Hello,
I've split my latest post off to this new thread as the circumstances and question and topic completely changed from the previous thread and now I need to incorporate a new company for my business.
I live in Malaysia, I have a demonstrably legitimate service-based business, my Customers are mostly Americans, and my Suppliers are mostly in Europe. I charge my American customers in EUR, pay my European suppliers in EUR, and the difference are my company's earnings. I am currently in the very early stages of a large expansion where I will expect to do approximately 2 million EUR in sales per year once the expansion is finished, and my new company will therefore need access to reputable payment services like Stripe/Wise/etc.
I need to figure out the ideal corporate setup for my situation to be able to charge US customers via Credit Card and pay my European suppliers via SEPA directly, all with no corporate tax since I don't need to pay income tax on this foreign income here in Malaysia since it has a Territorial Tax System.
From my brief research and comments here, the options that sound the simplest and most cost-effective while keeping my structure tax-free but with full access to all payment services would be either a UK LLP, a Hong Kong Limited Company, or perhaps a JAFZA or RAK company in the UAE.
All 3 jurisdictions (UK, HK, UAE) seem to be tax-free for my situation and have full access to all the big players in the payment services industry.
The advantage of the UK LLP seems to be that the UK still has access to SEPA, although perhaps SEPA payments are still possible for companies outside of Europe via another payment service, I'm not sure. The disadvantage of the UK LLP seems to be that I would have to apparently pay taxes on services in the UK or to UK customers, and my expansion plans include the UK. I suppose I would have the option of running only the UK operations manually via my current Belize IBC using Payoneer to avoid that, but I would have to think about that and see if it's worth it the hassle (I suppose that will depend on whether I can make SEPA transfers using a company outside of Europe or not).
The advantage of the HK Limited Company seems to be that it would be completely tax-free since I do not anticipate HK customers or providing services in HK. The disadvantage is that HK has been placed on the EU grey list like Malaysia has, and so it may lead to changes to its Territorial Tax System next year. That being said, it does not seem like "active income" will be effected by such those changes and only "passive income" like royalties and interest will be affected, so these changes may not impact me, but it's something I have to keep in mind. With an HK Limited Company I would need to find a service that would allow SEPA transfers to my European suppliers. I'm not sure if something like Wise offers that to companies outside of Europe, but if such services do, then wouldn't this be the best option since it would fulfill all of my criteria?
I'm not too familiar with JAFZA or RAK companies but I do know they are tax-free and Stripe offers their services to UAE, and apparently starting from last June "Foreigners opening a company in the United Arab Emirates will no longer need an Emirati shareholder or agent under changes to UAE company law" which is a positive development. But I don't know what advantage such companies would have over something like an HK company.
I'm not sure if there are any other jurisdictions for me to consider. I'm averse to incorporating in the US (unless there is some huge advantage to doing so) because I've heard and read about horror stories once the IRS has its tentacles around you considering how complex US tax law is (for example, I dread a change to their tax law that I don't become aware of that then leads to severe penalties and interest or worse).
So considering all of the above, where do you recommend I incorporate and why?
Thank you all for your continued help, and I hope this discussion helps others in a similar situation with US customers and European suppliers that can be managed from anywhere.
I've split my latest post off to this new thread as the circumstances and question and topic completely changed from the previous thread and now I need to incorporate a new company for my business.
I live in Malaysia, I have a demonstrably legitimate service-based business, my Customers are mostly Americans, and my Suppliers are mostly in Europe. I charge my American customers in EUR, pay my European suppliers in EUR, and the difference are my company's earnings. I am currently in the very early stages of a large expansion where I will expect to do approximately 2 million EUR in sales per year once the expansion is finished, and my new company will therefore need access to reputable payment services like Stripe/Wise/etc.
I need to figure out the ideal corporate setup for my situation to be able to charge US customers via Credit Card and pay my European suppliers via SEPA directly, all with no corporate tax since I don't need to pay income tax on this foreign income here in Malaysia since it has a Territorial Tax System.
From my brief research and comments here, the options that sound the simplest and most cost-effective while keeping my structure tax-free but with full access to all payment services would be either a UK LLP, a Hong Kong Limited Company, or perhaps a JAFZA or RAK company in the UAE.
All 3 jurisdictions (UK, HK, UAE) seem to be tax-free for my situation and have full access to all the big players in the payment services industry.
The advantage of the UK LLP seems to be that the UK still has access to SEPA, although perhaps SEPA payments are still possible for companies outside of Europe via another payment service, I'm not sure. The disadvantage of the UK LLP seems to be that I would have to apparently pay taxes on services in the UK or to UK customers, and my expansion plans include the UK. I suppose I would have the option of running only the UK operations manually via my current Belize IBC using Payoneer to avoid that, but I would have to think about that and see if it's worth it the hassle (I suppose that will depend on whether I can make SEPA transfers using a company outside of Europe or not).
The advantage of the HK Limited Company seems to be that it would be completely tax-free since I do not anticipate HK customers or providing services in HK. The disadvantage is that HK has been placed on the EU grey list like Malaysia has, and so it may lead to changes to its Territorial Tax System next year. That being said, it does not seem like "active income" will be effected by such those changes and only "passive income" like royalties and interest will be affected, so these changes may not impact me, but it's something I have to keep in mind. With an HK Limited Company I would need to find a service that would allow SEPA transfers to my European suppliers. I'm not sure if something like Wise offers that to companies outside of Europe, but if such services do, then wouldn't this be the best option since it would fulfill all of my criteria?
I'm not too familiar with JAFZA or RAK companies but I do know they are tax-free and Stripe offers their services to UAE, and apparently starting from last June "Foreigners opening a company in the United Arab Emirates will no longer need an Emirati shareholder or agent under changes to UAE company law" which is a positive development. But I don't know what advantage such companies would have over something like an HK company.
I'm not sure if there are any other jurisdictions for me to consider. I'm averse to incorporating in the US (unless there is some huge advantage to doing so) because I've heard and read about horror stories once the IRS has its tentacles around you considering how complex US tax law is (for example, I dread a change to their tax law that I don't become aware of that then leads to severe penalties and interest or worse).
So considering all of the above, where do you recommend I incorporate and why?
Thank you all for your continued help, and I hope this discussion helps others in a similar situation with US customers and European suppliers that can be managed from anywhere.
