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 guide, 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 / Canada LP – If properly structured, a UK LLP / US LLC / Canada LP 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 / Canadian 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 (this is slowly changing with the new online banks). 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. Opening a business bank account has also become fairly tricky in 2017.
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.
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).
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
You can access detailed country guides by clicking on the thumbnails
To access our step-by-step guide to registration, case studies, Zero Tax Nomad course and for personalized help, please log into your Insiders Club account. Not a member? Click here to learn about the benefits of membership.