4 ms·

Just having servers in the US does not mean you're doing business in the US. What is important is where your nexus of operations is or if you have actual staff

by pelle 16y ago

Just having servers in the US does not mean you're doing business in the US. What is important is where your nexus of operations is or if you have actual staff working in what could be considered a branch in the US. In the early days of the internet, several US citizens setup servers in offshore jurisdictions and bragged about it. The IRS quickly established that server location does not affect nexus and the offshore server owners ended up having to pay US taxes. This all expects you are not registered as a company in the US. In theory if you have a US LLC with no real operations except outsourced hosting in the US, there would be no US tax liability either as LLC are pass through entities. A c-corp is not passthrough and you would probably be taxable in the US. Any dividends and capital gains would be under double taxation. I am not a lawyer, accountant or anything. I just know a lot of people who do these kinds of things.

camz 16y ago
Nexus is a state and local tax concept. Nexus is defined as the "minimum connection necessary for a state to tax a taxpayer." Generally, there are three factors that lead to nexus (there are more but i'll give you the basics.) If you have employees in a state then you have nexus (this may include contractors as well). If you have ANY type of property or rental in the state then you have nexus. If you have significant economic connection to a state then you have nexus (notice this is a very subjective and BROAD concept.) Having servers in a foreign country isnt really important because YOU the owner = nexus to the state that you're living in. So, your state has the right to tax you. The IRS doesn't care about your nexus because they dont have that rule. The IRS is the shit because they dont deal with silly questions of "the relation to income earned and the US." Their rule is simple, "All income you earn is taxable period unless we say it isn't"

by pelle 16y ago

camz 16y ago

Nexus is a state and local tax concept. Nexus is defined as the "minimum connection necessary for a state to tax a taxpayer." Generally, there are three factors that lead to nexus (there are more but i'll give you the basics.) If you have employees in a state then you have nexus (this may include contractors as well). If you have ANY type of property or rental in the state then you have nexus. If you have significant economic connection to a state then you have nexus (notice this is a very subjective and BROAD concept.) Having servers in a foreign country isnt really important because YOU the owner = nexus to the state that you're living in. So, your state has the right to tax you. The IRS doesn't care about your nexus because they dont have that rule. The IRS is the shit because they dont deal with silly questions of "the relation to income earned and the US." Their rule is simple, "All income you earn is taxable period unless we say it isn't"