Choosing the jurisdiction in which you will register your company is a decision that should be based on hard facts and proper consideration. In this article, I list the best jurisdictions in the world and provide those important facts.

 

The best structures for online businesses

Growth focused / external funding

UK LLP / US LLC – If properly structured, a UK LLP / US LLC can be ideal for a company looking to grow aggressively or take external funding. It offers all the benefits that comes with being a UK / US entity but without the tax burden (if properly structured). Its also easy to add/remove partners / members, hire employees and process credit card payments. It is important to note that this entity is not suitable for those domiciled in high-tax countries, at least not if you wish to avoid paying taxes. It is also important to note that it is very hard for non-UK residents to open a business bank account in the UK. There is a strong possibility that your UK LLP will have to bank in Europe or in a place like Singapore / Hong Kong. This is not a problem in the US where it is easy for non-residents to open bank accounts.

Singapore Pte Ltd – Singapore companies benefit from one of the most competitive taxation system in the world with rebates available for new/small companies. They also benefit from easy access to the world’s most solid banks, excellent payment processing options (including Stripe) and an excellent reputation overall. It also is easy to raise capital in Singapore if you are in the creative, tech, medical, urban management or chemical industries.

Hong Kong Ltd – For those who are put off by the high cost of registering in Singapore (actual cost and taxes) or the complexity of properly structuring a UK LLP, Hong Kong is an excellent alternative. The local banks are great and Hong Kong provides easy access to the Chinese market. Just as in Singapore and the UK, reputation is not a problem for HK entities. That being said, Hong Kong does not have much of a startup culture and this means that the availability of facilities for such companies is limited. Also, unlike Singapore, in Hong Kong it is nearly impossible to avoid the annual audit.

 

Lifestyle

RAK Offshore – This tiny emirate in the United Arab Emirates offers one of the best “true offshore” structures for those building a lifestyle business. A RAK Offshore company is completely exempt from local taxation, does not have to file an annual return or go through an audit. It can bank in the UAE but it is important to note that it cannot conduct business onshore. The maintenance cost is higher than in places like Belize or the Seychelles but the excellent reputation of the UAE more than makes up for it (no problem opening bank accounts, investing globally and doing business in OECD countries).

Estonia OU – Thanks to its innovative tax system, the Estonian OU is an excellent structure for those living in Europe. Only distributed profit is taxed (at a flat rate of 20%) and thanks to existing tax treaties that 20% can in most cases be claimed in your country of residence. It is easy to open a bank account with the local banks (Swedbank, SEB and LHV) and you can benefit from cheap EU credit card payment processing. An Estonian company can also obtain a European VAT number, a must for a B2B business. Salaries paid to non-Estonian residents are not subject to Estonian taxation.

 

Partnership

UK LLP – This structure is perfect for partnerships. If each partner hold their shares through an offshore entity or are tax haven residents, no taxes are owed on non-UK sourced income. Opening a bank account is easy (not in the UK though) and it is possible to use Stripe or Braintree to process credit card payments. Maintenance is cheap and compliance is easy.

 

The best structures for holding companies

Companies and real assets

RAK Offshore – If reputation, privacy and the availability of world-class banking services is important for your business, the RAK Offshore entity is the way to go. The UAE is not on any tax blacklist and as such, no restrictions are imposed on its companies, they can own assets in nearly every countries. The tax burden of a RAK Offshore entity is nil and compliance is both easy and while more expensive than in Belize or Seychelles, still relatively affordable.

IBCs – If reputation does not matter or if you do not need to open a bank account, using an IBC is a great way to hold assets. It is incredibly easy to register one in a place like Belize, Seychelles, BVI and compliance is only a few hundred dollars annually (no audit, no annual return). It is important to note that opening a bank account for an IBC with a good bank is very, very hard. Restrictions may also be applied when doing business in OECD countries (often in the form of a withholding tax).

 

Pension

Estonia OU – This is by far the best entity for those looking to build a pension. This is essentially a zero-tax entity as only a distribution tax is levied and in this case, no distribution occurs until retirement. At that point, the company simply pays you a salary that is 100% tax-free as long as you do not live in Estonia. As an added bonus, registering and maintaining an Estonia OU is both very cheap and easy. It also will not attract the wrong kind of attention unlike a tax haven company.

 

The best structures for day traders

Company shares / Bonds / ETFs / Forex / Metals

RAK Offshore – For those trading big accounts, the combination of a RAK Offshore company and a Singapore trading account is as good as it gets. Compliance is very easy, the annual cost is reasonable, privacy is excellent and access to the best brokerage firms and banks is easy to secure. It is important to note that such a company cannot invest in UAE assets.

