What is the best jurisdiction for internationally distributed teams?

Based on your description, your goals are predictability and low or outsource-able overhead. For those goals, the US is the clear choice. By far the largest pool of investors and employees are comfortable with US entities as counterparties. Plenty of companies will incorporate, prepare tax returns, and handle other compliance items (unemployment insurance) for relatively small fees.

As far as states, if you don't care, Delaware is probably the most common. Nevada and Wyoming have no state corporate income taxes, so they are also popular. More on that: https://www.forbes.com/sites/forbesnycouncil/2019/03/04/the-... . To incorporate, check out Firstbase (https://www.firstbase.io/) or Stripe Atlas.

One thing to note if, as a Dutch person (and possibly even if you're another European), you incorporate in the US:

Many Dutch financial institutions hate people who have the "US person" status. If you own a US-incorporated company then I believe you will gain that status. Banks, lenders, stock brokers, etc will either refuse to do business with you, or will give you a lot of paperwork headache and/or charge you more tax. I think this has to do with the fact that US persons have to comply with FACTA.

For example I have 3 stock brokerage accounts (1 for personal, 1 for pension, 1 for business). They all ask me whether I have the US person status, and 2 of them just flat out tell me that they won't do business with me if I answer yes.

Not sure whether financial institutions in other European companies also come with this caveat. But since it's related to FACTA, I believe they do.

I recently had to consider this and was quite surprised to discover that the US was the best place. Compared to most countries the US has been a tax haven for a long time, but the 2017 tax change meant that in most cases the US would be a significantly cheaper place to recognize revenue.* Also the mechanics of getting the boring things done is significantly easier, as noted by the Germany post cited in your question.

Because of the US FATCA law you may have trouble opening a bank account in some countries (smaller entities simply can’t be bothered with the paperwork the US demands on accounts for “US Persons”, a term which has specific meaning). In practice this just means you have to deal with larger banks.

Note I’ve been a US resident for decades, and started several companies here, but am not a US citizen and have lived and worked on three other continents as well so had no prior bias.

* Note 2: this business is intended to be quite profitable relatively soon, rather than a “focus on user growth and toggle the profit switch later business.

I’ve founded companies in the UK, US and EU. I’d recommend the UK.

The cost of a limited company is £12. It’s formed in a day. Use https://www.ukpostbox.com if you need an address.

The legal system is well known and entrepreneur friendly. Accountancy and company admin are simple and relaxed. HMRC is supportive. You can pay dividends on a flexible schedule.

There’s a very large ecosystem of financial support, innovation grants, incubators, accelerators, angel networks and VC firms.

Flip to the US for later stage funding. Nice problem to have.

Needless to say, IANAL, this is not financial advice, crayons, etc.

Be careful regarding taxes and "Betriebsstätten". If you are living in Germany and your company management is mainly operating in Germany you are liable still for local taxes ("Hinzurechnungsbesteuerung"). There are also special rules depending on how much of the company stock you own. Also you may have to register a "Gewerbe" in certain cases if you are doing business in Germany (e.g. selling something) from a foreign entity.

So in a bad case as majority owner you will then have to do the taxes and other admin topics in the country of your company AND in Germany and you'll always have a special relationship with a curious tax office.

So the only way to have really a startup in a non-German jurisdiction is to make sure that your management decisions (and usually also some infrastructure) is set up there.

Estonia is also a really good choice within EU. With their digital residency card, everything can be managed online with digital signatures only.

Delaware company and then all team members get set up as contractors in their country of residence. If they are in the EU they can contract from where they are from but live within the EU - more flexibility. But putting people on payroll has a huge overhead - better compensate employees to pay a local book keeper to invoice and process their payroll. Encourage people who have not contracted to research what contractor fee covers their salary. It will be tricky to compare apples to oranges when it comes to salaries, not just because of different rates in different places, but because salaries are quoted differently and have different insurances. Where I'm from there's a compulsory payment from employer to the employees pension fund of choice. Salaries are quoted to include this payment. And on and on ... very different across countries. Contractor fee "normalizes" this and places some burden on employees to research what their USD contractor fee is. Ask people to invoice a week ahead of international transfer and transfer 1-2 business days before month's end. This will result in monthly salaries being paid out on time.

