

Ask HN: What is the best country to start an online software business? - somedude1234abc


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JacobAldridge
I do believe that the answer to this question depends on your needs and
priorities.

For instance, you could be asking "which country will charge me the least
tax?" Look for a tax haven, like some of the Caribbean islands.

But you could equally be asking "which country will provide the fastest
internet speeds?", in which case it's South Korea.

The list of considerations you might be using to filter your decision also
includes paperwork (at start-up and ongoing), access to mentors, fastest
access to the largest number of users, or even language and lifestyle (if you
wanted to live or spend time in the country). Some of these will differ again
depending on whether your online software will be B2C, B2B, or Enterprise
focused.

Are any of those factors for you? Are there others?

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joss82
It's undoubtly the country where you love to live. Since tax and other
technicalities are irrelevant compared to YOU feeling good and not not having
to worry about nothing else but software.

EDIT: Removed some useless stuff.

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virtualritz
Not necessarily. You can live wherever you like and still have a software
business in another country. Software does not require a physical office
space. You (or the people you may employ) can work from home or from a co-
working space.

As such, taxes, the associated paperwork trail, etc. can still be the driving
factors when deciding where to incorporate. At a later stage the accessibility
of additional funding may also be a point.

My (software) company is incorporated in Hong Kong for, among others, these
reasons. But I neither live there nor work there.

~~~
jdietrich
Yes, but you'll be taxed in your country of residence unless you can prove
that you don't have a Permanent Establishment, which will be near impossible.
If you wholly manage your business from a given country, your business is
_prima facie_ established in that country and wholly taxable there, regardless
of where it is incorporated.

There may be some advantages to incorporating abroad in order to take
advantages of streamlined legislation - many Germans incorporate in the UK to
avoid the complex and expensive GmbH - but trying to outsmart tax authorities
just isn't worth the effort for a small startup.

~~~
virtualritz
Indeed, but you are taxed on /your/ income, not your company's. The company
itself is not a citizen of the jurisdiction you live in. Have the company pay
yourself a salary that is below (or just above) the lowest tax bracket in the
jurisdiction you live in and you pay zero or very little taxes on that income.

When you ever want to take out more than this salary from that company, make
sure you do so either through another company that you control or while not
living in a jurisdiction that taxes individuals on such income.

A company is primarily a financial device to avoid paying (too much) taxes.

Regarding the last part: I don't know if you ever incorporated abroad. But
'streamlined' is an understatement. I have frankly no idea what 'effort' you
are referring to. Could you elaborate?

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jdietrich
If a company has a lasting place of business in a country (a Permanent
Establishment), it falls under that country's tax law for some proportion of
it's profits. You acting as a director or manager counts as a Permanent
Establishment.

If I register a limited company in Britain but I manage it from France, that
company will be taxable in France to a greater or lesser extent. While it may
be possible to distribute profits in a more tax-efficient manner, a company
cannot operate in a country but completely avoid paying tax by mere fact of
being incorporated abroad. Simply employing a contractor or renting a server
in a country may be sufficient to fall under the Permanent Establishment
rules.

International taxation is punishingly complex. Inadvertent evasion is easy and
mistakes expensive. If your company is only paying tax in Hong Kong but has
offices or employees elsewhere, you need to contact a competent accountant
_now_.

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jdietrich
Wherever you live. If your country of residence is highly bureaucratic or
corrupt, you may wish to incorporate as a Delaware C-Corp or a British Limited
Company.

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superted
What are your criterias for "best"?

