Question What's the best place to incorporate for my SaaS?

[KKC]

Hello

I've been working for a year on a SaaS application that helps individuals and companies to get better insights on their social media activities.
I'm looking to launch the application in around 6 months (I'm in the Beta-Testing stage and Populating the database),
I've been looking around for a solution to incorporate the company but after some research, I found out that I can get in some troubles in the future with some big companies like Facebook for scrapping their data,
What I've done is set up the SaaS to look 100% legit with a subscription-based system, and I will activate some advanced hidden features (Scrapping features which are Grey services) to only some of the clients after contacting them and checking their businesses,
I would like to know my options to get incorporated without the need to travel outside of my country (I live outside of the EU & US).
Also, it's going to be great if I can incorporate it into a jurisdiction accepted by Stripe.

So my priorities will be:

• Privacy and no personal liability in case I got a lawsuit from a big company.
• Low Taxes (Preferably).
• Access to a good banking system.
• Accepted by PayPal & preferably Stripe.

As I said, I still have 6 months to figure out a good setup, so any help will be appreciated.

Thank you.

 

[Sols]

Singapore is a pretty good match. Banking can be challenging if you don't have any local ties (customers, suppliers, office/staff), but if you can deposit or quickly grow to at least 50,000 – 100,000 SGD, banks like OCBC, UOB, and DBS might be open to taking you on.

2019—2020, I would've said Hong Kong and it might still be an option, but be mindful of the political situation.

Labuan in Malaysia might be worth taking a look at but I don't think it's any better than Singapore in your case.

Cyprus and Malta are good choices but especially Malta can be a little complicated. You also have an immediate VAT concern if you incorporate in EU, whereas for an overseas company with no substance in the EU, it's easier to get away without worrying about VAT for the foreseeable future.

Whatever you choose, make sure your structure is compliant with local tax laws. Tax residency and Permanent Establishments are concept you will want to research. Best is to speak with a local tax adviser. You may have valid reasons for wanting to incorporate a foreign company but unless you live in a tax haven, you are probably not going to be able to save on taxes.

 

[KKC]

Singapore is a pretty good match. Banking can be challenging if you don't have any local ties (customers, suppliers, office/staff), but if you can deposit or quickly grow to at least 50,000 – 100,000 SGD, banks like OCBC, UOB, and DBS might be open to taking you on.

2019—2020, I would've said Hong Kong and it might still be an option, but be mindful of the political situation.

Labuan in Malaysia might be worth taking a look at but I don't think it's any better than Singapore in your case.

Cyprus and Malta are good choices but especially Malta can be a little complicated. You also have an immediate VAT concern if you incorporate in EU, whereas for an overseas company with no substance in the EU, it's easier to get away without worrying about VAT for the foreseeable future.

Whatever you choose, make sure your structure is compliant with local tax laws. Tax residency and Permanent Establishments are concept you will want to research. Best is to speak with a local tax adviser. You may have valid reasons for wanting to incorporate a foreign company but unless you live in a tax haven, you are probably not going to be able to save on taxes.

Thank you for the suggestion, I will do some research about Singapore,
Can you tell me about the liability of a Singapore company in case it got sued by a big company?

 

[Sols]

A company which successfully sues your company in Singapore or gets a foreign court order to apply also in Singapore will be able to lay claim to the company's assets.

As long as you don't do anything criminal and as long as the company is providing the services, you're personally safe. Your personal liability is limited to what you have put into the company.

This goes for pretty much all of the popular and commonly used corporate entities across the world and isn't unique to Singapore.

If you're looking for a specific case and whether you could be sued for that in Singapore, I'd suggest speaking with a Singaporean lawyer. But it's one of the world's largest hubs for corporate services and technology, so chances are the laws will be aligned with your business requirements (assuming they are legal).

 

[KKC]

A company which successfully sues your company in Singapore or gets a foreign court order to apply also in Singapore will be able to lay claim to the company's assets.

As long as you don't do anything criminal and as long as the company is providing the services, you're personally safe. Your personal liability is limited to what you have put into the company.

This goes for pretty much all of the popular and commonly used corporate entities across the world and isn't unique to Singapore.

If you're looking for a specific case and whether you could be sued for that in Singapore, I'd suggest speaking with a Singaporean lawyer. But it's one of the world's largest hubs for corporate services and technology, so chances are the laws will be aligned with your business requirements (assuming they are legal).

As I described in the thread, the only problem I can face is that a big company like Facebook or Instagram... will sue for scrapping their user's data (I've tried to minimize this risk by only offering this service to specific clients).
Also, I'm living in a country where I don't pay taxes on foreign earnings (The case of having a company abroad and getting a salary or receiving payments from that company), so my main concern about taxes will be corporate taxes in the country where I will incorporate.

