The IT business remains a high-margin area, far ahead of manufacturing and some other types of services. Having created an application, game or service, you can work not only in local, but also in international markets, offering services to millions of potential customers.
However, when it comes to doing international business, any IT specialist understands that a company in Russia and the CIS loses in many respects to its foreign counterparts. Even large holdings that work primarily for the domestic market often take part of their capacities outside the country.
The same applies to smaller companies, but the decision to move the company abroad becomes doubly relevant when customers are located all over the world.
I have compiled a list of countries where it is interesting and profitable to register companies for doing IT business in 2019. The only caveat is that the specifics of registering Fintech startups that need to obtain a license to issue electronic money or conduct banking activities were not mentioned.
What should be considered when choosing a country for registering an IT company?
When choosing a country for registering a company operating in the international market, several factors must be taken into account.
Reputation
Alphabet can have offices in classical offshores, at least through the hired army of lawyers and consultants who will explain why this is needed. A company that is just starting its journey and entering new markets does not need extra expenses for lawyers and attempts to prove to officials that your structure is not for tax evasion.
Therefore, it is important that your company is immediately registered in a country with an adequate reputation. It is partly because of this point that one has to leave Russia and the CIS - they are not always trusted on the world market and are often asked to organize an additional company in Cyprus or in another familiar jurisdiction.
Availability of infrastructure
High-speed Internet, powerful servers, mobile communications, just the ability of users to use smartphones and computers - the presence of these structural elements is extremely important for the IT business.
In addition, the infrastructure can be considered the availability of convenient services for working with the state, flexible legislation that allows you to customize the company to your needs, access to incubators, loans, professional staff, and the like.
Ability to provide Substance. This moment has become relevant in recent years. If earlier it was possible to register a company somewhere in the Seychelles, but at the same time not open an office there and keep all employees, as well as the main activity, in their native Kaluga, now such a maneuver will not work.
Substance - this is the real presence of a business in one or another part of the world, usually at the place of registration. In the modern world, it is necessary to prove that you have substance. To whom? Banks and tax authorities.
Substance is an active site, office, employees, etc.
Without a real presence, you can lose tax benefits under agreements to avoid double taxation, receive a denial of service from the bank. Therefore, the choice of the place of registration of the company is often determined by the costs of maintaining the company.
Taxes are part of the cost of business
By choosing the right place and form of company registration, you can officially reduce tax deductions. The most interesting thing is that even without offshore companies it is quite possible to achieve adequate taxation.
In addition, when choosing a country, you need to look at double tax treaties: favorable conditions have been created between some countries that will allow you to pay a rate much less than officially written in the laws.
Ability to open a bank account
And finally, it is worth mentioning bank accounts. I will quote my colleague, Natalie Revenko, senior project consultant. She helps clients find a bank account.
In a correct and logical world, a client who honestly earns money by the sweat of his face chooses a suitable bank for himself. In our real world, unfortunately, in the case of banking for non-residents, the opposite is true. The final decision whether or not to open an account for you as a non-resident is always with a foreign bank.
Banks are subject to a huge number of requirements. Local and international legislation, sanctions, anti-money laundering legislation - everything in one way or another affects the activities of a financial institution.
To protect yourself from losing a license, new clients are studied very closely and any trifle can serve as a reason for refusal: a typo in the application form, an incomprehensible business structure, risky activities, a company owner from a black / gray list country.
Therefore, you need to understand: you can try to open an account for a company in the country of registration of the company or in third countries. It is easier if an account is opened right on the spot, but sometimes it is more profitable, faster and even cheaper to open an account somewhere else.
And now let's study the list of countries that are interesting for registering an IT company.
Countries where it is profitable to register companies for IT business
All the companies mentioned below can be registered remotely without a personal visit to the country. The set of documents may vary, but everywhere you will need a certified copy of the owner's passport, as well as proof of the address of residence (utility bill, registration, etc.).
USA
All IT people go to the USA, no doubt. It is the US market that offers the highest profitability, and even competition does not prevent more and more new startups from storming the local Olympus.
The US sets an example to the world with the help of the largest corporations such as Apple, Microsoft, Amazon. At the same time, the States offer a developed infrastructure in terms of legislation, IT and financing.
And besides, an American company can open an account almost anywhere.
After the Trump reform, taxes in the United States have become lower, which has increased the attractiveness of the country for investors.
At the same time, the cost of entering the US market can be high. In addition, if you plan to test your business model in other regions, you can register a company outside the United States, and then go back when necessary.
United Kingdom
Another extremely popular market for IT startups. Fintech projects performed especially well here. This was facilitated by legislation, access to the EU market and the English-speaking market, a reliable legal system and protection of intellectual property rights.
It is possible to open an account for an English company in the UK itself, although non-resident owners are more often asked additional questions. It is also possible to open an account outside the country.
Uncertainty in 2019 is due to the fact that the UK is saying goodbye to the EU, while many agreements have not been reached. Also tightening legislation requiring reporting from companies.
At the same time, there is already a clear demand for the provision of Substance. During the banking crisis in Latvia, during which the legislation changed, more than half of the companies that lost their accounts were UK companies. They were considered shell companies.
Ireland
Facebook, Apple and dozens of other IT industry giants have opened European offices in Ireland. This has saved billions in taxes. The EU tried to demand that IT giants pay extra taxes, recognize transactions between Ireland and companies as illegal, but it turned out crumpled.