IBCs – For those trading small accounts, an IBC is the way to go. Registration is cheap and easy, compliance is a breeze and privacy is excellent. That being said, it is very hard to open a bank account with a good bank, you may actually have to go with an “island bank”. In this case this should not be a major problem as the vast majority of your capital will be held by the broker but it still is a factor to consider.

 

Where to register your business

Anguilla
Anguilla is one of the world’s true tax havens. There is no income tax, capital gains tax, estate tax and profit tax on individuals nor corporations. A social tax is levied on salaries however. The Anguilla Offshore Company structure is the island’s most popular and is based on the BVI model. As such, it offers excellent privacy features and great flexibility. The cost of registering in Anguilla is around 1000 USD while the cost of annual maintenance is around 700 USD.

Belize – (read the detailed analysis)
Belize is one of the best jurisdictions for those who run small, online businesses. Registration is cheap (around 700 USD), annual maintenance is also very cheap (around 300 USD) and privacy is excellent. A Belize IBC can have a PayPal account so accepting online payments is fairly easy. As a tax-neutral structure, it is not subject to taxation in Belize. There is also no need to file an annual return or undergo any audit.

Bulgaria
Unlike most jurisdictions listed on this page, Bulgaria is not a tax haven. For a European country however, its tax rate is fairly low and this makes it a decent option for those who need to register their business within the EU. Registration costs around 200 USD and annual maintenance also costs around 200 USD. It is important to note that while Bulgaria’s corporate tax rate is only 10%, a social tax is levied on salaries.

BVI – (read the detailed analysis)
British Virgin Islands Business Companies are one of the most popular and widely used offshore structures in the world. This is in part due to their flexibility, tax exempt status, low compliance requirements and the fact that they are widely accepted by the financial sector. Registration costs around 1000 USD while annual maintenance costs around 600 USD.

Brunei
Brunei is a little known country on the island of Borneo. It has the second highest per capita income in Asia after Singapore and has the highest HDI in the Muslim world. Its Offshore Company structure is based on the BVI model and as such, comes with excellent privacy features and a full tax exemption. Registration costs on average around 1850 USD while annual maintenance costs around 1450 USD. This is fairly expensive for such a structure.

Cayman Islands
The Cayman Islands is a British colony in the Caribbean and a famous tax haven. Its Exempt structure is used by medium and large companies the world over. It is not a suitable jurisdiction for small businesses however due to its requirement to file an annual return using strict accounting standards and relatively high cost. Registration costs around 4000 USD while annual maintenance costs around 2000 USD.

Cook Islands
Famous for its trust products, the Cook Islands also offers an excellent International structure for businesses. It is completely exempt from local taxation and offers very rigorous privacy features. In fact, privacy is taken so seriously that the islands have gained somewhat of a reputation as a debtor’s paradise. Registration and annual maintenance both costs around 1500 USD.

Estonia – (read the detailed analysis)
Estonia is a small EU country in the Baltics region, famous for being the birthplace of Skype. It offers the excellent OÜ structure whose main advantage is that profits are only taxed when distributed. This means that as long as you do not pay out a dividend, you do not pay any profits tax. Salaries paid to non-residents are also, in most cases, exempt from taxation. Registration costs around 200 USD while annual maintenance costs less than 100 USD.

Gibraltar – (read the detailed analysis)
Famous for its dramatic rock, Gibraltar is also an excellent jurisdiction business-wise. Its Offshore Company structure is a tax neutral entity and as such, it is considered non-resident for tax purposes and is exempt from local taxation. The Offshore Company structure also benefit from a high level of confidentiality, flexibility and freedom of operation. Registration costs around 800 USD and annual maintenance 600 USD.

Guernsey
Guernsey is a crown dependency of the United Kingdom and is one of the Channel Islands. Since 2008, it has also become a true tax haven with a 0% corporate income tax for most resident companies. It offers excellent privacy features and there is no audit requirement. Best of all, Guernsey is NOT part of the EU and does not have VAT. Registration costs around 3500 USD while annual maintenance costs around 2500 USD.

Hong Kong – (read the detailed analysis)
Hong Kong has consistently ranked as one of the world’s best business jurisdictions, thanks in part to its strategic location within China and its territorial taxation system. So much so that more than a million companies now call it home. Registration costs around 800 USD while annual maintenance starts at around 3000 USD. The high annual maintenance cost is largely due to the mandatory audit.

