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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?

#91

Post by PragmaticPulp »

gardnr wrote: post #68
troydavis wrote: post #6

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 car…

Most US companies will hire remote "inside the USA" but not outside the USA due to potential foreign tax and legal liabilities. While the USA might be good for the reasons you listed, hiring remote full-time employees can be a legal minefield. If every employee is a contractor then that introduces its own legal issues in the USA.

> 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 location and then flaunt laws and pay people “under the table”, but they’re just breaking those laws, not escaping them.

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

#92

Post by donohoe »

mikeryan wrote: post #86
gardnr wrote: post #68

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. While the USA might be good for the reasons you listed, hiring remote full-time employees can be a legal minefield. If every employee is a contractor then that introduces its own legal issues in the USA.

There’s a company called Deel (I’m a customer) that can take a lot of the pain out of this including being the employer of record in many countries. There are others as well. http://letsdeel.com

Same, have had a good experience with using Velocity Global for employees in other countries (EU and International) https://velocityglobal.com

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

#93

Post by [deleted] »

mikeryan wrote: post #86
gardnr wrote: post #68

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. While the USA might be good for the reasons you listed, hiring remote full-time employees can be a legal minefield. If every employee is a contractor then that introduces its own legal issues in the USA.

There’s a company called Deel (I’m a customer) that can take a lot of the pain out of this including being the employer of record in many countries. There are others as well. http://letsdeel.com

[deleted]

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

#94

Post by bzxcvbn »

nine_k wrote: post #49
ageitgey wrote: post #37

Earlier quoted context omitted.

In my experience, things aren't that simple. For example, if you start a company in Country A but you are the main decision maker and live in Country B, then Country B may try to claim primary taxation of the company based on the fact that they consider the company being 'effectively run' from inside their borders despite your incorporation. And you aren't going to read about this kind of stuff on forums because it i…

As the post states, the idea is to hire / contract a number of people around the world. I don't think it would be easy to argue that that the company effectively operates from country A if most of the work is done by people in countries B..Z. IANAL, of course.

Needing to argue about that, possibly in a lawsuit, with the tax office, would certainly negate any benefit of incorporating abroad to avoid some unspecified overhead.

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

#95

Post by logifail »

jokull wrote: post #81
morpheuskafka wrote: post #63

Earlier quoted context omitted.

This will require research on each countries laws, some countries have very rigid definitions of what qualifies as employment and will not allow those payments to be classified as contract income, dividends, or anything else.

The way I do it, I set up a limited liability company that is just my own name. I then charge for services rendered and income goes into a company in my sole ownership. I then pay salary to the only employee (me). This is common and completely legal.

> I set up a limited liability company that is just my own name. I then charge for services rendered and income goes into a company in my sole ownership. I then pay salary to the only employee (me). This is common and completely legal

This approach exploded fairly spectacularly in the UK for many of those deemed by the tax office (HMRC) to be using it purely as a device to attempt to avoid being "on payroll"

https://www.gov.uk/guidance/understanding-off-payroll-workin...

Even BBC presenters were setting up "personal service companies" to try and avoid taxes (allegedly at the urging of the BBC) and ended up owing the tax office a bunch of back taxes.

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

#96

Post by donohoe »

giaour wrote: post #12

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?

Depends on the country :)

I've used Velocity Global to handle local laws, compensation (401K in USA but Pension Plan in UK/Ireland etc.), currency, and hiring requirements. There are others recommended elsewhere in the comments.

We are US based and used them for almost 8 countries so far (UK, Mexico, Hong Kong, Germany...)

https://velocityglobal.com

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

#97

Post by vruiz »

thruflo wrote: post #24

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, innovati…

As someone who tried UK, opening a bank account not being a UK resident and without proof of existing UK customers was extremely challenging.

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

#98

Post by astrange »

SkyAndSand wrote: post #36
FooBarWidget wrote: post #20

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…

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…

The US doesn’t care if you live there or not (unlike every other country except China); you still have reporting requirements and technically have to file returns saying you don’t owe taxes.

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

#99

Post by lukeqsee »

mishaker wrote: post #57
lukeqsee wrote: post #21

Earlier quoted context omitted.

I don't know of remote-first companies, but I know of many Estonian companies that have raised a lot of money and been incredibly successful. To name a few: - Bolt - Wise (TransferWise) - Pipedrive I have a long history with e-Residency and know many e-Residents (e-Resident since 2015, 3 companies, member of EERICA.ee). Happy to chat about it. Email in bio.

I was e-resident too but had to become resident in Estonia. Cause if you are abroad and distribute yourself dividend (as a sole entrepreneur) your host country would consider your Estonian company local and thus it constitutes a permanent establishment and that becomes extremely complicated

Of course--but this is the case for almost all jurisdictions of record vs jurisdictions of taxation. Few countries want to allow a company to operate 100% in their borders without extracting some degree of taxation. (In fact, this is basic OECD taxation doctrine.)

My situation is complex, but, generally, the advantages of Estonian registration are found in drastically simplified and lower-cost business registration and processing (vs say a GmbH in Germany or Switzerland with high share capital and accounting costs) or ease of operation for digital nomads or fully remote companies. A OÜ isn't for everyone in every life situation, but when it fits, it tends to work really well.

A LLC or C Corp in the US could work just as well (or better), depending on the situation.

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

#100

Post by melony »

gardnr wrote: post #68
troydavis wrote: post #6

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 car…

Most US companies will hire remote "inside the USA" but not outside the USA due to potential foreign tax and legal liabilities. While the USA might be good for the reasons you listed, hiring remote full-time employees can be a legal minefield. If every employee is a contractor then that introduces its own legal issues in the USA.

The term you are looking for is PEO.

See my old comment for some service options

https://news.ycombinator.com/item?id=31254615

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