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# Incorporating Your Company Abroad: Lesser-Known Countries to Consider

Are you looking to incorporate your company abroad? With so many factors to consider, it can be overwhelming to choose the perfect location. Taxes, ease of doing business, and potential for growth are just a few of the many factors to consider. In this article, we will cover four lesser-known countries that might just be the perfect place for you to incorporate your next company. We will be approaching this as a foreigner incorporating in that country abroad, and where applicable, we will use a company profit of $100,000 and $1 million as our baseline.

## Table of Contents

1. Introduction

2. UK Limited Company

3. US Corporation

4. Cyprus

5. Estonia

6. Georgia

7. Isle of Man

8. Pros and Cons of Incorporating Abroad

9. FAQ

## UK Limited Company

The UK is currently ranked 8th in the world for ease of doing business. However, from April 2023, UK corporation tax gets far less beneficial and a bit more complex. Before that, UK corporation tax was just 19%. But now, if your company makes a profit up to £50,000, it’s still 19%. Profits between £50,000 and £250,000 are going to be a marginal rate of 26.5%, and if your company profits are above £250,000, you’re going to pay 25% on everything. Using our standard test, if you have a company profit of $100,000, that’s going to equate to a corporation tax rate of 21.82%. Company profits of $1 million are subject to a 25% corporation tax rate.

## US Corporation

The US is currently ranked 6th in the world in terms of ease of doing business. This is a touch different because US corporations will pay a federal corporation tax of 21% always. But depending on the state they’re registered within, they could also pay a state corporation tax rate on top of that. If your company is registered in a state like Wyoming where there’s no state corporation tax, then on a $100,000 profit, you’ll pay 21%. The same goes for a $1 million profit. If you incorporate in a state like Florida, then on a $100,000 profit, your overall corporate tax rate is going to be 26.5%. If you incorporate in a state like Minnesota, then on a $100,000 and $1 million profit, your overall corporate tax rate is going to be about 30.8%. The US also has a popular limited liability company or LLC. Generally, these are treated as pass-through vehicles. What that means is profits of the LLC are not treated with corporation tax. They are passed to the owner as the owner’s income. The owner then pays personal income tax on those profits.

## Cyprus

Cyprus is home to the cleanest beaches in all of Europe and the world’s oldest perfumes. Cyprus is currently ranked 54th in the world in terms of ease of doing business. The corporate tax rate here is a flat 12.5%. Since it’s flat, that applies to both a $100,000 and $1 million profit per year. With Cyprus, aside from companies on the EU Blacklist, Cyprus does not levy a withholding tax on dividends, interests, or royalties paid to non-residents of Cyprus. The setup costs would include all of this and that’s going to cost about 1300 Euros plus that and that’s 19 in Cyprus. If you need assistance in opening a bank account in Cyprus as well, that’s going to have a cost of 400 euros plus that. The total incorporation cost is about 2,000 Euros, which is just under $2,200. The annual total fee for everything is about $1,900.

## Estonia

Estonia is currently ranked 18th in the world in terms of ease of doing business. In terms of corporate tax, all undistributed profits are tax-exempt. That’s 0% for all company profits kept within the company that you’re not, for example, distributing to yourself. Essentially, that means you can use all of the company’s money to further grow the company. Estonia is the first of two options on this list which actually uses a system whereby they postpone corporation tax until, for example, dividends are declared. Essentially, what this means is your company makes $100,000 in profit, no tax. So you’ve got $100,000 or $1 million in profit. However, that post-tax profit, because there is no tax, when you declare dividends to yourself or pay yourself a salary from those post-tax profits, here’s what happens. The normal rates on these distributed profits are 20%. However, if you’re making regular distributions like this, they do offer a lower 14%. If you use the 14% system, then a 7% withholding tax is levied on things like dividends unless the country you reside in has a 0% double tax treaty with Estonia, in which case that 7% would not apply, and you would pay 14% on distributed profits.

## Georgia

Georgia is ranked seventh in the world in terms of ease of doing business. Similar to Estonia, Georgia’s corporate tax rate is 0% on retained earnings. Again, similarly, there’s a max rate of 20% applied to distributed profits such as salaries or dividends paid to foreigners with withholding taxes. For companies set up in a non-free industrial zone, this is going to include all of this and it will cost about 900 Euros or $1,100. The annual fees are going to include this, and that’s going to cost about 400 Euros or about $433. For those of you wanting Georgian accountants, accounting is going to cost about 75 Euros a month. For a non-free industrial zoning corporation, it’s going to cost you about $1,100 to set up and $450 annually.

## Isle of Man

The Isle of Man is a self-governing British crown dependency, which technically means it’s a possession of the crown rather than the UK. It’s well established as an international business center due to its political stability and low taxation. The Isle of Man has a corporate tax rate of 0%, and dividends have a 0% rate of tax. There is no withholding tax on dividends. The initial set-up costs include all of this and that’s going to cost you between three and a half and four thousand pounds. In terms of bank account here, you have two options. You can set up an offshore bank account, which is cheaper. That’s going to cost you about 400 pounds. It’s also going to require a deposit into that account of between a thousand and five thousand dollars. The total cost to incorporate here is going to be between about four thousand pounds and five thousand one hundred pounds, or between $5,000 and $6,400.

## Pros and Cons of Incorporating Abroad

Pros:

– Lower taxes

– Access to new markets

– Diversification of assets

– Increased privacy

– Potential for growth

Cons:

– Language barriers

– Cultural differences

– Legal complexities

– Distance from home base

– Potential for political instability

## FAQ

Q: What is the best country to incorporate my company in?

A: It depends on your specific needs and goals. Consider factors such as taxes, ease of doing business, and potential for growth.

Q: What are the benefits of incorporating abroad?

A: Lower taxes, access to new markets, diversification of assets, increased privacy, and potential for growth.

Q: What are the drawbacks of incorporating abroad?

A: Language barriers, cultural differences, legal complexities, distance from home base, and potential for political instability.

Q: Do I need to be a resident of the country I incorporate in?

A: No, you do not need to be a resident of the country you incorporate in.

Q: What are the annual fees associated with incorporating abroad?

A: Annual fees vary depending on the country and the services you require. Be sure to research and budget accordingly.

Resources:

– [UK Government](https://www.gov.uk/government/publications/rates-and-allowances-corporation-tax/rates-and-allowances-corporation-tax)

– [IRS](https://www.irs.gov/businesses/small-businesses-self-employed/c-corporations)

– [Cyprus Company Formation](https://www.cypruscompanyformation.com/)

– [Estonian Business Register](https://www.rik.ee/en)

– [Georgia Company Formation](https://www.georgia-company.com/)

– [Isle of Man Government](https://www.gov.im/business/companies/)

– [Investopedia](https://www.investopedia.com/terms/i/international-business.asp)