

Ask HN: Tax consequences of server location - Yrlec

We are about to set up our production environment in AWS and are wondering about the tax consequences of where the servers are located. We are a Swedish start-up and since AWS is cheapest in the US we'd love to place the servers there but we've heard that we might risk double taxation if we do that (i.e. both Sweden and the US will tax us).<p>Do you guys have any experience having the servers in the US for non-US start-ups?
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iProject
> we've heard...

But did you hear it from a tax attorney / certified accountant?

That being said (and: I've _no_ experience in Sweden, and I'm neither atty nor
acct) the idea that a US tax liability could be incurred by an international
corp/business purchasing a service (e.g., AWS) from company in U.S. ...seems
pretty outrageous.

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Yrlec
No, he was not a tax attorney. I agree, it seems outrageous but it doesn't
seem completely impossible. If the servers are located in the US one could
argue that the company is doing business in the US.

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iProject
If you were providing services _to AWS_ \- that would "be doing business in
US". I don't see how renting a service (AWS) from Amazon is "doing business in
US" any more than would be buying a book from Amazon.com N'est-ce pas?

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chris_dcosta
I think you are mixing far too many issues - but that comes from your lack of
qualified advice, and obvious lack of understanding about what company is.

What you haven't specified is if you are concerned about the cost of hiring
the equipment (a purchase and therefore tax deductible) or the sale of your
goods or services.

For the record, your company earnings from sales are taxed according to the
country in which the company is declared and owned and where the company
accounts are filed. It has nothing to do with the location of the servers on
which your software resides.

Double taxation [treaties] are not what you have assumed them to be - they do
not necessarily mean that you are taxed twice and more specifically they
relate to individuals earnings and not companys'.

As I say you have mixed a lot of issues into one question.

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surfingdino
You need an accountant who knows both US and Swedish tax laws, double taxation
agreements, etc. In general, if a business has no presence in the US, it would
not be taxed in the US, but the tax laws are a twisted maze filled with traps
for the unwary, so make sure that you go to a good accountant first.

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onetwothreefour
No. I'm not an accountant, etc.

There's no nexus as long as you aren't co-locating servers that you have
purchased yourself. If you're leasing from AWS (or most dedicated server
providers) there are no issues.

The US doesn't care what Swedish companies do, unless you establish a physical
presence in the US (or does something that forms a nexus, and even then, that
varies by state).

You don't want to go anywhere near the US tax system, because it's pretty much
the worst tax system in the world. Avoid it at all costs.

