Spanish resident to set up an online SaaS startup with a US-based cofounder. Where?

[jamescameron]

My cofounder and I would like to incorporate our SaaS business, since it's getting traction.

I'm a Spanish resident and he is an US-resident.

Our customer base is global, with the majority of being US based.

We thought of Delaware through Stripe Atlas, however, we are unclear of the running costs. We don't have great revenue at the moment, as we are in launch phase, so ideally we wouldn't want to be drowning in admin costs.

Is there an alternative to Delaware for a fast and easy setup? Most importantly, I wouldn't want Spain (or US) to claim that the company is local. After all, we'll both be 50% shareholders and both Directors.

Estonia? The UAE? BVI?

Thanks in advance!

 

[Sols]

Estonia, UAE, and BVI cost more and make no sense in this case.

The company risks being tax resident in both Spanish and American, so the easiest is probably to start a US LLC and focus on ensuring that it's an American company only. The LLC pays no corporate tax in the US and profits become personal income for you and your US partner, so you both have to pay personal income tax on the profits.

There is a risk that if you upset the Spanish tax authorities, they consider the US LLC to be a corporation and wholly or partly taxable in Spain. You'd need to bring in an attorney to fight this, which should be doable if the company has an actual presence in the US.

If you plan to raise VC money, then a C Corp would be better than LLC.

 

[uplana]

The LLC pays no corporate tax in the US and profits become personal income for you and your US partner, so you both have to pay personal income tax on the profits.

Sounds to be a universal solution / setup for most small guys around here looking for reducing their taxes at some grade.

I believe if you can avoid corporate taxes and only have to pay personal income tax, you have a tax benefit. Because most often you have to pay tax in the company 20 - 35% and then you have to pay income tax for the rest you pay yourself.