6 ms·

You incorporate in the country in which you live 183 days per year (or more). It's simple. If you live more than 183 days in country X, but you incorporate in

You incorporate in the country in which you live 183 days per year (or more). It's simple. If you live more than 183 days in country X, but you incorporate in country Y, you'll have a hard time explaning it to the tax authorities.

sebst 5y ago
Not sure why this is downvoted - this is the reality in most tax laws worldwide. https://en.wikipedia.org/wiki/Controlled_foreign_corporation https://en.wikipedia.org/wiki/Controlled_foreign_corporation
- sparkling 5y ago
  Not every jurisdiction has CFC rules. There are a few countries that simply don't care if you control a foreign corporation abroad. Now if you pay yourself a salary or dividends from that corporation, that might be taxable on a personal level, but that is another story.
  - mbreese 5y ago
    Exactly. The question was about where to incorporate a company, not where to run it from. Just also be prepared to deal with the massive headache of a company is one jurisdiction and living (and paying taxes) in another. This can be a headache even if you live in the US if you’re split between states.
    - dariusj18 5y ago
      > be prepared to deal with the massive headache Which I would assume would be part of the calculations for any recommendation.
- texasbigdata 5y ago
  So XYZ parent company thats say mature and public, who hires a French CEO who lives primarily in France should be a French company? Why? What if the customers are in the US? Etc
iExploder 5y ago
from my experience there are no hard times to explain anything. if you have income from your activities from abroad you declare it and might have to tax it additionally, depending on whether the two countries have any treaties against dual taxation or not.
deleted 5y ago
[deleted]
0xfaded 5y ago
It is completely possible to have a parent corp in the US that owns a subsidiary in the country you live and employs you. Europe (post brexit) attracts approximately 1/10th the VC compared to the US. Valuations are also 1/10th on average, and sadly this is because E[value(European Startup)] is also 1/10th. Having a US parent parent makes it easier to raise from US investors and make the move once you can sort out visas.
- eloff 5y ago
  This is an important consideration for companies assuming to be fast growing billion dollar business (startups). Most business do not fit this criteria and should not seek venture capital.
exikyut 5y ago
(For people as badly math-challenged as myself: 365/2=182.5.)
conductr 5y ago
Out of curiosity. Do tax authorities tap into your travel/passport activities to determine where you are spending your time? Could you just have a local address listed as your residence? I know maybe bordering a slippery slope towards tax fraud or something, but theoretically, I'm curious how clued in the tax authorities are to where you actually reside vs where you say you reside.
- texasbigdata 5y ago
  At the individual state tax level (and for payroll tax) it can be a consideration.
- pjc50 5y ago
  Usually you want to do it the other way round and be "overseas" from the big western country with the normal tax rate while you pretend to be resident in the Cayman Islands.
- hluska 5y ago
  When I was very young, I did a four month internship with the Canada Revenue Agency. I learned three things: 1.) Don’t even think about screwing with tax authorities. 2.) See #1. 3.) See #1.
  - martin_a 5y ago
    Same goes for Germany if you're not wealthy. You can do lots of things, but don't try to screw with the tax office.
- rgj 5y ago
  Here in the Netherlands the tax authorities go a long way. They have demanded data from parking apps and even from a museum subscription. Judges have ruled that they are entitled to do so and use this information in court. https://translate.google.com/translate?sl=nl&tl=en&u=https://www.rechtspraak.nl/Organisatie-en-contact/Organisatie/Rechtbanken/Rechtbank-Amsterdam/Nieuws/Paginas/Belastingdienst-Museumkaart.aspx https://translate.google.com/translate?sl=nl&tl=en&u=https:/... https://translate.google.com/translate?sl=nl&tl=en&u=https://www.belastingbelangen.nl/artikel/Parkeergegevens_controlemiddel_voor_de_fiscus https://translate.google.com/translate?sl=nl&tl=en&u=https:/...
pjc50 5y ago
Not really a problem incorporating into the UK: https://1office.co/blog/company-registration-non-uk-resident/ https://1office.co/blog/company-registration-non-uk-resident... Quite a few places are keen to attract overseas investment and will let you incorporate there. Conversely, having an overseas company with a bank account there (usually more tricky than the incorporation!) that you don't treat as your personal bank account shouldn't create problems.
- desertedisland 5y ago
  Creating a UK corporation takes ten minutes online and costs you USD $20 (and anyone can do it). But the compliance / Know Your Customer rules are very strict in the UK: it's almost impossible to get a bank account there unless you are legally resident there.
jokethrowaway 5y ago
If it's a one man operation, sure. If you're actually running a foreign business, that depends. Eg. I may start a company in Dubai, access the local talent and pay 0% corporate rate tax. Depending on the country I'm residing in, I may have more or less difficulties in proving things are actually run in Malta and not in the country where I am residing. Having employees, directors, shareholders meeting in the country could be helpful in doing that. I don't recommend doing it while resident in some countries that are particularly terrible for this kind of setup, such as Italy.
ronyfadel 5y ago
How does that work if you divide your time between multiple EU countries? How can they even know? The Schenghen area is borderless.
- tcldr 5y ago
  Most countries have a series of 'tests' to determine tax residency. I can't remember all the details, but a lot of it comes down to substantial ties. i.e. spouse, family, primary residence, secondary residences, number of days spent in the country, number of years away from country, etc. Countries solve the issue of 'competing' for an individuals tax residency through tax treaties which lay out the method in which the tests are applied and who would 'win' in a tie-break situation. This avoids the issue of double taxation but means you'll be subject to tax somewhere in any one year. That's likely where the 180 days figure comes from as it's one of the most broad and substantive tests to determine tax residency, but it's not the only metric used. The actual details are more nuanced. For example, if you give up tax residency in one country but then spend 179 days there each year to visit your spouse and kids – they'll probably claim you're tax resident.
- elric 5y ago
  I suspect you haven't had the pleasure of living in multiple EU countries. Schengen is borderless for travel. It is not paperless (or borderless) for living. Depending on where you live, you may have to register with local government. If you have a job somewhere, you'll have to register with tax authorities. You can pretend you're a "digital nomad", but as the saying goes: death & taxes! You'll end up paying your taxes, one way or another. "How can they even know" is the wrong question. "How can you think that you can get away with living places without paying taxes?" is a better question. There is a lot of small scale tax evasion going on, like registering a car in Luxemburgh while living in France. Or buying boatloads of tax free booze somewhere and forgetting to declare it. You can probably get away with that without too much effort. But dodging income tax altogether? Forget it. Property tax? Good luck. If anything, you'll end up paying more because of your ambiguous residency status. There are all kinds of treaties for cross-border workers and all kinds of ways to prevent getting taxed twice. But there aren't many ways to avoid getting taxed.
- 5y ago
flemhans 5y ago
What if the founders are located in different countries?

