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Which one is the Best Tax Setup for eCommerce?

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banafinfodafuggiano

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Jun 18, 2020
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Panama
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#1
I can relocate in almost any country. I run an ecommerce business (6+ figs)
and I would need to incorporate in one of these following countries in order to remain compliant
with Stripe/shopify payments, which one is the best one in terms of saving taxes?

ROMANIA
SWITZERLAND
SINGAPORE
HK


Note that 100% of my income comes from clients outside these countries, that I am not yet a resident of any of these countries
and I have A LOT of monthly transactions to do accounting for (Hong Kong accountants already quoted me 10,000 USD just for book keeping lol).
 
#2
Depends also on how much profits you generate every year.

Switzerland is expensive, but depending on your profits it is worth it.
 
#3
Probably not Switzerland.

Where are your customers based?

If they are mostly in EU/EEA, processing payments in Singapore or Hong Kong is probably going to cost 1-2% more than if you were based in EU/EEA using a domestic processor. A percentage or two on gross revenue can be quite a lot, especially if your margins aren't high.

banafinfodafuggiano said:
and I have A LOT of monthly transactions to do accounting for (Hong Kong accountants already quoted me 10,000 USD just for book keeping lol).
Click to expand...
Per month or per year? Reasonable per year, unreasonable per month.

You shouldn't need to have manual review of every single order, at least not in a manner that requires manual review of each one. So long as tax calculations are done correctly by your own systems, and reconciliations line up, you should be good.
 
#4
Sols said:
Probably not Switzerland.

Where are your customers based?

If they are mostly in EU/EEA, processing payments in Singapore or Hong Kong is probably going to cost 1-2% more than if you were based in EU/EEA using a domestic processor. A percentage or two on gross revenue can be quite a lot, especially if your margins aren't high.


Per month or per year? Reasonable per year, unreasonable per month.

You shouldn't need to have manual review of every single order, at least not in a manner that requires manual review of each one. So long as tax calculations are done correctly by your own systems, and reconciliations line up, you should be good.
Click to expand...
My customers are in the USA, Europe and the rest of the world.

Sols said:
Probably not Switzerland.

Where are your customers based?

If they are mostly in EU/EEA, processing payments in Singapore or Hong Kong is probably going to cost 1-2% more than if you were based in EU/EEA using a domestic processor. A percentage or two on gross revenue can be quite a lot, especially if your margins aren't high.


Per month or per year? Reasonable per year, unreasonable per month.

You shouldn't need to have manual review of every single order, at least not in a manner that requires manual review of each one. So long as tax calculations are done correctly by your own systems, and reconciliations line up, you should be good.
Click to expand...


Romania company can be set up even if I am not a EU resident? I'm a EU citizen but not a resident since 8+ years.
and how easy are Romanian business bank accounts to open...
 
#5
banafinfodafuggiano said:
My customers are in the USA, Europe and the rest of the world.
Click to expand...
Then it's pretty simple math to work out whether setting up shop in EU/EEA is worth it or not. The gap grows the bigger you get. Large ecommerce businesses pay close to or under 0.50% for card processing within EU/EEA due to EU regulations forcing domestic (intra-EU/EEA) fees down.

Assess the costs for setting up in EU and the taxes on net profits, and compare that to costs of setting up outside EU and the taxes there vs. paying 1-2% more in payment fees.

banafinfodafuggiano said:
Romania company can be set up even if I am not a EU resident? I'm a EU citizen but not a resident since 8+ years.
and how easy are Romanian business bank accounts to open...
Click to expand...
On paper, you can anything in Romania. In reality, I have seen very few people actually do it.

There's a reason people pick Ireland (with local presence), Estonia (with e-residence to simplify incorporation), Cyprus, Malta, or even Bulgaria over Romania, despite Romania on paper being cheaper and lower tax. I hear complaints about horrendous bureaucracy and having to do things in person in Romania. But I haven't explored that aspect in much detail.

To answer your question about banking: opening a bank account in Romania with zero local presence besides incorporation is very challenging. If you have a director and some staff there, it seems to be relatively easy.
 
#8
Marzio said:
Depending on where the biggest chunk of your customers are I would use a UK LLP to process payments in GBP/ EUR and a US LLC to process payments in USD with personal tax residency in a country like Panama.
Click to expand...
EU bank-acc and EU-PSP with a Panama residency seems unrealistic. Cyprus residency is the best bet for people running EU businesses.
 
