European Warriors: Better incorporate in USA or Europe?

17 replies
I am wondering if as an European its better to incorporate a business in the USA (Delaware, Nevada) or just stay with your business in Europe.

I have read in a topic that its better to stay in Europe even if you sell most of your stuff to USA because you don't have to pay sales taxes on your digital products and getting sued is not as easy, as if you have your LLC is in the USA.

I asked an european attorney but he does not know about incorporating in the USA and how it works with taxes.

What are fellow European Warriors doing? Building their business in the USA or Europe? Would really appreciate any advice you can give me! (could not find anything about this on the internet)
#europe #european #incorporate #llc #usa #warriors
  • Profile picture of the author Thomas
    Since Europe is a continent, and not a country, it will be easier to answer if you tell which of the 50, or so, European countries you're actually in! Even though the E.U. makes the business regulations of 27 of those broadly similar, each nations laws (even within the E.U.) are still sufficiently different to make a generalised answer pretty much impossible.

    If you're worried about sales taxes, have a look at Clickbank: You sell your product directly to them and they, in turn, sell it to the final customer and add any applicable sales taxes (for the U.S.) and even add the appropriate VAT rate (for EU customers).

    For the legal stuff, Europeans tend to be far less litigious than the Yanks. That said, don't count on the fact that you're in Europe to save you if you really screw things up.

    Tommy.
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  • Profile picture of the author Adrian Cooper
    Originally Posted by enigma2k View Post

    I am wondering if as an European its better to incorporate a business in the USA (Delaware, Nevada) or just stay with your business in Europe.

    I have read in a topic that its better to stay in Europe even if you sell most of your stuff to USA because you don't have to pay sales taxes on your digital products and getting sued is not as easy, as if you have your LLC is in the USA.

    I asked an european attorney but he does not know about incorporating in the USA and how it works with taxes.

    What are fellow European Warriors doing? Building their business in the USA or Europe? Would really appreciate any advice you can give me! (could not find anything about this on the internet)
    Stay away from the USA for incorporation.

    The best place is an offshore location with 0% tax, ideally with anonymity as well.

    Keep in mind though that you will need to get a bank account in an area where you can get a PayPal account, bank checks by post etc.
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  • Profile picture of the author Marian Berghes
    One of my biggest "dreams" is to move to the US and make a life there. And I was thinking that I have to move my biz with me...but if I can make the business location in my country or some other one then I guess ill be good.

    If not, I don;t really mind making my business us based.

    Until I see some1 that actually did incorporate in another country and they can show me some big benefits to that, I can't make a decision.
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  • Profile picture of the author Tyrus Antas
    I wouldn't incorporate in the US unless I was planning to move there or sell my business later on which could make it easier if you're selling to Americans.

    There isn't much advantage to incorporate there from a tax standpoint either. Corporate taxes in the US are some of the highest in the world.

    Tyrus
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  • Profile picture of the author The Pension Guy
    Recently, with an off-line business we went through a lot of options with some knowledgeable people (i.e. lawyers, accountants etc.) regarding incorporation. The general opinion was that incorporating it where you live is the most comfortable option. On the other hand, for safeguarding your assets from litigious people - the best option is an off-shore corporation (with bank account and everything there, as it was stated above).
    So, I don't see why anybody not living in US would want to incorporate their business there... (sorry, neighbours, but you are known as the most litigious kind of people in the world! )
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  • Profile picture of the author Peter Adamson
    Incorporating in the US for a non-US business seems overkill. For an online business there is simply no advantage to doing this. If you are looking for a tax advantage, offshore is the way to go, but do it right, and do it legally. This involves significant consultancy fees, so you will want to have a solid online income to protect before you go this route.

    If you are in the EU, the UK is still the most favourable tax jurisdiction. I ran a UK limited company for about ten years while living in France. I did not save on personal income tax, because the French topped up if the UK tax was lower than the French rate. But there were enormous savings on indirect taxes (such as social contributions) that the Euros are famous for. The UK just doesn't have any.

    You can get an off-the-shelf company in the UK for £100. The equivalent in France, Germany, Italy etc would cost a fortune, with ongoing fixed overhead to kill any young business. Seriously consider a UK company.
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    • Profile picture of the author Thomas
      Originally Posted by Eleazar View Post

      If you are in the EU, the UK is still the most favourable tax jurisdiction. I ran a UK limited company for about ten years while living in France. I did not save on personal income tax, because the French topped up if the UK tax was lower than the French rate. But there were enormous savings on indirect taxes (such as social contributions) that the Euros are famous for. The UK just doesn't have any.