 

[Zaki]

Singapore is a pretty good match. Banking can be challenging if you don't have any local ties (customers, suppliers, office/staff), but if you can deposit or quickly grow to at least 50,000 – 100,000 SGD, banks like OCBC, UOB, and DBS might be open to taking you on.

2019—2020, I would've said Hong Kong and it might still be an option, but be mindful of the political situation.

Labuan in Malaysia might be worth taking a look at but I don't think it's any better than Singapore in your case.

Cyprus and Malta are good choices but especially Malta can be a little complicated. You also have an immediate VAT concern if you incorporate in EU, whereas for an overseas company with no substance in the EU, it's easier to get away without worrying about VAT for the foreseeable future.

Whatever you choose, make sure your structure is compliant with local tax laws. Tax residency and Permanent Establishments are concept you will want to research. Best is to speak with a local tax adviser. You may have valid reasons for wanting to incorporate a foreign company but unless you live in a tax haven, you are probably not going to be able to save on taxes.

What about Romania ? I mean if you incorporate in EU Romania is a good choice as well isn't ?

 

[Sols]

What about Romania ? I mean if you incorporate in EU Romania is a good choice as well isn't ?

I never see Romania used. I know it looks great on paper but people, for different reasons, almost never actually end up incorporating there. Malta and Cyprus (and others like Ireland, Estonia) are just so much more well-established and understood, plus English is far better spoken which makes it easier for foreigners to do business there.

 

[KKC]

What about Romania ? I mean if you incorporate in EU Romania is a good choice as well isn't ?

I don't have any problem incorporating in the EU, but what bothers me in the EU is high taxes, the complicated accounting proccess, and the privacy issues I may face.

I never see Romania used. I know it looks great on paper but people, for different reasons, almost never actually end up incorporating there. Malta and Cyprus (and others like Ireland, Estonia) are just so much more well-established and understood, plus English is far better spoken which makes it easier for foreigners to do business there.

Thank you for the input,
I'm still waiting for members' suggestions.

 

[KKC]

I've done some research about the privacy part, and I read some articles about Nevis,
I know it's not supported by Stripe, but 2checkout is supported,
And I read that it's possible to get a bank account for the company remotely,
What do you think about it?

 

[Sols]

First, ask yourself: How many SAAS businesses do you know that are operating under Nevis companies?

Then, ask yourself: Why is it zero?

Payment processing for offshore companies such as Nevis is difficult, expensive, and most of all fragile. What do you do if 2Checkout throws you out? There are options available, even to offshore companies, but they cost much, much more.

Banking is very difficult, but not impossible. The banking you can get will be unreliable, slow, and expensive unless you settle for an EMI in which case you may find yourself limited to SEPA, which can restrict your ability to receive settlements from payment processors.

Just look around this forum for other people who have problems with payment processing and banking for Nevis and other such jurisdictions.

None of this is impossible to solve (if you have the time/money to solve it), but you're adding a lot of overhead (or risk of overhead) for unclear benefit compared to more reputable options like Singapore, Hong Kong, Labuan, EU, and possibly UAE.

 

[KKC]

First, ask yourself: How many SAAS businesses do you know that are operating under Nevis companies?

Then, ask yourself: Why is it zero?

Payment processing for offshore companies such as Nevis is difficult, expensive, and most of all fragile. What do you do if 2Checkout throws you out? There are options available, even to offshore companies, but they cost much, much more.

Banking is very difficult, but not impossible. The banking you can get will be unreliable, slow, and expensive unless you settle for an EMI in which case you may find yourself limited to SEPA, which can restrict your ability to receive settlements from payment processors.

Just look around this forum for other people who have problems with payment processing and banking for Nevis and other such jurisdictions.

None of this is impossible to solve (if you have the time/money to solve it), but you're adding a lot of overhead (or risk of overhead) for unclear benefit compared to more reputable options like Singapore, Hong Kong, Labuan, EU, and possibly UAE.

Thank you for the clarification,
My only concern is Privacy and shielding the business & myself of course because I saw many businesses received cease & desist letters from Facebook for doing similar things to what I'm doing.
That's why I'm looking for a safe path.

 

[Sols]

A cease and desist letter is a very formal, threatening, and intimidating letter written by a lawyer who charges a lot of money to draft and send it. But unless it's issued by a court or authority, that's all it is: just a letter.

As long as there is a postal system or courier network, cease and desists letters can be sent to any company anywhere. They can also be delivered electronically.

