaint about taxes management and government regulation, but looks like is a breeze compared to other countries.
If not legally, in practice. With the nomadic piece, you have a certain amount of momentum that makes it hard to pinpoint your origin, so you might be giving up freedoms by putting a flag in the ground when you don't need to.
You find a few more details here: http://www.guidemehongkong.com/
In case you don't know already, Estonia is offering an e-residency program[-2]. For the time-being it requires a quick trip to Estonia to get this (and it's open to everybody regardless of nationality), but afterwards you can run and administer a company remotely with this smart card. (Bonus points for the fact the smart card reader plays nicely with Linux as well as OS X and Windows.) Soon you won't even need to show up in Estonia, but will be able to register as an e-resident at one of their consulates.
Estonia have made it pretty straightforward to run a business there and it doesn't appear to be especially expensive to start an Estonian company either. To the best of my knowledge you can deal with the government entirely online and IIRC in English too. (This is a big deal because some English-speaking countries like the Netherlands have tax offices that are forbidden from speaking English unless they come out to you in person, even though all the staff are fluent. I hear this might change in the Netherlands in the future.)
Banking in Estonia appears to be awesome and developed. Stripe isn't there yet, but Paymill is.
Estonians are fluent in English and just about everything the government, banks, etc publish online is in English. The Estonian government even translates some of their laws (like the ones pertaining to companies) to English too. They might be translating others but I've just never looked.
Taxes aren't super low, but are pretty sensible and IIRC corporate profits aren't taxed until they're distributed. [-1]
To the best of my knowledge, Estonia didn't really implement the EU cookie directive. They got a slap on the wrist for it but no Estonian site (even big bank and government sites) has those "y'all accept cookies?" banners. That's a good sign.
The biggest downside to Estonia is its size. It's going to be a ghastly nightmare to hire a decent number of staff if you want them to be all in the same building in Estonia, but hey, why not just run a 100% remote company? But cross that bridge if and when you come to it. You can always just open up offices in other cities around Europe or other places.
[-2] https://e-estonia.com/e-residents/e-residency/
[-1] http://www2.deloitte.com/content/dam/Deloitte/global/Documen...
Registering company ~186 euros. time ~15minutes online with smart card
bank account ~free first year, full online support with smart card
digital signature with smart card is equal with real one on all documents.
taxes, bookkeeping, hire local bookkeeper ~>30euros per month and use skype/email
Here's one list of Estonian startups: http://hub.garage48.org/estonian-startups
https://news.ycombinator.com/item?id=8939426
Right now I'm in the United States and I'm forming a Nevada Series Limited Liability Company. I needed a Registered Agent to do that, but the question came up for me: how long do I need to be somewhere, and what kind of mailing address do I need, to not even need a Registered Agent?
Nevada has no State tax, but there's still Federal. I'll be watching this with interest on the tax piece... otherwise to me, in this country, it seems like Nevada is the way to go.
however recently I've heard that if you're selling stuff on Amazon or any other e-commerce store then taxes are different depending upon where you're located ... and you may not even be eligible for selling in few states - I wish someone can explain this in a simple language ...?
Source: http://www.bizfilings.com/nevada/ongoing-llc-requirements.as...
.sg = low corp tax (first 3(?) years waived). someone else here mentioned capital gains scenario. stock market secrecy regime is designed for laundering burmese drug money. US lapdog. its boring as batshit... see https://en.wikipedia.org/wiki/Disneyland_with_the_Death_Pena...
.hk = low personal tax (none, unless resident >3 months/year). can open business and bank account within 2 hours (pay an agent). first world level of service. less US-friendly and more fun than .sg.
.cn = low chance anyone will come looking at your balance. basically no tax. nice forex trajectory for CNY at the moment. only way to really do business in china. possible to convert inbound international SWIFT xfers to EUR/USD/RMB cash, even without a bank account, with any foreign 'id' document. online banking is crap. foreign banks are barred from providing most services despite china signing to the contrary when joining the WTO. ~impossible to process card not present credit card transactions. its bladerunner meets monkey magic meets the land of opportunity. taobao is a big win if you ever do hardware sourcing.
other countries in Asia tend to lack decent english or infrastructure, but may provide interesting fringe benefits (eg. IIRC Philippines gives you permanent in/out visa with a property purchase, has lots of good english speakers, though they recently dropped their relative bank secrecy to US pressure)
My company has been thinking of creating a sort of "world company" package for people like you: solid main entity (Wyoming LLC for example); globally accessed banking, mail scanning/forwarding, etc. I'm curious if that would appeal to you (or anybody else on HN). Email me mattknee at google's mail system if so.
Here's our general information page for international clients that might be helpful with other issues: http://www.mynewcompany.com/international.htm
Good luck!
On the other hand, if you can manage this I've found forming and dissolving companies in SG to be very easy, not to mention the tax and accountancy processes.
To get permanent residence you need to visit Paraguay, proof that you have a fortune of at least 5K USD and run around a few days between different agencies. I helped a US citizen some month ago with his residency and we had everything together in 4 days, it would have been 3 if we not had forgotten one paper.
The big draw to Singapore is usually for the individuals - Singapore has no Capital Gains Tax (http://en.wikipedia.org/wiki/Capital_gains_tax#Singapore). At a personal level, if you're flipping a multi-million dollar business that's a big deal.
As other commenters have mentioned, the company/personal/VAT picture becomes more murky.
It used to be called a "Dutch Sandwich", but now called the Double Irish: http://en.wikipedia.org/wiki/Double_Irish_arrangement
http://www.guidemehongkong.com/taxation/topics/hong-kong-tax...
