Best place to start a foundry?

Alex Visi
Alex Visi Posts: 185
edited December 2020 in Type Business
Hi everybody!
I’m curious to hear opinions or experience on what country is the best for incorporating a foundry? I’m a EU resident, but my home country is far from being business friendly taxes-wise. EU also seem to make less sense because we have to charge high VAT to customers from EU, making pricing higher, which can be avoided if the business is founded elsewhere, if I’m not mistaken. So considering the fact that it’s online only, I’m curious about better options. Some US states seem interesting for outsiders, but there are probably other options too? Any opinions?

Thanks and Merry Christmas!

Comments

  • Dave Crossland
    Dave Crossland Posts: 1,429
    VAT prices are not actually higher, because VAT is claimed back, and it can even be beneficial - when I was operating a UK business, I benefitted from a VAT based subsidy for small-medium businesses with turnover above and below certain thresholds.

    Since a lot of no-tax jurisdictions are subject to withholding taxes from larger jurisdictions at transfer time (eg without a https://en.wikipedia.org/wiki/IRS_tax_forms#W-8_Series) then running a business there may be more expensive than in a low-tax jurisdiction, plus there are the risks involved (a) of getting formalities wrong legally and (b) of brand tarnishing ethically, which can be much more expensive. Just ask the ex prime minsters of Iceland and Pakistan ;)

    So, staying in the EU might be best for you. There is a huge range in differences across the EU, and for example I've heard Italy is extremely bureaucratic compared to other EU states. A lot of tech companies are in Ireland since the 1990s. Cyprus has been in the EU since 2004. Estonia's E-Residency is more recent. 

    There's a lot of information online if you pull on this thread: https://en.wikipedia.org/wiki/Perpetual_traveler#Flag_theory

    But in general, I wouldn't believe anything that is too good to be true, and I wouldn't discount the value of local chartered accountancy and banking firms that you can trust, dealing with their people in your mother tongue, sleeping easy at night, and focusing on profit center activities rather than marginally trimming the cost centers.
  • Claudio Piccinini
    Claudio Piccinini Posts: 681
    Besides all this, why should you want to base your activity outside of the place where you reside?
  • Dave Crossland
    Dave Crossland Posts: 1,429
    edited January 2021
    In many places, the local chartered accountancy and banking firms aren't believed to be trustworthy. Or, as Alex Visi alluded to, the local tax authority is believed to be exorbitant, or at least burdensomely inefficient with official red tape, leading to "capital flight". The exorbitance might be a high official corporate or income tax rate, or might be a high rate due to local corruption culture. Local currency may be unreliable, for example in argentina and india the inflation rate is much higher than NATO nations.

    Of course I recommend to always pay your taxes, and never offer or accept bribes, but I also recognize that other people do/nt do that. Here's an excellent book about this, more now exactly 10 years old, which explains how - as James Montalbano alluded to above - the USA and UK are the center of the offshore financial world:

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