Where should I incorporate as an American expatriate?


2

I am a U.S. citizen who is about to move to Mexico for the next 2-4 years. Following that, I expect to move to Italy more or less permanently. So my question is, is there any advantage/disadvantage to incorporating my business offshore (from the U.S.)? I don't have any U.S. employees. The contractors that work for me are in five different countries. I was thinking about Seychelles. What do you think?

Incorporation Tax Offshore

asked Feb 27 '11 at 07:47
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Kenneth Vogt
2,917 points

3 Answers


3

If you are living in a Country of the European Community longer than 180 days you normally have to pay taxes on your worldwide income. But you need to inform yourself about this issue.

Furthermore, you should have a bit of a clue of the tax and other legal issues in the Country you are going to incorporate your business. As well as which issues or obligations may arise from your offshore incorporation. This means, if you are required to register it in the country you are living in.

For example, if you live in Germany and incorporate in UK, you need to register a subsidiary in Germany to use that business in Germany. As of this, you have to recognize 2 legal systems, the one from Germany and one from UK. You will need to fulfill the requirements of both legal systems.

It's not a trivial decision, you have to recognize many different topics, so take your time and get as much information as possible before you take the next step.

Hope the above helps a bit. Good Luck with your Ventures.

answered Apr 16 '11 at 03:59
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Abenetis
371 points

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Neither Italy nor Mexico are easy places to manage from an administrative standpoint. I suspect there might be corporate tax advantages to incorporating in the Seychelles, but you'd probably end up having to set up subsidiaries in countries where you plan to employ people and managing that from a remote location sounds like a nightmare.

I have no idea what kind of business you are trying to build and how you are planning to exit it some day, but few countries are as sophisticated, streamlined and business-friendly as the U.S. in a whole host of areas including employment terms, stock options, accounting principles,etc.

answered Feb 28 '11 at 07:58
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Zippy
871 points
  • The administration issue is not a problem as I have run this business for several years and my personal location has been irrelevant as long as I have internet access. Employing international contractors does not require setting up international subsidiaries. – Kenneth Vogt 8 years ago
  • So why not incorporate in a place with non-existent business taxes and a streamlined court system (like the BVI)? If you don't ever plan on returning to the US, then repatriating your capital gains shouldn't be a concern. – Tbaums 8 years ago

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It depends a lot on what business you're in. I, for example, am close to starting a business that technically breaks the law (website terms of service violations) in some countries, but in other countries my business practices are actually protected as freedom of speech. By being protected by the law the websites in question could try to block my access, but they can't go to court and sue me. So that would be something to consider.

Also, if your business will be heavily intellectual property dependent then you would want to incorporate in a country that has very strong laws protecting your IP from infringement. In this case incorporating in the USA would have strong benefits vs incorporating in someplace like China (if it's even possible).

answered Feb 28 '11 at 15:17
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Kort Pleco
891 points
  • I am not involved in any activity that any western country would label illegal. As far as IP goes, I don't find U.S. laws to be any protection from the places that harbor IP scofflaws (China, Pakistan, Eastern Europe). – Kenneth Vogt 8 years ago
  • AFAIK, IP laws usually come into play in the specific country where royalties are being received. i.e. royalty income from U.S. source is taxed in the U.S. and royalty income from Country X source is taxed in Country X. – Jberger 5 years ago

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