New ask Hacker News story: Best Legal Structure for Non-US Founders of a SaaS with Global Revenue
Best Legal Structure for Non-US Founders of a SaaS with Global Revenue
2 by agustingarcia | 0 comments on Hacker News.
In LatAm startups usually set up in this way: Cayman holding company > Delaware LLC holding company > Local country operating company This is costly to maintain, but it allows for some efficiencies. Corporate tax is only paid on the country that has operations. All remaining income goes tax free up to its distribution to shareholders at which point the shareholder is taxed as per their country of tax residency. This is usually recommended when a company operates payroll, IP, and sales in a country that is not the US. Having said that, I am thinking about a SaaS company with Non-US founders that receives revenue from multiple countries and has globally distributed contractors instead of employees. It would be a hassle to incorporate in every country where there is revenue or contractors. Also, a Delaware C-Corp would cause double taxation in the form of corporate tax and withholding to dividends paid to foreign shareholders (hence the non-US founder point). Assuming there is no tax treaty to account for this withholding, the founder would then have to pay income tax in their home country. Would any of the below structures work? a) Cayman company only. This company will be a holding and operating company. It will receive income solely from a merchant of record such as Paddle which manages VAT compliance worldwide. It would hire contractors via Deel which handles compliance worldwide. It has no corporate tax and shareholders would only be subject to tax when paying dividends. Concern about why this might not work: 1) Controlled Foreign Corporation laws of the founder's home country. 2) Accessing services such as Mercury / Brex / Google Ads with a Cayman company. 3) Can a holding company also be an operating company and have no corporate tax in Cayman, as long as there are no operations there? b) A Delaware LLC owned by a Cayman holding company. The Delaware LLC would be pass-through to the Cayman holding company so it would not generate corporate income tax. It is easy to open accounts anywhere with the Delaware LLC. Paddle would pay the LLC. There are some maintenance issues for compliance. FBAR, Be-12, PFICs, etc. Would it create the same issues in terms of CFC for the Cayman shareholders? This seems like a dark hole to waste time on, but it is crazy to me that there isn't an obvious solution for a Legal Structure for Non-US Founders of a SaaS with Global Revenue. Maybe there is... can you share it?
2 by agustingarcia | 0 comments on Hacker News.
In LatAm startups usually set up in this way: Cayman holding company > Delaware LLC holding company > Local country operating company This is costly to maintain, but it allows for some efficiencies. Corporate tax is only paid on the country that has operations. All remaining income goes tax free up to its distribution to shareholders at which point the shareholder is taxed as per their country of tax residency. This is usually recommended when a company operates payroll, IP, and sales in a country that is not the US. Having said that, I am thinking about a SaaS company with Non-US founders that receives revenue from multiple countries and has globally distributed contractors instead of employees. It would be a hassle to incorporate in every country where there is revenue or contractors. Also, a Delaware C-Corp would cause double taxation in the form of corporate tax and withholding to dividends paid to foreign shareholders (hence the non-US founder point). Assuming there is no tax treaty to account for this withholding, the founder would then have to pay income tax in their home country. Would any of the below structures work? a) Cayman company only. This company will be a holding and operating company. It will receive income solely from a merchant of record such as Paddle which manages VAT compliance worldwide. It would hire contractors via Deel which handles compliance worldwide. It has no corporate tax and shareholders would only be subject to tax when paying dividends. Concern about why this might not work: 1) Controlled Foreign Corporation laws of the founder's home country. 2) Accessing services such as Mercury / Brex / Google Ads with a Cayman company. 3) Can a holding company also be an operating company and have no corporate tax in Cayman, as long as there are no operations there? b) A Delaware LLC owned by a Cayman holding company. The Delaware LLC would be pass-through to the Cayman holding company so it would not generate corporate income tax. It is easy to open accounts anywhere with the Delaware LLC. Paddle would pay the LLC. There are some maintenance issues for compliance. FBAR, Be-12, PFICs, etc. Would it create the same issues in terms of CFC for the Cayman shareholders? This seems like a dark hole to waste time on, but it is crazy to me that there isn't an obvious solution for a Legal Structure for Non-US Founders of a SaaS with Global Revenue. Maybe there is... can you share it?
Comments
Post a Comment