[charlesdm]

While I applaud the idea, if you don't need to be US based:

1. It's ridiculous to incorporate in the US, due to ridiculous tax policies; and

2. It's a great way to upset local tax authorities + there are probably a ton of nasty side effects (e.g. some countries have "see through" taxation that taxes certain profits arriving in foreign entities at the shareholder level, or require board meetings to be held in the jurisdiction the company is based in, etc etc)

If you do this, make sure to get advice from local counsel, or it could end up being a very expensive exercise

[tomp]

> 1. It's ridiculous to incorporate in the US, due to ridiculous tax policies; and

What are these ridiculous tax policies? I've often heard complaints about US taxes for citizens/residents, but nothing yet for companies... (I realize that many companies choose to incorporate in tax havens to evade taxes; but I'm mainly interested in knowing how is incorporating in the US worse than incorporating in e.g. UK, Switzerland, Japan, Australia, Germany, France)

[charlesdm]

High corporate taxes + global taxation of profits. For example, any profit coming from lower taxed subsidiary (i.e. a dividend) will be taxed at the difference between the local rate and US corporate tax rate. So if you pay 20% in the UK, you will have to pay an additional 15% (35%-20%) in US tax.

Second, the US is very aggressive when it comes to withholding taxes (FATCA and all) - if you’re a shareholder living in a country without a decent tax treaty with the US, you’ll lose an extra 30% on any dividend you declare, unless you include intermediary structures such as holding companies etc

Now, some of these might not matter that much to a startup since they aren’t making a profit anyway. But if you build something profitable it will be relevant for an acquirer. If things are set up properly to pay less tax, they will pay more for your company.

[tomp]

> So if you pay 20% in the UK, you will have to pay an additional 15% (35%-20%) in US tax.

To me, this makes sense. Is this different to what other countries do? Although the corporate tax does seem rather high...

[michaelschade]

This definitely isn’t for everyone — and people’s situations will be different — but based on what we’ve seen there are plenty of entrepreneurs who have already (painstakingly) done this or would like to do it. Our goal is to make what people are already doing more understandable and remove roadblocks so this is available to everyone who wants to go this route.