In which country I should open a company for my online business?

[Vilmantas]

Hi everyone,
I'm thinking of a project that will connect customers with service providers all over the world and will work in a similar way like Airbnb. I'm EU national living in Mexico. My employees will be mostly freelancers from all over the world too. So I don't have to open business in my country of residence, I can do it anywhere. I found some information online that people recommends Hong Kong, Singapore, Panama and some other countries. Do you have any idea which country would be the best in my case?
Thanks.

[singhabhishek251]

I do not see any country specific issue here because your work is online and your employee will be also freelancers, So you can operate from anywhere, the home country will be always a best choice because of the legal or tax issues to solve them easily.

[Harold Mansfield]

It doesn't matter. Open it where you live. When you get to be a multi national corporation with millions in tax liabilities, then you can start thinking about where to headquarter for tax purposes. You're one guy. Why open a small business in a country where you don't know the laws? Seems like that's just asking for things to go wrong.

[Vilmantas]

Thank you for your reply. I live in Mexico because my partner got a good job here and we decided to move here. I am investigating tax system here now and as far as I understand, only income tax here is 28 percent and I'm looking for cheaper options.

[Harold Mansfield]

Thank you for your reply. I live in Mexico because my partner got a good job here and we decided to move here. I am investigating tax system here now and as far as I understand, only income tax here is 28 percent and I'm looking for cheaper options.

To open a business using another country as your headquarters, you have to have residency, a % of operations or at least an address in that country. For some countries that means your website ( if that's your core business) needs to be hosted there. Like people who host in The Netherlands or Costa Rica for instance to side step certain laws in certain countries.

In most advanced countries that still doesn't absolve you of paying taxes where ever you are living, so you're now paying income tax in one country and corporate tax in another. That may make sense for some people, but I don't see it making sense for a one website, first time small business owner, start up.

You're obviously a small organization, or else you'd have a legal department taking care of this already.

I still say that you are over complicating it. Between the EU where you are legal resident, and Mexico where you are living it's not a huge tax burden much different from the U.S. There are other things that you can do to limit your tax burden in the jurisdictions that you already know. Especially for a start up. I'd investigate the full picture first. The rate listed isn't always what it's cracked up to be. In the U.S. it's 30%, but no corporation is paying that. I'll bet the EU has similar dodges.

The bigger picture here is that you're talking about headquartering a business which is a website in countries where you don't know the other business laws and may or may not recognize your intellectual property rights. That would concern me more than a few tax points.

Personally, I'd stick with the laws that you know, get the business going and let's see if you even make any money, and if you're making so much that you need to headquarter in Greenland, then do it. If you're making so little that 3%-5% is the difference between living and dying, then it's not worth the effort because you'll have spent more than that on legal fees and expenses to run it offshore.

The easy answer is if you feel you really need to do this just go to an international tax attorney and ask him, and then hire him to keep the thing legal and avoid catastrophe.

[David Hunter]

Necker Island.

[Harold Mansfield]

Necker Island.

Doesn't he own that island?

[David Hunter]

Doesn't he own that island?

Yeah! I saw he paid like $180,000 for it back in the 70s. Wish it was mine.

[Vilmantas]

I get your point.
Thank you very much for taking your time to advise me. That was very useful.

[Vilmantas]

I get your point.
Thank you very much for taking your time to advise me. That was very useful.