Isle of Man
While the Isle of Man is a British Crown territory, it is not and has never been part of the United Kingdom. Unlike the Channel Islands however, the IOM is usually considered part of the UK for tax purposes and as such, has VAT (same rate as in the UK). Registration costs around 4000 USD while annual maintenance costs around 3500 USD.

Jersey
Like Guernsey, Jersey is a crown dependency of the United Kingdom and one of the Channel Islands. Unlike the UK however, it is not part of the European Union. Jersey’s corporate tax rate of 0% has attracted many companies to the island and has contributed in making it the major offshore center it is today. Registration costs around 4500 USD while annual maintenance costs around 2300 USD.

Malaysia (Labuan) – (read the detailed analysis)
The federal territory of Labuan is one of the fastest growing offshore centers in Asia and one of the best places in which to register an online business. It also is a great way to acquire Malaysian residency which can be valuable thanks to the country’s territorial taxation system. Registration costs around 1500 USD while annual maintenance costs around 2000 USD. The cost increases if the flat-tax option is selected.

Marshall Islands
Located halfway between Indonesia and Hawaii, the Marshall Islands are an island group in eastern Micronesia. It is an associated state of the United States of America and uses the US dollar as its currency. Its Offshore Company structure resembles that of the other island tax havens although it offers the possibility to be structured “US-style” (with a president, treasurer and secretary). Registration costs around 900 USD while annual maintenance costs around 750 USD.

Mauritius
Mauritius offers two different company structures, the GBC1 and GBC2. The GBC1 is tax resident and can access Mauritius’s tax treaties while the GBC2 cannot make use of the treaties but is non-resident and as such, not subject to local taxation. Registration costs around 1600 USD while annual maintenance costs around 1250 USD.

Panama
Panama is not only a great business jurisdiction but also a great residency option. Thanks to the Friendly Nations Visa, one can use a Panama Corp to apply for instant permanent residency. Panama has a territorial taxation system and as such, foreign-sourced income is not subject to taxation. Registration costs around 900 USD while annual maintenance costs around 650 USD. For those interested in the residency, the total cost is around 3000 USD.

Samoa – (read the detailed analysis)
The Samoa International Companies Act of 1987 has establish the country as a leader in the offshore world and the Samoa IC has become a go-to structure for those seeking to protect their assets or run small online businesses. Registration costs around 1250 USD while annual maintenance costs around 850 USD.

Seychelles – (read the detailed analysis)
Completely exempt from local taxation, the Seychelles IBC is one of the more flexible IBCs and certainly one of the easiest / cheapest to register. Its poor reputation may affect your options depending on where you plan to open a business bank account however. Registration costs around 700 USD while annual maintenance costs around 300 USD.

Singapore – (read the detailed analysis)
Singapore has, over the last few decades, transformed itself into one of the most successful countries in the world. It is a great jurisdiction not only in which to register a business but also in which to relocate to run the business. There are multiple ways to register a business and costs will vary greatly depending on multiple factors such as the type of visa you hold, the ownership structure etc.

St Kitts and Nevis – (read the detailed analysis)
St Kitts and Nevis is a country famous for being the first to launch an economic citizenship program. The island of Nevis also has developed a fame of its own thanks to its excellent structures, the most popular being the Nevis LLC. Its main advantage over competing structures is its low maintenance cost and low compliance requirements. Registration costs around 550 USD while annual maintenance costs around 650 USD.

United Arab Emirates – (read the detailed analysis)
The UAE is one of the fastest growing countries in the world, best epitomized by the city of Dubai. Ras al-Khaimah, one of the emirates, offers the Offshore Company structure which is perfect for those who run an online business that needs to be based in a reputable jurisdiction. The OC is tax exempt and compliance is a breeze. Registration costs around 2500 USD while annual maintenance costs around 1500 USD.

United Kingdom – (read the detailed analysis)
The United Kingdom is one of the leading business jurisdictions with some of the best structures. The LLP, if properly configured, can operate tax-free while still enjoying the reputation advantage of being a full-fledged UK company. Registration costs around 300 USD while annual maintenance costs around 200 USD.

United States – (read the detailed analysis)
While this will surprise some, the United States is one of the world’s best tax haven. For non-citizens/residents that is. Privacy is excellent, banking and other business services are also excellent. Compliance is surprisingly easy, especially for companies who do not derive any income from within the US. Registration costs around 250 USD and the cost is the same for annual maintenance.