sebst 5y ago

Not sure why this is downvoted - this is the reality in most tax laws worldwide. https://en.wikipedia.org/wiki/Controlled_foreign_corporation https://en.wikipedia.org/wiki/Controlled_foreign_corporation

sparkling 5y ago
Not every jurisdiction has CFC rules. There are a few countries that simply don't care if you control a foreign corporation abroad. Now if you pay yourself a salary or dividends from that corporation, that might be taxable on a personal level, but that is another story.
- mbreese 5y ago
  Exactly. The question was about where to incorporate a company, not where to run it from. Just also be prepared to deal with the massive headache of a company is one jurisdiction and living (and paying taxes) in another. This can be a headache even if you live in the US if you’re split between states.
  - dariusj18 5y ago
    > be prepared to deal with the massive headache Which I would assume would be part of the calculations for any recommendation.
texasbigdata 5y ago
So XYZ parent company thats say mature and public, who hires a French CEO who lives primarily in France should be a French company? Why? What if the customers are in the US? Etc

iExploder 5y ago

from my experience there are no hard times to explain anything. if you have income from your activities from abroad you declare it and might have to tax it additionally, depending on whether the two countries have any treaties against dual taxation or not.

deleted 5y ago

[deleted]

0xfaded 5y ago

It is completely possible to have a parent corp in the US that owns a subsidiary in the country you live and employs you. Europe (post brexit) attracts approximately 1/10th the VC compared to the US. Valuations are also 1/10th on average, and sadly this is because E[value(European Startup)] is also 1/10th. Having a US parent parent makes it easier to raise from US investors and make the move once you can sort out visas.

eloff 5y ago
This is an important consideration for companies assuming to be fast growing billion dollar business (startups). Most business do not fit this criteria and should not seek venture capital.

exikyut 5y ago

(For people as badly math-challenged as myself: 365/2=182.5.)

conductr 5y ago

Out of curiosity. Do tax authorities tap into your travel/passport activities to determine where you are spending your time? Could you just have a local address listed as your residence? I know maybe bordering a slippery slope towards tax fraud or something, but theoretically, I'm curious how clued in the tax authorities are to where you actually reside vs where you say you reside.

