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Ask HN: What is the best jurisdiction for internationally distributed teams?

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Re: Ask HN: What is the best jurisdiction for internationally distributed teams?

#161

Post by csomar »

glenngillen wrote: post #107
SkyAndSand wrote: post #36

Earlier quoted context omitted.

I am indeed another European and I do know about the issues with being a "US person". Many banks and brokers will simply immediately close your existing account or not allow you to open one. However, are you sure that simply by owning a US company you become a US person? Because according to my understanding if you don't live in the US (and don't spend more than 4 months / year there) you wouldn't actually be tax res…

Wow you’re getting some bad takes here. Having a phone number does not make you a US Person. Having a bank account there does not make you a US Person. I can only assume people are confusing this with the domiciled test that can exist in other tax jurisdictions. It’s mostly the same criteria as the usual tax resident status (so all citizens + those with work visas + if you’re in the country for 183 days). HSBC had th…

Having a US phone number, bank account, company and a house does not make you a "US-Person". So why the banks ask you these questions?

The banks deal with FATCA with checkboxes. If you cross one incorrectly, I can imagine they need documentation for that. And no bank wants that.

Re: Ask HN: What is the best jurisdiction for internationally distributed teams?

#162

Post by petesergeant »

yayr wrote: post #69

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 forei…

The general name for these are CFC laws, and most developed countries have them in some form.

https://en.m.wikipedia.org/wiki/Controlled_foreign_corporati...

Re: Ask HN: What is the best jurisdiction for internationally distributed teams?

#163

Post by GeneralMayhem »

sdrinf wrote: post #122
PragmaticPulp wrote: post #91

Earlier quoted context omitted.

> Most US companies will hire remote "inside the USA" but not outside the USA due to potential foreign tax and legal liabilities. That’s not a unique feature of the USA. It doesn’t matter what country you’re incorporated in. You’re still obligated to follow the local laws and tax codes of any foreign country you hire in. Technically some companies (shady crypto plays especially) will try to incorporate in a weird loc…

Given the number of founders I've seen running into this problem, I think it's worth calling it explicitely out: the problem with US incorporation as a foreign person isn't just your local tax code, but: US LLCs/partnerships (a very common structure for incorporating) require witholding (ie taxes) for foreign holders 30% (which is one of the highest rates) (keywords for googling: Federal Withholding Tax for Foreign N…

> witholding (ie taxes)

The witholding rate is not the tax rate... if your actual tax burden is less than 30%, you file a tax return in April and Uncle Sam writes you a check for the difference. There's a time-value-of-money cost, but not an actual cost.

Re: Ask HN: What is the best jurisdiction for internationally distributed teams?

#164

Post by el_nahual »

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.

Re: Ask HN: What is the best jurisdiction for internationally distributed teams?

#165

Post by SkyAndSand »

el_nahual wrote: post #164

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…

What exactly does the Cayman Delaware sandwich look like? Cayman Holding and Delaware C Corp as operational company? What is the purpose of the Cayman holding then?

Re: Ask HN: What is the best jurisdiction for internationally distributed teams?

#166

Post by yakak »

SkyAndSand wrote: post #134
yakak wrote: post #62

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.

Is that an assumption or are you speaking from experience?

Ireland? That is my envious observation of things Irish startups indicate they can do by the offers they make in EU markets. Before Brexit, UK and Ireland appeared to be able to payroll a worker in another EU country, now just Ireland. For Switzerland, we could recruit them to work here or contract them but we could not directly payroll a worker who permanently lived and worked outside Switzerland.

US Person problems? Those are just part of the annoyances the US will bring you if it becomes a meeting point through the logistics of the boss needing to go there in person more often. I've met people working in Switzerland for the FAANGs in a tier beyond the people who work out of Canada to get around US travel complications, for additional US made complications for traveling to Canada. An accidental US person by marriage who travels with their partner and has a different income situation might also find they needed to be counting days in the US for tax reasons, etc.

Many companies seem to end up dual homed in Ireland and the US and that seems to work. Personally, I would start with seeing what Ireland alone looks like and delay anything in the US if possible.

Re: Ask HN: What is the best jurisdiction for internationally distributed teams?

#167

Post by plumeria »

el_nahual wrote: post #164

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…

Can you recommend some pointers to learn more about the Cayman-Delaware sandwich?

I assume the payment processing would be in the US?

Re: Ask HN: What is the best jurisdiction for internationally distributed teams?

#168

Post by [deleted] »

plumeria wrote: post #167
el_nahual wrote: post #164

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…

Can you recommend some pointers to learn more about the Cayman-Delaware sandwich? I assume the payment processing would be in the US?

[deleted]

Re: Ask HN: What is the best jurisdiction for internationally distributed teams?

#169

Post by gumby »

SkyAndSand wrote: post #159
withinboredom wrote: post #151

Earlier quoted context omitted.

You usually need a local bank account. For example, in the NL I need an NL bank account for taxation purposes for my NL business.

I understand that. But why would a US company need a NL bank account?

Because it had a subsidiary in NL, perhaps because it had employees to pay, or otherwise did business there.

Re: Ask HN: What is the best jurisdiction for internationally distributed teams?

#170

Post by progapandist »

gyulai wrote: post #58

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 s…

That’s a nice setup, but it probably won’t work in Germany, as Germany requires freelancers/sole traders to work for >1 clients. Otherwise it’s labeled as sham employment and everyone gets into trouble. There are dedicated startups like remote.com or Deel who go around this by actually hiring people according to local laws, paying their social security and filing paperwork, while the real employer covers all costs and transfers “salary” to their bank account.
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