If you intend to get VC funding, then you have to "keep it standard." Don't do anything new, weird, etc.

The "Cayman-delaware sandwich" is quickly becoming the go-to structure for Latin American startups. It's well known and has a ton of advantages, but I believe it only works if your business is not actually US-based: if the bulk of your customers are in the US, for example, then you might have to do a Delaware corp.

Ireland seems like an obvious one to look into. English language. Simplified relationship with the EU as a market and source of employees. Used to dealing with US paperwork but not going to cause anyone to get the viral US person disease.

Wherever the CEO/founder lives. You can always move the company, better to just get something formed and worry about optimizing for taxes later. Pay folks as contractors and you don't have to worry about having a presence in their country.

If you want VCs then it's always the US and should always be a Delaware corp.

For non-VC funded companies HK is great, allows for tax minimization, minimal headaches, access to international banks and potential access to Chinese market if that is important for your business.

The jurisdiction where banking and accepting payments will be easiest for you. Probably the US (Delaware, Nevada, Wyoming, as mentioned) or EU. Be careful of common offshore places, accepting credit cards will either be difficult or expensive or both.

With a fully remote setup like you describe, what are the mechanics of hiring a foreign team member?

Do you need a subsidiary or some legal entity in the foreign country in order to pay employment taxes? If they're direct employees of the US entity, what's their legal status in the US? Can you avoid all these questions by using foreign contractors rather than hiring foreign employees?

(Not a lawyer etc.)

If you didn’t have a US founder I think you’d have more options, but since you do, just embrace the US - it’s will also be the easiest from a fundraising standpoint, and one of the cheaper options.

I actually think the US gives you the most choices from a vendor standpoint, and is the cheapest (or one of the cheapest from an administrative standpoint).

Regardless, definitely do it in a jurisdiction where one of the key founders actually resides (ideally the CEO and/or CFO) as that just makes the administration much easier to have someone on the ground.

I don't see Malta mentioned. They speak English, are in the EU, use Euros, and have low tax.

Nice weather too.

Reading this thread (and remembering past pains) I posit that things are too complex almost everywhere.

Some innovation-minded billionaire should buy an island - a white spot on the map (not this one: https://en.wikipedia.org/wiki/Principality_of_Sealand) - and create a new jurisdiction optimized for incubating remote startups.

There are plenty of good suggestions about jurisdictions, but I'd say that's not the only thing you should pay attention to

What you should check is what's the best way for each person to own their share in the company. Straight ownership might have some issues. Having each one have a company that then owns the parent company might be a way. Or having a company own your company then the founders own the parent company.

There's a reason the Cayman Islands have two-thirds of the world's hedge funds incorporated there. It has a long and stable financial history and has stated that any structural financial changes will be grandfathered where legally possible. That sort of stability is worth the $100/month it takes to keep an international business there.

Be careful with the offshore jurisdictions. The low taxes can be offset by a lot of weirdness and org crime. It works if you’re a big corporate and have the right protection. Everyone knows each other in the small islands and scams get run from MITM attacks in local cafes, profiling from people in restaurants/cafes/coworking and a general lack of confidentiality among islanders between people they’ve known all their lives. Also there’s a level of hostility towards outsiders being successful in some of the offshore locations even though their economies depend heavily on such investment. I speak of Isle of Man, Guernsey and Jersey but there are horror stories from some of the Caribbean islands too. Again YMMV but if they do target you expect major friction in kind of the manner the Chinese do to force you to go through a local “partner”.

Among the ones you mentioned, Singapore.

If you're happy to relocate / create substance (director, offices, employees, board meetings) in another country so that the tax man in your countries of residence won't pursue you, then I'd go with Dubai or some zero tax Caribbean island if you don't care about Anti Money Laundering regulations (aka you don't care about investing the profits in European / American banks). Malta at 5% if you care about accessing European markets (even better if you have residence somewhere with little or no dividend tax like Portugal with NHR or Cyprus at 2.5% extra).

