from Hacker News

Ask HN: Best country to run a boostrapped startup from? (After Section 174)

by justinram11 on 1/23/24, 1:38 AM with 31 comments

• by vintagedave on 1/23/24, 6:19 AM

  I cannot answer for Taiwan, but if you're interested in an EU-based company registration from abroad, I recommend Estonia. The tax system is extremely straightforward: a company pays tax for its employee's wages (so, no tax for contractors, for example.) Flat rates, very easy to understand. In addition it's a very IT-based country; not relevant if you're not personally resident but worth being aware.

  In my experience explaining the tax system here, which takes _less than a single page of text to understand_, generally blows most US citizen's minds :) It is very business-friendly.

  Check the section "Estonian tax system" on this page: https://learn.e-resident.gov.ee/hc/en-us/articles/3600007215...

• by Kon-Peki on 1/23/24, 3:15 AM

  The US Congress is working on some special tax legislation related to Taiwan. It’s part of the same package that will delay Section 174 from going into effect (retroactively???). It’s a bipartisan deal so there is a greater-than-zero chance it passes. I’d look into that before jumping ship and heading somewhere else.

• by woutr_be on 1/23/24, 2:56 AM

  I run a business in HK, and generally it’s incredibly easy. Easy to set up, accounting is easy, ongoing fees are fairly low. So far I haven’t encountered any issue. But I’m well aware of the political issues being registered in HK might bring, and some (especially US) businesses might be wary of doing business.

• by altdataseller on 1/23/24, 2:06 AM

  Where will most of your customers be? If this is a startup with an enterprise sales component, that's important to know, because you'll be doing sales calls with them (at least initially)

• by csomar on 1/23/24, 6:30 AM

  It'll depend on how you sell to your customers. Do you have 2/3 very large invoices in a year; or are you in the subscription model with thousands of customers.

  Malaysia+Singapore/UAE is a good combo. Malaysia is cheap and loose. Sg/UAE have decent banking and low taxes.

  My advice, however, is to just start as long as you can process payments. You can care about jurisdiction and taxes later when you have enough money.

• by greenSunglass on 1/23/24, 6:15 AM

  Taiwan starts enforcing the CFC rules in 2023. if you open a company outside Taiwan in a low-tax jurisdiction (liek Singapore), the revenue and profits of that company might be subject to taxation in Taiwan under the CFC rules. But there is some exemptions : https://taxsummaries.pwc.com/taiwan/corporate/significant-de...

  If you intended to pay yourself in dividends from outside Taiwan: Taiwan Taxman will ask you if the dividends were generated from the work done while in Taiwan.

  Open a Taiwan company? Probably not, it's such an hassle to get payments from the US with Taiwan's fintech (no stripe like company yet that make payment easy)

  A shameless plug: if you are a dev in Taipei/Taiwan and want to talk to like minded developer, try taipeidev community:

  https://join.taipeidev.com

• by Grimburger on 1/23/24, 4:16 AM

  To be domiciled in Singapore but then run it from Malaysia is a good option. SG has solid tax incentives for startups and operating costs across the border are tiny, rent and bills are a rounding error, it gives you a lot of runway to work with.

  I've been through the MDEC entrepreneur visa process and it was all fairly straightforward. Believe they have one of these digital nomad visas also now, if you are pulling out personal income while working on the business that's perhaps an alternative.

  If you are willing to pay the higher corporate rate by domiciling directly in Malaysia then you can also apply to get a business visa as an employee instead.

• by cssanchez on 1/23/24, 4:25 PM

  I think Puerto Rico stands a lot to gain from these changes.

  Residents and businesses here file taxes with PR's Hacienda, not the IRS, therefore Section 174 doesn’t affect PR as far as I know. On top of that, PR already has several tax breaks and incentives that may tip the scales even more for some.

  It will be a very interesting year though as the head of Hacienda just resigned, so it’s anyone’s guess as to how we’ll end up.

• by Pete-Codes on 1/23/24, 12:23 PM

  The UK is pretty good - quick and easy to set up a company or you can be a 'sole trader' which basically means you have simplified accounting but you don't have any limited liability if someone sues you etc

  Also, an overlooked benefit - we have public healthcare so you don't have to worry about keeping a job in order to get health insurance. It's kinda overlooked point but it's weird that America has this system which incentivises you to have a job in case you get ill.

  Also, everything is in English. I personally woulnd't want to file my accounts somewhere that I need to hire someone to translate the bank letters/contracts etc.

• by samcheng on 1/23/24, 5:09 AM

  Lucky you; Taiwan is a great place to live!

  I would say that selling into US businesses is going to be a real drag, though. Those 11 AM PST meetings start at 3 AM in Taiwan...

• by itake on 1/23/24, 3:10 AM

  Not an expert... but foreign investments require extra paperwork and tax for you at a minimum.

  If it was me, I'd keep everything under the US system until you're profitable enough to hire an expert and not ask on HN.

  Also if you're going to raise investment, I would stick to the USA.

  You might get into legal or hiring issues if you only get contractors though.

• by wnolens on 1/23/24, 2:57 AM

  How are the tax (filing and actual $ burden) complications of being a a majority owner of a foreign corporation?

• by throwaway290 on 1/23/24, 4:52 AM

  You don't care where your developers live. If you do business with US then they want you to be a US corp. Who wants to do cross border business?

• by ulfw on 1/23/24, 9:09 AM

  Why would a Taiwanese company use "1099 contractors"? That's a US tax thing

• by KomoD on 1/23/24, 11:46 PM

  > US Citizen

  > sells to mostly US based businesses

  > 1099 contractors

  This sounds to me like you should just do it in the US

• by poulsbohemian on 1/23/24, 3:18 AM

  I mean - isn't this really just a choice between your citizenship, your country of residence, and your target market? Sure you can tie yourself (and your lawyer and accountant...) in knots trying to come up with the ultimate tax and legal strategies, but at the start up / early-stage phase, getting something to market and getting customer feedback (and reaching some kind of profitability...) feel like they are going to matter a lot more than saving a few ducats in taxes, for most businesses.