What's the best place to incorporate an online business?

Non-resident partners are only liable to tax on:
profits that arise in the UK, although a corporate non-resident partner
will be liable on overseas profits which relate to a UK permanent
establishment, and
• their share of partnership investment income, to the extent that it
arises in the UK, although a corporate non-resident partner should
return its share of overseas investment income which relates to a UK
permanent establishment.

https://www.gov.uk/government/forum/uploads/system/forum/uploads/attachment_data/file/323787/hs380.pdf

For the VAT, it only applies to UK sales. Sales to non-UK customers do not incur any VAT in the UK.

Thanks for sharing this and all the other information.
I’m actually about to incorporate an LLP. None of the partners is a UK resident.
I’m looking for an accountant/firm that will ensure the simple (I think) reporting that will be needed.
Do you think you can help? Or you could point me in some direction?

I would stronly recommend Hong Kong due to its simple and low tax system. Maximum corporate profit tax rate of 16.5% (in some cases, can be as low as zero). No VAT; no sales tax. Very simple and flexible business environment. No need to hire staff or rent office here as all back office works of your HK company can be supported by local service providers. Many foreign businesses (small or large) find it extremely beneficial (both from a financial and operational perspective) to use their own HK company as a hub to conduct its international business.

Hi Mario,

You can actually register the LLP yourself. It’s easy and cheap.
https://www.gov.uk/set-up-and-run-limited-liability-partnership/register-your-llp

As for compliance, you could hire an accountant in the UK on a freelance basis to help you get started. Compliance is easy in the UK for a small business and it’s even easier for an LLP (if there is no UK income you barely have anything to do).

I’ve been told by two different accountants this is not true and all income is taxable regardless of where customers and partner is located

If I were you, I’d fire those accountants. You can clearly see here, on the UK Gov website that you only need to pay VAT on UK sales. If you sell to other EU countries, you need to collect the VAT for those countries (and send it to the respective countries using the EU one-stop-shop). That’s true regardless of where your business is registered.

In other words. A UK LLP selling to UK customers will pay UK VAT. A UK LLP selling to French customers will pay French VAT. A UK LLP selling to US customers will not pay any VAT.

https://www.gov.uk/guidance/vat-exports-dispatches-and-supplying-goods-abroad

You only need to collect vat for those eu countries if you are above their distance selling thresholds per country. If you sell electronic products there’s no threshold. Non eu businesses selling non electronic products to the UK are not liable to EU vat

Yes that goes without saying. As for non-EU businesses, even those selling VAT-applicable services to consumers rarely, if ever, pay VAT. The EU has just no way to enforce their rules internationally.

But if you are outside of eu the thresholds don’t apply I understand? I’m selling non electronic goods. Probably best for me.based in usa . I’m buying from eu suppliers who charge me vat. My customers order the same products from me (I’m Middle man) The suppliers are local to EU country and deliver products locally. I don’t want to charge then vat abs get caught up in the whole one stop vat stuff. In case you hadn’t guessed I’m a relay agent for flower bouquet delivery. To complicate things further the people who order flowers are never the recipients (sending gifts) and often the person who orders is in a different countries to recipient. Was a great business before all this country of supply beaded vat stuff in the eu. Thanks for nothing amazon

Hi @nomadtax,
yes, you are right.
I kept researching and found an accountant. Compliance will take a few hours of work per year. With UK revenue there will be a little more work involved but really simple anyway.
It’s a really good set up.
Thanks again.

It’s not that they don’t apply, it’s that it’s impossible for the EU to enforce them. In your case though you’ll probably have to pay VAT. You are selling physical products, this makes things a lot more complicated.

USA, if Trump is the new US president

Hi @StewartPatton! Thanks for details, but what is considered as “dependent agent on the ground in the US running the business ?” If you are running Amazon FBA and sell in US basically you are engaged with in trade and you have to pay tax income you earned from sales even if it is single member LLC.

you could check Gibraltar for this purposes.

Hey @international_man could you please tell what offshore company/location are using to wire funds form US LLC ?

Thanks!

I’m using a Marshall Islands company with Banking in Singapore.

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Hi @Denis_Dovgal.

Here’s an article with more details on how this works: http://ustax.bz/non-us-entrepreneurs/

A dependent agent is basically a person who works mainly for you (whether as an employee or independent contractor).

Your second sentence is a common misconception–it’s simply not true. The article above goes into detail to explain how this all really works.

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@StewartPatton thanks for the link. Now that make sense.

Just a tip guys: to avoid dividend withholding taxes where you want to pay yourself a share of a profit, don’t pay them as dividends. Give yourself royalties and interests, instead, they are tax-free or at the lowest bracket almost in every jurisdiction. Basically you should lend money to your company as a loan and the company would refund the loan paying interests (the profit you want to pay yourself). And/or instead of selling your product, license it, so the royalites would be not taxed as dividends but almost tax-free. Talk with your accountant for details explaining this scheme. Tons of companies legally reduce their tax burden (Apple, Amazon, but also smaller businesses) this way. You don’t have to sell software, a design, or a plugin (this only is doable with IP products, digital or media) but you licens it to your company and your company license it to customers. When you buy tunes on Itunes they are not yours, in fact: legally you’re renting them. Your son won’t be able to inherit them, as they are owned (still) by Apple.