Company formation / bureaucracy is generally not a big concern, just avoid Germany, Italy, Spain, France (no reason to pick them to do business anyway) and get an accountant to deal with the pain.

You need to be aware that if you choose to employ remotely internationally, then you aren’t just choosing one jurisdiction — you are potentially tying yourself up in many jurisdictions.

This is because your foreign workers will have local tax obligations by virtue of being physically present in another country while working for you. It doesn’t matter what’s written in your contracts, local law wins. They can also claim rights under their local employment law, and those countries could deem you to be operating locally and subject your company to corporate registration, reporting and taxation.

Be careful to analyse the local laws and tax situation before hiring people in another country.

My friends and I have a seed-investment fund that we needed to be low overhead since we're all running companies. The Delaware process was fairly low-overhead. Some things needed to be notarized and it was a pretty easy process to get a virtual mailbox and everything (notarize.com was in the loop and they're neat!)

Sorry it isn't directly against your constraints but we are foreigners in the US so I thought I'd mention it. More information is always better :)

Good luck! Eager to hear how it goes.

I’m absolutely not an expert but I think when choose the country you also choose the problems so I think it’s more important to chose a country you feel comfortable working with (same spoken language, knowledge of laws).

Then there are plenty of company that offer as a service to hire for you in the other countries removing you from the hassle of figuring out the technicalities of other countries.

From a litigation standpoint, if you stay in Europe, consider Switzerland as a neutral jurisdiction (Rechtswahl). This is independent from where your company will be registered. Else the US, as mentioned already, is a good place. Generally to keep in mind is, that apart from the tax standpoint consider also questions regarding labor regulations and civil damages (Schadensersatz).

What I keep finding non obvious is equity. And especially ideally keeping US side a Delaware C. How to issue international options and shares?

Why do you need a company? You need for contracts between the company and customers, company and employees, company and investors. Lots of people here recommend USA, I'd guess that is unnecessarily expensive. I'd think UK, Ireland, Luxemburg, Netherlands is simpler. It depends a lot on where your customers, employees, investors are.

That's a pretty complex question with a lot to unpack. (Except: Minimize your contact surface vis-a-vis Germany. That part seems easy.)

First off: There is no such thing as a "remote friendly" jurisdiction. Estonia is trying to market this, but don't drink the Kool Aid. Someone is going to have to make a trip to the bank or the notary every now and then. They'll have to show their faces. They'll have to affix their signature to things. With ink on paper. You will have to deal with business partners who will think this way: "This guy is based where I am based. He knows that if he tries to defraud me, the police will come knocking. So he's probably not trying to defraud me, so it should be safe to do business with them." Versus "This guy is just someone on the other side of the planet sending e-mails. He knows that if he successfully defrauds me, I won't be able to do anything about it. Therefore I don't want to take the risk."

A lot depends on trust and interpersonal dynamics between founders.

If there is a lot of trust between the founders, I'd pick one of the jurisdictions where a founder is actually based. Say you pick the U.S. for ease of access to capital. This means that the person who is physically in the U.S. would probably end up having to liaise, frequently in person, with banks, accountants, government offices, etc. This puts a huge admin burden on that person, and also requires a lot of trust from the founders in the other jurisdictions that this person won't abuse their privileged position. If that founder drops out and there isn't yet any physical presences in the U.S. except for that founder, the others will be in a difficult position, because their own jurisdictions might not recognize that this is legitimately a U.S.-entity if there is no actual person in the U.S. who is connected with this entity. So that's why it requires a lot of trust.

An alternative might be: Set up 4 sole traderships and a "placeholder entity" in a zero tax jurisdiction that kicks into gear when real money starts getting to the table. So:

* Frank Deutschmann registers with German authorities as a German sole tradership.

* John Smith registers with U.S. authorities as a U.S. sole tradership.

* Aussie Australian registers in Australia as an Australian sole tradership.

* Sing Singapore registers in Singapore as a Singapore sole tradership.

* Startup Inc registers in Bermuda, with each of the four holding a 25% ownership stake.

