4 ms·

Ask HN: What is the best tax-haven to start a start-up?

2 points by roschdal 16y ago

What is the best tax-haven to start a start-up?

AlexMuir 16y ago
First, unless you're 100% certain that this startup is going to be making serious profit from day one this shouldn't be a concern. You are going to need a local operating company later anyway, so it might be best to startup normally and then transfer the operating assets over to a tax efficient company later. Fees for getting a company set up in a 'proper' tax haven can be extortionate. And legal costs soon mount up, along with agent costs etc. Your choice might depend on where you live - it's no good saving Xk on tax if you're wasting X+1k on traveling thousands of miles to do things. Being based in a tax haven is going to make raising investment difficult - angels in particular will be unable to write off investments against their taxes. You might do well to look at somewhere like Ireland - stable and reputable but generally low taxes. Otherwise BVI is probably where I'd look.
sivers 16y ago
Caribbean places like British Virgin Islands and Nevis are so shockingly cheap and easy to set up a corporation, it's amazing. On a whim, I emailed TridentTrust in BVI with the name of a new company I'd like to incorporate. 2 hours later they emailed me back saying it was all done, the completed certificates and paperwork were FedEx'd to me, along with their annual ~$350 bill for resident agent services. Amazing. I brought my Certificate of Incorporation into my local Wells Fargo (where I already had an account), and 10 minutes later was out the door with a business checking account, checkbook in hand, and a Visa card on its way. I agree with AlexMuir's comment here, but there are situations where you don't care about that stuff. For example: I just needed a holding company for a new project with no physical office, no employees, and no investors. I'm not living in the US, and not sure which country I might end up living in. So a "tax-haven" corporation was a good choice. See a comparison of the different jurisdictions, here: http://www.tridenttrust.com/PDFs/Companies-IND.pdf http://www.tridenttrust.com/PDFs/Companies-IND.pdf
philiphodgen 16y ago
If you are looking for a physical location for starting q startup that also happens to be a tax haven, I would suggest being willing to pay a bit in tax in order to get the infrastructure you need. If I were in this position I might think of Singapore for instance. If you are purely asking for a cheap jurisdiction to form a business entity, there is an endless supply of vendors on the Internet. I use BVI and Bahamas companies like cookies for my clients. Buying a company is the trivial issue. The more important question is what you're going to do with it and what type of assets it will own. Look to home country regulation and taxation of your shiny Bahamas company in other words. War story: I worked on an Internet gambling migration a few years ago (moving the business out of the US). There is a US tax rule that says transferring ownership of intangible property to a foreign owner (eg from your own US corporation to yor own Bahamas corporation) is treated like a sale. Imagine the capital gain on the domain name: bought for $7 per year and now the brand of a profitable business. Giant tax cost. Moral of the story: start with IP owned offshore while it is being developed. The person asking the question shows a profile of living in Norway, so to you I would suggest looking at localtax rules and business regulation in Norway. Choosing the right starting point may save you orders of magnitude more money than the trivial expense of setting up a company. Also the brain damage must be considered. I have lots of nonresident clients who buy US real estate. In almost every transaction the party onthe other side spazzes put when confronted with other than a domestic entity. I spend the front end of my time educating them. You will add to your transaction costs in time and money by using a nonlocal company. Unlike another commented in this thread I ahem have not had ease of use experiences with my bank (which happens to be Wells Fargo) and non-US corporations. Other banks too. The federally-mandates compliance costs for non-US transactions are too high. This may be true in Norway too. (I have a client who is the president of a business-only bank and even with that connection the bank won't take on my clients).

2 points by roschdal 16y ago

What is the best tax-haven to start a start-up?

First, unless you're 100% certain that this startup is going to be making serious profit from day one this shouldn't be a concern. You are going to need a local operating company later anyway, so it might be best to startup normally and then transfer the operating assets over to a tax efficient company later. Fees for getting a company set up in a 'proper' tax haven can be extortionate. And legal costs soon mount up, along with agent costs etc. Your choice might depend on where you live - it's no good saving Xk on tax if you're wasting X+1k on traveling thousands of miles to do things. Being based in a tax haven is going to make raising investment difficult - angels in particular will be unable to write off investments against their taxes. You might do well to look at somewhere like Ireland - stable and reputable but generally low taxes. Otherwise BVI is probably where I'd look.

sivers 16y ago

Caribbean places like British Virgin Islands and Nevis are so shockingly cheap and easy to set up a corporation, it's amazing. On a whim, I emailed TridentTrust in BVI with the name of a new company I'd like to incorporate. 2 hours later they emailed me back saying it was all done, the completed certificates and paperwork were FedEx'd to me, along with their annual ~$350 bill for resident agent services. Amazing. I brought my Certificate of Incorporation into my local Wells Fargo (where I already had an account), and 10 minutes later was out the door with a business checking account, checkbook in hand, and a Visa card on its way. I agree with AlexMuir's comment here, but there are situations where you don't care about that stuff. For example: I just needed a holding company for a new project with no physical office, no employees, and no investors. I'm not living in the US, and not sure which country I might end up living in. So a "tax-haven" corporation was a good choice. See a comparison of the different jurisdictions, here: http://www.tridenttrust.com/PDFs/Companies-IND.pdf http://www.tridenttrust.com/PDFs/Companies-IND.pdf

philiphodgen 16y ago

If you are looking for a physical location for starting q startup that also happens to be a tax haven, I would suggest being willing to pay a bit in tax in order to get the infrastructure you need. If I were in this position I might think of Singapore for instance. If you are purely asking for a cheap jurisdiction to form a business entity, there is an endless supply of vendors on the Internet. I use BVI and Bahamas companies like cookies for my clients. Buying a company is the trivial issue. The more important question is what you're going to do with it and what type of assets it will own. Look to home country regulation and taxation of your shiny Bahamas company in other words. War story: I worked on an Internet gambling migration a few years ago (moving the business out of the US). There is a US tax rule that says transferring ownership of intangible property to a foreign owner (eg from your own US corporation to yor own Bahamas corporation) is treated like a sale. Imagine the capital gain on the domain name: bought for $7 per year and now the brand of a profitable business. Giant tax cost. Moral of the story: start with IP owned offshore while it is being developed. The person asking the question shows a profile of living in Norway, so to you I would suggest looking at localtax rules and business regulation in Norway. Choosing the right starting point may save you orders of magnitude more money than the trivial expense of setting up a company. Also the brain damage must be considered. I have lots of nonresident clients who buy US real estate. In almost every transaction the party onthe other side spazzes put when confronted with other than a domestic entity. I spend the front end of my time educating them. You will add to your transaction costs in time and money by using a nonlocal company. Unlike another commented in this thread I ahem have not had ease of use experiences with my bank (which happens to be Wells Fargo) and non-US corporations. Other banks too. The federally-mandates compliance costs for non-US transactions are too high. This may be true in Norway too. (I have a client who is the president of a business-only bank and even with that connection the bank won't take on my clients).