#9
Dandyline said:
EU bank-acc and EU-PSP with a Panama residency seems unrealistic.
Click to expand...

Once you have determined that the country is supported by Stripe and are ready to open a new account, you will need the following:
  • For Stripe business accounts: a legal entity registered in the same country for which you plan to open the account
  • A tax ID in that country
  • A physical location in that country at which you are able to receive mail (cannot be a P.O. box)
  • A phone number in that country
  • A government-issued ID, such as a passport or driver’s license, from any country
  • A working website that shows what your business sells or what services you provide.
  • A physical bank account in that country (cannot be a virtual bank account), denominated in a supported transfer currency for that country.

Requirements to open a Stripe account in another country : Stripe: Help & Support

Find help and support for Stripe. Our support site provides answers on all types of situations, including account information, charges and refunds, and subscriptions information. Get your questions answered and find international support for Stripe.
support.stripe.com support.stripe.com

Stripe + Wise can work, it's not unrealistic at all.
 
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#10
Marzio said:
Once you have determined that the country is supported by Stripe and are ready to open a new account, you will need the following:
  • For Stripe business accounts: a legal entity registered in the same country for which you plan to open the account
  • A tax ID in that country
  • A physical location in that country at which you are able to receive mail (cannot be a P.O. box)
  • A phone number in that country
  • A government-issued ID, such as a passport or driver’s license, from any country
  • A working website that shows what your business sells or what services you provide.
  • A physical bank account in that country (cannot be a virtual bank account), denominated in a supported transfer currency for that country.

Requirements to open a Stripe account in another country : Stripe: Help & Support

Find help and support for Stripe. Our support site provides answers on all types of situations, including account information, charges and refunds, and subscriptions information. Get your questions answered and find international support for Stripe.
support.stripe.com support.stripe.com

Stripe + Wise can work, it's not unrealistic at all.
Click to expand...

You need to be resident in a Stripe supported country, Panama is not. Wise don't onboard Panama residents.
 
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#11
Possible to get Stripe for HK company, I don't think, you will use NEAT right?
 
#12
Dandyline said:
You need to be resident in a Stripe supported country, Panama is not.
Click to expand...

"For Stripe business accounts: a legal entity registered in the same country for which you plan to open the account"

It's not YOU that need to be resident in a Stripe supportd country, it's the entity.

Dandyline said:
Wise don't onboard Panama residents.
Click to expand...

I'd say it depends on the business.
 
#13
Marzio said:
"For Stripe business accounts: a legal entity registered in the same country for which you plan to open the account"

It's not YOU that need to be resident in a Stripe supportd country, it's the entity.



I'd say it depends on the business.
Click to expand...
No, its for owners as well.

"However, at this time, the place of residency for individuals associated with your account needs to be located in one of the countries currently supported by Stripe."

Supporting companies that registered in Estonia through e-residency : Stripe: Help & Support

Find help and support for Stripe. Our support site provides answers on all types of situations, including account information, charges and refunds, and subscriptions information. Get your questions answered and find international support for Stripe.
support.stripe.com support.stripe.com
 
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#15

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#16
"Supporting companies that registered in Estonia through e-residency"

Do you understand what does it mean or do you need a drawing?

Personal tax residency only matters for Stripe for those who register a company in Estonia.
 
#17
Sols said:
Then it's pretty simple math to work out whether setting up shop in EU/EEA is worth it or not. The gap grows the bigger you get. Large ecommerce businesses pay close to or under 0.50% for card processing within EU/EEA due to EU regulations forcing domestic (intra-EU/EEA) fees down.
Click to expand...
wonder where you get that rate from!! We pay 5% processing fee and 0,5 euro per transaction!! Not really low.

BTT - UK LTD without your name and file dormant, have been working for me 5 years in a row.
 
#18
ImKing said:
wonder where you get that rate from!!
Click to expand...
From Adyen, Worldpay, Worldline, and many others. For large, clean ecommerce.

ImKing said:
We pay 5% processing fee and 0,5 euro per transaction!! Not really low.
Click to expand...
Then you might be getting ripped off and/or you are in a high risk sector. Not even Stripe, Mollie, or Braintree are that expensive.
 
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