Taking action

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Sources

http://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/taxation-international-executives/Lists/Expired/ANGUILLA_2008_TIES.pdf
https://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/thinking-beyond-borders/Documents/anguilla.pdf
http://www.pkf.com/media/1954299/belize%20pkf%20tax%20guide%202013.pdf
http://www.pkf.com/media/10025970/bulgaria-tax-guide-2015-16.pdf
http://www.pkf.com/media/1954323/british%20virgin%20islands%20pkf%20tax%20guide%202013.pdf
https://home.kpmg.com/content/dam/kpmg/pdf/2015/10/brunei-2015.pdf
http://www.pkf.com/media/10025978/cayman-islands-tax-guide-2015-16.pdf
http://www.mfem.gov.ck/tax/legislation
https://home.kpmg.com/content/dam/kpmg/pdf/2015/09/country-profile-estonia-2015.pdf
http://www2.deloitte.com/content/dam/Deloitte/gi/Documents/about-deloitte/informationsheets/gi_en_corporatetax_noexp.pdf
http://www.willis.com/documents/publications/General_Publications/CaptiveManagementAug04.pdf
https://home.kpmg.com/content/dam/kpmg/pdf/2015/10/hong-kong-2015.pdf
http://www.pkf.com/media/387098/isle%20of%20man_2012.pdf
http://www.pkf.com/media/387110/jersey_2012.pdf
https://www.labuanibfc.com/uploaded_files/slide/hasa5edah_1414036273.pdf
https://www.oecd.org/tax/exchange-of-tax-information/marshall-islands-supplementary.pdf
https://www.pwc.com/mu/en/publications/tax/assets/pwc-taxtimes-4.pdf
https://www2.deloitte.com/content/dam/Deloitte/pa/Documents/tax/2015_PA_Tax-panamahighlights.pdf
http://www.doingbusiness.org/data/exploreeconomies/samoa/~/media/giawb/doing%20business/documents/profiles/country/WSM.pdf
http://www.doingbusiness.org/data/exploreeconomies/seychelles/~/media/giawb/doing%20business/documents/profiles/country/SYC.pdf
https://home.kpmg.com/content/dam/kpmg/pdf/2015/11/singapore-asean-tax-2015.pdf
http://www.doingbusiness.org/data/exploreeconomies/st-kitts-and-nevis/~/media/giawb/doing%20business/documents/profiles/country/KNA.pdf
http://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-unitedarabemirateshighlights-2016.pdf
https://home.kpmg.com/content/dam/kpmg/pdf/2015/09/country-profile-uk-2015.pdf
https://www.pwc.com/us/en/tax-services/publications/assets/doing-business-in-the-us-2014.pdf

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  • Olga

    Wow! That’s an awesome analysis you’ve done. Thank you for putting this information together. Which one would you recommend for a global online consultancy services?

    Thank you

  • Olga

    Wow! That’s an awesome analysis you’ve done. Thank you for putting this information together. Which one would you recommend for a global online consultancy services?

    Thank you

  • A UAE offshore company (RAK offshore) is what I’d recommend provided that your personal tax situation is taken care of. The banks there are excellent, there’s many options for payment processing, no taxes, no bookkeeping requirements, no audit, no accounting requirements.

  • A UAE offshore company (RAK offshore) is what I’d recommend provided that your personal tax situation is taken care of. The banks there are excellent, there’s many options for payment processing, no taxes, no bookkeeping requirements, no audit, no accounting requirements.

  • bobriakov

    And does the bank opening require a visit or some banks allow remote openings?

  • bobriakov

    And does the bank opening require a visit or some banks allow remote openings?

  • Konstantin Kurbatov

    Such a great overview, thank you! I also would suggest to add a withholding tax rate to each country as it’s a crucial point for foreign investors.

  • Konstantin Kurbatov

    Such a great overview, thank you! I also would suggest to add a withholding tax rate to each country as it’s a crucial point for foreign investors.

  • Yes a personal visit is required. All reputable banks these days require it, in UAE, Hong Kong, Singapore etc.

  • Yes a personal visit is required. All reputable banks these days require it, in UAE, Hong Kong, Singapore etc.

  • Richard

    Great info! I’m looking into registered agents in Gibraltar and getting a huge range in prices. I was wondering which one you based your the pricing in you info on? Also would you recommend one in particular?

  • Richard

    Great info! I’m looking into registered agents in Gibraltar and getting a huge range in prices. I was wondering which one you based your the pricing in you info on? Also would you recommend one in particular?

  • Hi Richard, formacogibraltar.com is one of the most popular registered agent in Gibraltar and their prices are very competitive.

