Where should I register my company as a digital nomad? Singapore, Hong Kong?


#1

Hey guys, here’s a question I’ve been asking nomads I meet everywhere, but still haven’t found good information. My startups mostly focus on american and european markets but I don’t have a registered company, nor I live permanently on any of these countries.

I get the cash payments online in paypal (or adsense) and transfer it to Thailand (or Malaysia, or Bali, or Brazil, or wherever I’m at). The thing is… for low volume living expenses it seems fine, but as I scale the business, I’m starting to think more and more about fiscal law.

A fellow nomad told me to transfer it to Singapore, Hong Kong or The Virgin Islands, and then use an international credit card anywhere. I don’t know if it’s the best way to optimize this… any ideas?

Also, could there be any problems in selling to these countries without a registered local company?


#2

Hi Raphael,

That’s an excellent question. I can’t give you a binding answer as I’m not a lawyer, but can provide these remarks. For a deeper discussion, you can hit me up via PM. I’ve been dealing with these issues for a few years now and may be able to give some tips.

  • There seems to be a (WTO?) treaty that will grant your passport country taxation rights, if there is no company or other place of residence. I don’t have a source for this and it doesn’t seem to get enforced.
  • Americans will always have their worldwide income taxed until they cancel their citizenship or you’re subject to a Double Tax Treaty.
  • If you deliver to the EU consumers, you need to collect VAT since 2015. Even on virtual goods.
  • There are a number of countries that allow you to put up an official residence without really being there.

#3

I’m looking for the same, but in europe… Ireland looks to be the best, both on taxes and on startup enviroment… But I’m also looking for solutions worldwide.


#4

Hong Kong and Singapore are probably not the most cost efficient jurisdictions for your company. Hong Kong because of the high annual cost of the mandatory audit and Singapore because of the requirement for a local director. It really depends on what you do but since you get paid online I’d say jurisdiction reputation isn’t that important. An IBC in Belize or BVI works pretty nicely for most businesses and they aren’t only cheap, there are no tax returns to file there and no audit requirement.

Check out my blog post here about some of the most popular jurisdictions:


#5

Singapore and Hong Kong come with filing and reporting requirements. You’ll also be liable for tax in most circumstances (yes, even in Hong Kong). If you’re not a US citizen, or a citizen of some countries that are going crazy against offshore structures (i.e.: Turkey), a traditional offshore jurisdiction may be the best to avoid costly filings and audits. Panama is good; BVI and Caymans are UK territories and more expensive. I think the trend is going to paying a little tax vs. paying 0% tax, so a country like Gibraltar that has 0% tax rather than no tax could be helpful, also, but it will come with more requirements.


#6

If you’re not an EEA citizen, setting up shop in Ireland can be expensive. It also has a 12.5% tax rate that requires some trickier set-ups and transfer pricing or invoicing if you want to reduce that rate.


#7

This post is very relevant for me at the moment. At the moment I am trying to set up a small software consulting (totally remote) firm in the US and it has been a pain. I am currently nomadic US citizen but not entirely sure that I will always be nomadic. As for my company, I see no problem in it being based offshore since we are a global team. What I am wondering is what guidelines my company has to follow to be legit even if I were to live in the US and do business with clients there. Currently my only clients are in the US but I could easily work with some clients elsewhere if that would help my case.

@freedomsurfer that blog post is awesome thank you for that. From reading the post it seems like BVI may be a good choice. Would I hire a firm or agent to help with that process or just do it all myself?


#8

Hello, I agree with “freedomsurfer”. Hong Kong and Singapore both are very expensive for startup needs. Additionally to BVI and Belize I can recommend Seychelles International Business Company - it will be relatively inexpensive and incorporation process is very fast. Check World-Offshore.com for more info regarding other jurisdictions and their correspondence to your business activity.
Good Luck!


#9

I wouldn’t suggest incorporating in countries like BVI, Seychelles…as these are perceived as tax avoidance countries and that many companies are not carrying out normal business but just set up there to hide funds to avoid tax. This is evident by the fact that there has been increasing scrutiny and new regulations in BVI in the recent years to battle this.
Set up business in Singapore or Hong Kong is definitely better option as it is perceived that you are running a legitimate and real business. Besides, your funds are safe as HK is one of the major financial centres in the world. Clients in general, will have more confident in your company. Regarding the company set up and maintenance costs, it is actually very cheap considering that the maximum corporate profit tax rate is only 16.5% (in some cases can be as low as zero). You just have to work with a reliable and professional local service provider. You will be amazed that this is actually very cost effective and efficient.


#10

Is there any particular reason folks are looking to setup companies rather than operate under their own names?

What is the benefit of a corporation vs just running your “business/consultancy” under your own name? Why go for an offshore “company” when you can just go for an offshore personal bank account?


#11

For US citizens who live outside the US, there are US tax benefits to operating a business through a non-US corporation instead of through their own names.

More on this here: http://ustax.bz/how-to-structure-your-non-u-s-business-or-profession/


#12

Putting up with the Hong Kong hassle just for perceived legitimacy of your company may be beneficial for certain startups. But it’s absolutely unnecessary for a business owner that simply wants to make money.

No one cares about the type of company you use to hold your Amazon FBA business, SaaS product, blog, podcast, etc. And if you structure things correctly, no one will even know about it.

More thoughts here: http://ustax.bz/want-to-form-a-hong-kong-company-read-this-first/


#13

Singapore requires 2 directors.
Hong Kong requires a HK resident secretary.
HK requires an annual audit even for a company that earns $1.

Annual Financial statement is mandatory as well. During the annual financial statement you have to add a form to prove you don’t make money out of HK because 0% corporate tax is not automatic.

HK government does not allow a non resident HK bank to pay through wire transfer for gov fees or profit tax or any tax. You need HK bank account to pay fees and tax to HK government or you need to pay someone in HK to pay HK fees.

I know a country that is incredibly under-estimated in Europe. It is called Bulgaria. Full protection of owners. corporate tax 10%, Cheap Accountants, Cheap & Serious Local Banks (société générale, Raiffeisen) who just require passport and utility bill. The only thing that you cannot do in Bulgaria is distributing pornography.


#14

I know this is a late response, but what about Dubai Free Zone company in the RAK zone? It costs about $1500 to incorporate and has no taxes or filing requirements. Of course, you must not live in other countries for extended periods of time or you will become a tax resident there and thus liable for taxes.

Dubai rents are cheaper than Hong Kong and cost of living seems a bit better. Plus you’re closer to Europe.


#15

A Limited Liability Partnership in British Colombia might be a great option: If you don’t have any clients in Canada itself, there are no taxes and you don’t need to do any book keeping. And, as the name implies, you’re protected against liability.

As Canada hasn’t a reputation of a tax paradise (but as a tax hell), opening bank accounts should be possible without problems. Costs are about 2000USD, when done by a local lawyer.

I didn’t look into the details, yet, but what I know about it sounds great. I’ll probably go this way, as soon as turnover is big enough.