Despite this, Ireland is attracting more and more new players. This is due to legislation that protects business interests and intellectual property, practically the lowest level of corporate tax in Europe, a proven infrastructure for IT business.
And against the background of Brexit, Ireland becomes a potential replacement for British companies that risk losing access to EU markets.
The presence of an office, employees in the country is recommended, as elsewhere. It is possible to open an account.
Canada
Canada is home to many major gaming companies, including Ubisoft, a division of Rockstar. Many IT projects and online businesses also choose the country as their home.
Canada has a large domestic market, close ties to the US, and a clean reputation in the international market. The infrastructure is developed and is constantly being improved. There is a reserve of personnel, which is trained in local universities.
Of particular interest are Canadian limited partnerships - a form of companies that allows you to reduce corporate income tax to 0%, provided that all income is received outside the country. Tax on dividends is paid by partners at personal income tax rates in the country where they are tax residents (in Russia it is 13%).
This form may not be suitable for an Apple-sized corporation, but it is an extremely good option for a start.
In addition, a Canadian partnership can open a bank account in Canada (subject to certain conditions) or virtually any other country in the world. If you need an account in Canada, then the issue of providing Substance will have to be approached very responsibly. For example, one of the company's directors must live in Canada. Opening an account outside of Canada will be a little easier.
Malta
Malta is also considered a contender to replace the UK. But even if this does not happen, Malta has already won its share of the IT market and continues to increase.
The jurisdiction is especially popular with projects related to betting, online casinos, cryptocurrencies, but they require licensing. The conditions for the rest of the IT business are also pleasant.
Malta is part of the Eurozone, offers a corporate tax of 35%, but with the possibility of reducing the effective rate to 5%. Tax on dividends - 0%. For IT-specialists, the procedure for obtaining work permits has been simplified.
Malta has its own banks, plus it is allowed to open an account in other countries, including opening a bank account in Europe.
Armenia
Given the above selection, this member of the list will seem unexpected. However, new names and rising stars are also appearing on the international corporate services market.
Even Zuckerberg was once not a very popular student, let alone jurisdictions.
Armenia is interesting primarily for its tax regime for IT business. Having received a certificate of IT activity (about a month of waiting after registering a company), you receive 0% income tax, 5% tax on dividends, which can be returned, there are no strict requirements for a local office and employees, and an account is opened directly in the country.
The authorized capital of such a company can be from 1 euro - ideal starting conditions for a startup.
Switzerland
Switzerland is not the first country that comes to mind when talking about IT. However, this omission should be corrected. The fact is that projects with large budgets feel comfortable in Switzerland, whether it is IT development in the field of medicine or a base for creating and maintaining a large cryptocurrency.
The infrastructure of Switzerland is developing so rapidly that bitcoins are accepted in some cantons as payment for public services.
In addition to fintech, Switzerland is interested in cyber security, medicine, science and manufacturing. If your project solves problems in these areas, the choice of the Federation may be an additional incentive for you.
In addition, Switzerland is a banking country, which means there will be plenty to choose from a financial institution.
Hong Kong
Opening a company in China is not easy. But in Hong Kong - please. If you want to take a bite out of the Chinese games market, then Hong Kong will give you a chance to jump into that niche.
In addition, Hong Kong offers territorial taxation, which can be very beneficial for an IT business that makes a profit outside the country. There are various incentives for companies, including tax incentives: 50% discount on the first 2 million Hong Kong dollars of profit, R&D deductions, etc.
And most importantly, Hong Kong is predictable. Its legislation is fixed for 50 years. It is clear what will happen in the next couple of decades.
The only problem is the bank account. It is extremely difficult for foreigners and young companies to open an account in Hong Kong itself. It takes a lot of time and effort, and the result is not guaranteed. Therefore, it is better to open an account in other countries or look at alternatives.
Estonia
Despite its modest size, Estonia has big ambitions. Perhaps, it is Estonia that offers one of the most convenient infrastructures for business, including IT, in terms of communication with the state. The electronic state is set up here and works quickly and efficiently.
The bet on IT in the country was made a long time ago and we have seen its fruits, for example, in the face of Microsoft's purchase of the creators of Skype. Despite the sad ending for the messenger itself, the $8,5 billion price tag shows the scope of the opportunity.
For businesses, in addition to infrastructure, it is useful not to pay income tax as long as the profits are reinvested in the company.
The lack of jurisdiction, as always, comes from the banks. To open an account in Estonia, it is necessary that the company's activities are connected with Estonia. This is solved by opening accounts outside the country.
Andorra
Another not too obvious player, but offering a corporate tax rate of 2%. For this, special conditions must be met. The base rate is 10%, which is lower than in Ireland.
If the owner of the company becomes a tax resident of Andorra, he will be able to get rid of the tax on dividends.
The account is opened in Andorra itself or outside it at your request.
From Andorra, it is beneficial to attract not only local, but also Spanish and French infrastructure. The countries are very, very close.
Instead of a summary
Entering the international market is a well-thought-out decision. The choice of company and country of incorporation should be just as thoughtful. Each business is different in its own way and each will suit its own companies and its own bank accounts.
The specific choice is best made with a professional. The reason for this is simple: for example, if you want to open a company in Estonia and open an account there, but your clients are only in Asia, then you will not receive any account. We'll have to think, look for alternatives. But you simply did not take into account the rules and lost money and time.
Source: habr.com