
Ask HN: How much does a founder pay on exit? Is offshoring dumb? - 55555
Is it simply the following?<p>&gt; Qualified dividend and long-term capital gain: Tax rate is 0% for the 10%–15% brackets; 15% for the 25%–35% brackets; and 20% for the 39.6% bracket.<p>Example:<p>&gt; Let&#x27;s say I start a company as the Founder and grow it over a period of years. I exit by selling my remaining 10% of shares for 50 million dollars (company valuation of 500m USD)<p>Do I simply pay a number very close to 20% (due to marginal taxation) of that 50 million dollars?<p>Essentially I am pretty well-versed in international taxation and have previously used offshore companies (I do not live in the USA, I have offices outside of the USA, and my customers are mostly not from the USA, etc, but I am American). For my next startup, which will be an interface for international buyers of wholesale goods, I am still deciding how to legally set up the company. Now obviously if I set up in a haven I can pay 0% tax on corporate income, but I&#x27;m planning for an exit, and when I sell my shares, I will still be liable to pay the US capital gains tax rate.<p>Basically my final thought is this: I may be able to save up to 15% on corporate income tax by using a haven, but if I&#x27;m planning for an exit, perhaps this doesn&#x27;t matter at all. Additionally, even if not planning for an exit, if I&#x27;m able to raise money at a &gt;15% more favorable rate in the valley as a standard Delaware c-corp, and have access to US capital markets, then perhaps it makes more sense to just form a Delaware C-corp and defer international tax minimization strategies until we have a big company. It certainly seems to me that 15% more optimistic valuations are possible in the valley as compared to Singapore or Hong Kong, for example, and the simpler corporate structure should allow investors greater confidence and security.<p>Any thoughts or feedback?
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staticautomatic
If you are a US citizen, your personal taxes are entirely separate from the
c-corporation, and accordingly whether the company is based in a tax haven is
irrelevant to your personal tax liability.

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calcsam
How are you planning on seeking financing for your company? No Silicon Valley
VC will fund you unless you have a Delaware C-Corp.

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55555
Thank you. This is basically my point/question. There are obviously HK and
Singapore based VC's but I reckon Valley VC's would value the company at a
valuation that's more than 15% more optimistic.

My other question is regarding the outlined example: Do I simply pay a number
very close to 20% (due to marginal taxation) of that 50 million dollars (when
selling my shares in a Delaware C-corp)?

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calcsam
Assuming you put early exercise clauses in your contract and exercise your
shares immediately, yes. If you don't early exercise, you may have to pay
ordinary income rates.