texasbigdata 5y ago
At the individual state tax level (and for payroll tax) it can be a consideration.
pjc50 5y ago
Usually you want to do it the other way round and be "overseas" from the big western country with the normal tax rate while you pretend to be resident in the Cayman Islands.
hluska 5y ago
When I was very young, I did a four month internship with the Canada Revenue Agency. I learned three things: 1.) Don’t even think about screwing with tax authorities. 2.) See #1. 3.) See #1.
- martin_a 5y ago
  Same goes for Germany if you're not wealthy. You can do lots of things, but don't try to screw with the tax office.
rgj 5y ago
Here in the Netherlands the tax authorities go a long way. They have demanded data from parking apps and even from a museum subscription. Judges have ruled that they are entitled to do so and use this information in court. https://translate.google.com/translate?sl=nl&tl=en&u=https://www.rechtspraak.nl/Organisatie-en-contact/Organisatie/Rechtbanken/Rechtbank-Amsterdam/Nieuws/Paginas/Belastingdienst-Museumkaart.aspx https://translate.google.com/translate?sl=nl&tl=en&u=https:/... https://translate.google.com/translate?sl=nl&tl=en&u=https://www.belastingbelangen.nl/artikel/Parkeergegevens_controlemiddel_voor_de_fiscus https://translate.google.com/translate?sl=nl&tl=en&u=https:/...

pjc50 5y ago

Not really a problem incorporating into the UK: https://1office.co/blog/company-registration-non-uk-resident/ https://1office.co/blog/company-registration-non-uk-resident... Quite a few places are keen to attract overseas investment and will let you incorporate there. Conversely, having an overseas company with a bank account there (usually more tricky than the incorporation!) that you don't treat as your personal bank account shouldn't create problems.

desertedisland 5y ago
Creating a UK corporation takes ten minutes online and costs you USD $20 (and anyone can do it). But the compliance / Know Your Customer rules are very strict in the UK: it's almost impossible to get a bank account there unless you are legally resident there.

jokethrowaway 5y ago

If it's a one man operation, sure. If you're actually running a foreign business, that depends. Eg. I may start a company in Dubai, access the local talent and pay 0% corporate rate tax. Depending on the country I'm residing in, I may have more or less difficulties in proving things are actually run in Malta and not in the country where I am residing. Having employees, directors, shareholders meeting in the country could be helpful in doing that. I don't recommend doing it while resident in some countries that are particularly terrible for this kind of setup, such as Italy.

ronyfadel 5y ago

How does that work if you divide your time between multiple EU countries? How can they even know? The Schenghen area is borderless.

tcldr 5y ago
Most countries have a series of 'tests' to determine tax residency. I can't remember all the details, but a lot of it comes down to substantial ties. i.e. spouse, family, primary residence, secondary residences, number of days spent in the country, number of years away from country, etc. Countries solve the issue of 'competing' for an individuals tax residency through tax treaties which lay out the method in which the tests are applied and who would 'win' in a tie-break situation. This avoids the issue of double taxation but means you'll be subject to tax somewhere in any one year. That's likely where the 180 days figure comes from as it's one of the most broad and substantive tests to determine tax residency, but it's not the only metric used. The actual details are more nuanced. For example, if you give up tax residency in one country but then spend 179 days there each year to visit your spouse and kids – they'll probably claim you're tax resident.
elric 5y ago
I suspect you haven't had the pleasure of living in multiple EU countries. Schengen is borderless for travel. It is not paperless (or borderless) for living. Depending on where you live, you may have to register with local government. If you have a job somewhere, you'll have to register with tax authorities. You can pretend you're a "digital nomad", but as the saying goes: death & taxes! You'll end up paying your taxes, one way or another. "How can they even know" is the wrong question. "How can you think that you can get away with living places without paying taxes?" is a better question. There is a lot of small scale tax evasion going on, like registering a car in Luxemburgh while living in France. Or buying boatloads of tax free booze somewhere and forgetting to declare it. You can probably get away with that without too much effort. But dodging income tax altogether? Forget it. Property tax? Good luck. If anything, you'll end up paying more because of your ambiguous residency status. There are all kinds of treaties for cross-border workers and all kinds of ways to prevent getting taxed twice. But there aren't many ways to avoid getting taxed.
5y ago

flemhans 5y ago

What if the founders are located in different countries?