Startup Inc passes the following resolution, and correspondingly makes a contract with each of the other four entities:

Revenues: We intend to sell an API to clients at $1 per 100 calls. To achieve that, Startup Inc will subcontract Deutschmann to run one server, Smith to run one server, Austrialian to run one server, Singapore to run one server. When a request hits a server, the server should use a random number generator: With a 25% probability it will handle the request itself. With a probability of 25% for each of the other three servers, respectively, it will redirect the client to one of the other three servers. Every partner has to pay the costs for their own server (AWS bills etc). Every partner gets to keep revenue of up to $100k per year for requests their server serves. Revenue in excess of that goes to Startup Inc. Intellectual Property: All IP belongs to Startup Inc.

The thing about the API was just an example, but you can think of analogous ways of e.g. splitting sales of widgets. The load balancing algorithm is obviously stupid, this was just for simplicity of exposition.

The great thing about this arrangement:

* As long as your api makes below $400k, Startup Inc doesn't handle any money. The German authorities only deal with a German sole tradership and tax it on its small profits, and don't care about the rest. The U.S. authorities only deal with a U.S. sole tradership and tax it on its small profits, etc.

* The Bermuda entity is the key to the whole thing and yet no jurisdiction would have a reason to scrutinize it or try to poke holes in it or attach any real significance to their respective citizens holding shares that are legally worthless in a company that is legally not really doing anything.

* No founder enjoys a privileged position that requires almost unlimited trust. If any founder drops out at this stage, the other three continue to operate almost as if nothing had happened.

* While it makes a lot of sense for the four to take advantage of economies of scale by sharing heavily, there is also potential for some autonomy which reduces the potential friction if there's something that founders can't agree on (e.g. every one goes to their favourite bank and hosting provider, picks an accountant they personally trust, etc.)

* If they end up making a loss, everybody gets a loss on their personal income tax which they can each offset against future earnings.

* In this stage the whole thing legally just looks like four people coordinating their efforts on a joint venture of sorts. But the main thing is each of the persons. Which is the actual reality of the thing at this stage.

* For each additional dollar that the API makes beyond the $400k per year, the whole thing starts gradually to look more and more like a corporation, both legally and in terms of the real life circumstance that the legal structure represents. Increasingly, what matters is no longer the four people, but the IP and money held by the Bermuda Inc with every individual being pretty replaceable. And the legal structure actually reflects that, automagically turning from joint venture-like to corporate-like.

Since we're on the subject... Can anyone just incorporate a company in the United States? Even if they don't have permit to work? Separate question, can they be employed by the company they incorporated, remotely, and use the company to bill American customers?

Anyone have experience with "non-resident" US LLC ?

That would be one way to avoid corporate taxes while being established in a reputable jurisdiction?

But for online businesses I guess at some point you'd be selling to US customers, so would that complicate things?

Try Northern Ireland :)

Why?

* Anybody from Northern Ireland is entitles to both UK and Irish passports, meaning they can live and work in both the UK and EU

* Booming tech industry, 3 Universities all with a strong focus on tech

* Can trade into both the EU and UK markets

* Great broadband etc

* Lots of VC's/Investment opportunities

One of the "tax heavens".

This is the actual reason why multinationals move headquarters there.

imho this decicions also heavily depends on the topic of your startup.

afaik for example for blockchain related stuff switzerland, especially the canton/city of zug is a very good choice - for legal reasons etc.

br, v

Delaware or Dubai.

Germany obviously has a high overhead. If you own more than 50%, CFC rules might apply and will make things very complicated.

You’re likely going to have to establish “business entities” in each county - but if you’re working with VC/other firms I’d say defaulting to US - California would be the most known.

Delaware seems to be a common choice.

I'd say New Zealand. Purely because the labour is cheap. But if you're remote first that doesn't really matter.

Singapore maybe.

Tax shelters would be my initial guess.

Lol I wouldn't, I'd head for the hills. If choice of where to incorporate is being made to align with mitigating tax liabilities. I wouldn't work for that company as it doesn't align with my ideals.

Gross business is gross.

Other than that probs EU. Gdpr is good, murica has crap like HIPAA, straya well we're basically the wild west rife with white collar crime. Which I mean is ok if you understand from the get go the playing fields aren't even. Dice roll between those three.