      You can get an off-the-shelf company in the UK for £100. The equivalent in France, Germany, Italy etc would cost a fortune, with ongoing fixed overhead to kill any young business. Seriously consider a UK company.
      For tax purposes, I would suggest that Ireland is a better choice: holding companies (for foreign residents) only cost a few hundred euros to set up (the paper-work is fairly simple, so you could even do it yourself) and the Irish corporate tax rate is only 12.5%, which is (much) less than half the UK rate. In fact, I think it's one of the lowest rates in the developed world.

      And, if you live in the E.U., I'm pretty sure you can move just about everything else (minus corporation tax) back to your own country, which might be better if income tax there is lower than in Ireland (which has 20% on the first €36,400 and 41% on the balance) or, if you do pay income tax in Ireland, it's generally off-set against tax in your own country anyway, through a series of Double Taxation Agreements. (Actually, I'm not certain but that might be the case even outside the E.U. too.)

      Just some thoughs to confuse the issue a bit more...

      Tommy.
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  • Profile picture of the author Adrian Cooper
    Lawyers always play it safe - it isn't their money or business.

    Incorporate and bank offshore -again making sure PayPal works in that location, and enjoy all the benefits. A corporation is a legal entity and not obliged to pay tax to any other jurisdiction.
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  • Profile picture of the author DavidO
    Keep your business out of the U.S.! They have the most complex tax and corporate laws in the world. I've owned businesses in the U.S. and the U.K. and found the laws much simpler in the U.K. and the overall tax rate about the same.

    If you want to go low-tax you can stay within the EU by getting a company in Cypress. But I wouldn't bother until you get into serious money.
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  • Go offshore man. Now a days there are companies who set the whole thing (offshore biz + offshore bank account) for a small fee within 2 or 3 weeks.
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  • Profile picture of the author Adrian Cooper
    The offshore UK islands are now at 0% tax - you just pay around £350 per year in fees and that's it. Plenty of banks to choose from. You need to file an annual return.

    Don't tell the banks you do IM - they won't want to know. Make up something that is respectable but do not mislead them.
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  • Profile picture of the author enigma2k
    which offshore would you guys recommend? Would be great if its easy to get a bank account.
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  • Profile picture of the author clarke1000
    I'm very interested in offshore marketing but totally green - does anyone have any suggestions as to where to start?
    Clarke
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  • Profile picture of the author enigma2k
    whats the best place to incorporate? I always thought I should incorporate in Delaware or Nevada but it seems that there are better places...
    Whats important for me: low taxes, able to get a bank account easily and able to get a payment processor for credit cards.
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  • Profile picture of the author Marian Berghes
    take a look at this:

    Tax Free Status

    There are no taxes on income or profits, capital, wealth or capital gains. The revenues of the islands are to much extent derived from indirect taxes such as import duties and stamp duty. One of the most important features is that there never have been any taxes.
    Companies incorporated in the Cayman Islands enjoy the same tax free status as individuals, regardless of nationality or ownership.
    The Government has encouraged investment by the deliberate introduction of laws and development of the financial sector. The policy of the government is aimed at the continuation of the development of this aspect of the Islands' economy.
    The Cayman Islands dollar is the official currency in the Cayman Islands, American, British and Canadian currencies are also readily accepted. There is no restriction on any company maintaining accounts in any currency either inside or outside the Islands.
    Might be better to move your accounts and business there?

    It kinda seems too good to be true...you mean I can make my business "headquarters" there and loose the 50%+ taxes im paying now?
    You could double your income just by incorporating in that country.

    It also says that you have to set up a registered office for your business in the islands but you are NOT allowed to make the islands your home. You can't move there with your family while still getting the same benefits for your business.
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    • Profile picture of the author enigma2k
      Originally Posted by Marian Berghes View Post

      take a look at this:



      Might be better to move your accounts and business there?

      It kinda seems too good to be true...you mean I can make my business "headquarters" there and loose the 50%+ taxes im paying now?
      You could double your income just by incorporating in that country.

      It also says that you have to set up a registered office for your business in the islands but you are NOT allowed to make the islands your home. You can't move there with your family while still getting the same benefits for your business.
      but if you cant move there, you will still have to pay taxes on your income. you always pay taxes on the income where you live - no matter if you have your business on the cayman islands.
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