To have any binding impact, they would have to follow through on the threat and actually sue you. If your enemy is Facebook, hiding in Saint Kitts and Nevis is marginally better than Singapore. The courts in Singapore are more likely to cooperative and hear Facebook, whereas courts in Nevis are known for requiring a large deposit just to listen to a foreign adversary's arguments.

If you want to go down that path, go for Nevis, Samoa, Cook Islands, Seychelles, Panama, Antigua, Liberia, or other difficult jurisdictions like it where courts are slow and/or uncooperative.

You can solve some of the payment processing headaches by also setting up a payment agent company in EU or Singapore and process payments through it. Facebook could still go after that company, but I'm not sure on what grounds and whether that would go anywhere. It really depends on the severity of your infringements and their dedication.

 

[KKC]

A cease and desist letter is a very formal, threatening, and intimidating letter written by a lawyer who charges a lot of money to draft and send it. But unless it's issued by a court or authority, that's all it is: just a letter.

As long as there is a postal system or courier network, cease and desists letters can be sent to any company anywhere. They can also be delivered electronically.

To have any binding impact, they would have to follow through on the threat and actually sue you. If your enemy is Facebook, hiding in Saint Kitts and Nevis is marginally better than Singapore. The courts in Singapore are more likely to cooperative and hear Facebook, whereas courts in Nevis are known for requiring a large deposit just to listen to a foreign adversary's arguments.

If you want to go down that path, go for Nevis, Samoa, Cook Islands, Seychelles, Panama, Antigua, Liberia, or other difficult jurisdictions like it where courts are slow and/or uncooperative.

You can solve some of the payment processing headaches by also setting up a payment agent company in EU or Singapore and process payments through it. Facebook could still go after that company, but I'm not sure on what grounds and whether that would go anywhere. It really depends on the severity of your infringements and their dedication.

That's really helping, thank you,
Can you tell me how to set up a payment agent company in the EU or UK?
Is that company pays taxes for every payment received or how it's structured?

Thank you.

 

[Sols]

Can you tell me how to set up a payment agent company in the EU or UK?

It's a subsidiary company which is (directly or indirectly) 100% owned by the offshore parent company. A payment agency agreement is set up between the two companies. You'll need an experienced adviser/lawyer to draft this agreement for you to make sure it's air tight.

Is that company pays taxes for every payment received or how it's structured?

The payment agent keeps a small percentage and pays tax on that. The percentage it keeps needs to be in line with applicable transfer pricing regulations. This is something a lawyer can help with.

 

[KKC]

It's a subsidiary company which is (directly or indirectly) 100% owned by the offshore parent company. A payment agency agreement is set up between the two companies. You'll need an experienced adviser/lawyer to draft this agreement for you to make sure it's air tight.


The payment agent keeps a small percentage and pays tax on that. The percentage it keeps needs to be in line with applicable transfer pricing regulations. This is something a lawyer can help with.

Is it possible to suggest the most efficient setup?
Where the parent company should be incorporated, and where to incorporate the subsidiary, and where to open bank accounts for both...?
If you know anyone that can help, can you suggest it or send me a private message?

Thank you so much for your time and help.

 

[Zaki]

You can solve some of the payment processing headaches by also setting up a payment agent company in EU or Singapore and process payments through it.

Can u please give us more details about this please ?

 

[Zaki]

Is it possible to suggest the most efficient setup?
Where the parent company should be incorporated, and where to incorporate the subsidiary, and where to open bank accounts for both...?
If you know anyone that can help, can you suggest it or send me a private message?

Thank you so much for your time and help.

The seem Qs

 

[KKC]

Still waiting for suggestions from members about the best setup for my use case.

 

[Ssrn]

I never see Romania used. I know it looks great on paper but people, for different reasons, almost never actually end up incorporating there. Malta and Cyprus (and others like Ireland, Estonia) are just so much more well-established and understood, plus English is far better spoken which makes it easier for foreigners to do business there.

I've found the same situation. It looks great but nobody seems to use it. I have not found any real reason, mostly just 'corruption risk' but very unspecified... Do you have more insides?

 

[Sols]

I've found the same situation. It looks great but nobody seems to use it. I have not found any real reason, mostly just 'corruption risk' but very unspecified... Do you have more insides?

Mainly comes down to reputation (which stems from corruption), language barrier, and an unfortunate circle of lack of popularity. Lots of people look at it and think "No one uses Romania, so why should I?"

It's also unfit for growth. If you plan to keep your business small, maybe it's fine if you can overcome the other hurdles. But if you have plans that exceed millions, the tax advantage of Romania quickly dissipates. Same with Latvia. The corporate and tax laws of Cyprus and Malta (and most other jurisdictions) are fundamentally equipped to handle large international businesses, whereas micro-company legislations aren't.