USA Best Country to Incorporate?


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I am a United States citizen going into business with 2 people. One person is based in the Netherlands and will own 66%. Another person is based in the UK and he will own 1% and I will own 33%.

We have narrowed down our choice to either locating in the UK which has a corporate rate of 20% or the United States which has a corporate rate of 21%.

1) Anyone know if the UK has more taxes than this that we have not considered?

2) I have read that the U.S. c corp would be necessary to get the 21% corporate tax rate. Is this correct? What would be the best state to incorporate in? I hear Delaware everywhere but is it really better for taxes? Not worried about corporate laws, etc. Just tax.
 

Becky

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Welcome to the forum :)

There is a guide to the basics of running a UK company here: https://www.gov.uk/running-a-limited-company

If all three of you will also be directors of the company as well as shareholders then you may have UK income tax obligations whether or not you are UK resident. The company will be required to deduct income tax and national insurance contributions (NICs) from a director's salary through the payroll. These NICs are called primary contributions, and the company has to also pay secondary contributions - these are not deducted from the employees pay, they are an added cost of employment for the employer. The rates start at 0% but for income over £8,424 the rate is 13.8% for the 2018/19 tax year. Here are all the rates: https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2018-to-2019

Furthermore if directors are resident in another country then there are local tax considerations to consider too. There is a good article on it here: https://www.taxadvisermagazine.com/article/global-governance

This is a very general overview, and the reality would depend of a number of factors. If you do decide to incorporate in the UK I would strongly advise seeking professional tax and accounting advice beforehand so that you know exactly what to expect.

Another factor that might be worth considering is Brexit - depending on your business you may be affected one way or another when the UK exits the EU. Given that we don't know what is happening yet, this is a big unknown.
 
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You are quite kind to reply to my question - there is a ton of information in here for me to research. Thank you again!
 

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