  • Hi Richard, formacogibraltar.com is one of the most popular registered agent in Gibraltar and their prices are very competitive.

  • Dave

    Great info. Who would you recommend for opening a RAK off source company?

  • Dave

    Great info. Who would you recommend for opening a RAK off source company?

  • World Assets Management (worldassets.eu) is the best corporate service provider for RAK offshore formation.

  • World Assets Management (worldassets.eu) is the best corporate service provider for RAK offshore formation.

  • Rick

    Awesome analysis, thank you!! As for small trading/investment accounts for US citizens, do you know which countries would be best to open a brokerage account in, and do you happen to know any brokerage firms in these countries that are known to take US clients? I know a lot of brokerage firms turn away US clients since FATCA..

  • Rick

    Awesome analysis, thank you!! As for small trading/investment accounts for US citizens, do you know which countries would be best to open a brokerage account in, and do you happen to know any brokerage firms in these countries that are known to take US clients? I know a lot of brokerage firms turn away US clients since FATCA..

  • The US-owned brokerage firms in Singapore and Hong Kong sometimes open accounts for US citizens (Citi, Interactive Brokers etc). The benefits of using such a setup as opposed to trading with a US-based account are not significant however.

  • The US-owned brokerage firms in Singapore and Hong Kong sometimes open accounts for US citizens (Citi, Interactive Brokers etc). The benefits of using such a setup as opposed to trading with a US-based account are not significant however.

  • Rick

    I was thinking that a US citizen may be able to set up an IBC somewhere like Nevis and then a brokerage account in the name of that IBC in a place like Singapore or HK and be able to lower their taxes. As far as trading profits, would it not be possible for US citizens to essentially avoid the US federal income tax in this way?

  • Rick

    I was thinking that a US citizen may be able to set up an IBC somewhere like Nevis and then a brokerage account in the name of that IBC in a place like Singapore or HK and be able to lower their taxes. As far as trading profits, would it not be possible for US citizens to essentially avoid the US federal income tax in this way?

  • It certainly is possible to register an IBC and open a trading account for it. That said, I can’t tell you if it would benefit you from a tax perspective. Especially due to CFC rules (See IRS form 5471, https://www.irs.gov/pub/irs-pdf/f5471.pdf ). I’d certainly talk to a tax attorney before making a move.

  • It certainly is possible to register an IBC and open a trading account for it. That said, I can’t tell you if it would benefit you from a tax perspective. Especially due to CFC rules (See IRS form 5471, https://www.irs.gov/pub/irs-pdf/f5471.pdf ). I’d certainly talk to a tax attorney before making a move.

  • Rick

    Ok, thanks for the info! Yeah, the US tax code really shows no mercy for expats…

  • Rick

    However, I wouldn’t have to pay taxes on any income earned from an offshore business until I repatriate it back to the US, so I would still be able to hold profits in offshore banks and access it abroad without paying US taxes, no? Well, I assume this is why virtually all US multinationals stash their foreign profits overseas

  • Idy

    Hello,

    In your list, you have forgotten the Costa Rica.

    Why ?

  • Idy

    Hello,

    In your list, you have forgotten the Costa Rica.

    Why ?

  • I did not list it here because it isn’t a good business jurisdiction. I covered its residency program for individuals however.

  • I did not list it here because it isn’t a good business jurisdiction. I covered its residency program for individuals however.

  • Nathalie

    Hello!

    Hong Kong is on the blacklist of European commission.

    Proof here : http://www.paradisfiscaux20.com/

    Regards

  • Nathalie

    Hello!

    Hong Kong is on the blacklist of European commission.

    Proof here : http://www.paradisfiscaux20.com/

    Regards

  • Hi Nathalie,

    There is no such thing as a European Commission tax blacklist. There is talk of creating one but at the moment it’s just that, talks.

    In any cases, such a move is very unlikely to have any impact on HK. The only EU country in HK’s list of major trading partners is Germany with 1.6% of trade.

  • Hi Nathalie,

    There is no such thing as a European Commission tax blacklist. There is talk of creating one but at the moment it’s just that, talks.

    In any cases, such a move is very unlikely to have any impact on HK. The only EU country in HK’s list of major trading partners is Germany with 1.6% of trade.

  • If I have a residence in a tax haven jurisdiction and own a small business online, where would you recommend?

    I would like to open a company that can do banking with solid banks and also hold some assets under the company´s name.

  • If you are a tax haven resident, the UK would be a great option for your business. You can read my article about the LLP structure at:
    https://www.freedomsurfer.com/uk-llp/