To pay no tax all your income needs to come from outside of HK in addition to not having a local operation.
http://www.guidemehongkong.com/taxation/corporate-tax/calcul...
btw, do you have any info on any agent who can help with this? do you need a physical address (even for opening a bank account)? Do you need to visit HK for any reason to setup a company?
The registered address in HK can be provided by the agent. I'm not sure what else you mean by physical address.
You'll need to visit HK to open a bank account in case you need one in HK, but you could open a bank account in any other country as well if you can find a bank willing to do so (tough where I'm from).
I have no idea about the legal intricacies involved for US citizens, but that doesn't change the fact that there is no corporate tax for the HK setup I described.
There are company structures possible though via a second company in a EU country with a double taxation treaty that would make things easier if you need more than PayPal, but the cost for the whole setup is probably prohibitive if you're just starting out.
Preach!
Boy do they go red when you simply say "If you don't know the answer, please don't confuse people more."
There's a lot of people on nomadforum.io/ that will have first-hand experience on this FYI.
Nothing else is required (office/staff), virtual services are provided at additional fees (secretary etc ..)
non-virtual:
I have received an email. If I have time later I will dig around to find the link to an official website from UAE commercial authorities.
Beware though, the GCC is notorious for renegging any niceness when you cause them unniceties.
The Middle East in general has Internet firewalls, e.g. VOIP is often packet filtered. Might be worth checking on those policies within the zone.
Some tax-free jurisdictions generate money from bureacracy and fees, which impose substantial time overhead, since penalties for noncompliance can be.. unexpected.
Down the street in Qatar, they routinely have Enterprenuer This and That coneferences and contests for recent college grads. I would love to see well-wishers and gov't officials face scrutiny in the form of super obvious questions regard bureaucracy and self-censorship as you described above which are hilarious.
Again, I am still not sure if I see the value. I think about it daily.
What're the other alternatives and how does this compare to SG/HK?
As to the how and what, I'm willing to learn myself.
Unless someone has a way to prove that wrong?
No proof here but I cannot find the reason why you would need to do what you suggest?
http://www.irs.gov/Individuals/International-Taxpayers/Forei...
http://www.irs.gov/Individuals/International-Taxpayers/NRA-W...
I would prefer this all not be fact, and I wish it were not true, but I put this out there because I hope it isn't but it seems like it definitely is real and effectual. This is the biggest difficulty I've hit myself.
If you're American, this gets really sticky. The US taxes you on your worldwide income. If you have a US corporation, it is also taxed on worldwide income, so it can be double taxed. And foreign corporations in the US are taxed on US-sourced income.
However, there is a loophole. If you own a company outside the US, and the company earns money outside of the US, it's only taxed in the US when the money comes back into the US. So, many people have companies registered abroad (Hong Kong is a popular jurisdiction) and money earned offshore is accrued in the foreign corporation. Expenses abroad are also paid by the foreign corporation. So, you can effectively avoid the money being double taxed (paying personal income tax only) if you earn money offshore and your offshore corporation pays your salary.
Also, if you're working abroad, it's not a vacation. A lot of things you spend money on are legitimately considered business expenses. So, if something is a business expense, pay for it with company earnings that haven't been taxed.
Now, what about paying income tax in the jurisdiction where you were living abroad? Typically, countries only tax income sourced within the country, and many countries have tax treaties where income is only taxed once. So, for example, if you're living in China, a country that has a tax treaty with the US, and you're paid by a company outside of China, and you pay taxes in the US, you don't actually have to pay taxes in China. Technically you are supposed to file there (at least in Beijing), but this isn't actually enforced unless you're on a Z-type visa and you are working for a Chinese company. And, if you're on a tourist visa pretty much anywhere in the world, you won't owe any tax in the country you were visiting. As best I know, no country in the world charges tourists income tax!
One thing that WILL happen if you're living abroad, and have foreign bank accounts: You will get audited if you claim tax exemptions that apply when you live outside the US. In my case, this came in the form of a letter to my Chinese address which basically said "prove you're really living in China," and gave me a list of documents to supply as evidence of same. There was a list of 8 or so things, of which I had to supply 3. I just sent the IRS everything on the list (not only 3 of the things, but all of the things), mailed the package from Beijing, and I never heard from them again. I think they just wanted to make sure I really was living abroad."
edit : this comment come from here http://nomadforum.io/t/what-is-the-tax-situation-for-perpetu...
These links might be really helpful : http://www.irs.gov/Individuals/International-Taxpayers/Forei... http://flagtheory.com/digital-nomad/ http://flagtheory.com/nevis-llc-formation http://nomadforum.io/t/what-is-the-tax-situation-for-perpetu...
Does this apply to foreigners who incorporate in the US? Living in the UK, co-founders (UK and India) want to incorporate in Delaware, I am looking into it but don't want to be liable for anything unnecessary. None of us lives in the US.
Law firms and others specialize in doing this.
Edit: Also judging by the comments so far you don't want to trust HN on this.
If you just need something simple with no employees partners then you probably only need the equivalent of a u.s. LLC which separates your business income/debt from your personal income/debt. Find whatever the equivalent is where you're a resident.
If you need an actual corporation then it's much tougher. Where I live (Switzerland) you need to start out with a lot of capital, probably need a lawyer and an accountant, etc.
It will get complicated if you need to register a corporation outside of where you're a resident and paying your taxes.
After reading this incredible thread, I think either HK or SG would fit me best for now, just need to know what will be most beneficial for me in the long run.