Best structure for startup/online platform

[JustAnotherNomad]

Thank you for your reply. Yes, I wouldn’t incorporate any business until the product is ready.

The reason for keeping the funds in the company would be to mitigate the risk of something “going wrong.”
I know that personal tax residency is different from corporate tax residency, but I don’t own a factory. It’s me and my laptop. So if a country claims me as a tax resident, there’s a massive risk that they will also consider any company tax resident per its effective place of management. That risk is probably even higher with a US LLC without any substance in the US which is disregarded for tax purposes. So not even the IRS would try to challenge the foreign tax residency.
But if I have a holding company, in a worst case scenario, the money would be in the holding company, so only CIT would apply - provided that the other country treats SMLLC’s as corporations and not as sole proprietorships. Which I believe many countries do, as they don’t have an equivalent in their domestic law. So even in a worse case scenario, where the corporate tax residency would be moved to a high-tax country, I would only have to pay CIT.

Of course then you may ask if it’s more likely for that to happen or for me to die.
I agree that it may seem overly complicated, and I wouldn’t do it if it wasn’t cheap. I’m just thinking if it’s a couple hundred bucks per year, why not try to build a slightly better structure.

 

[fshore]

If you withdraw dividends /salary before you become tax resident somewhere else then you wouldn't have to worry about those funds when you become tax resident somewhere else, but if kept in a company then you'd face dividends or salary taxes when you need the funds.

You would also only have to pay cit without a holding company, unless you want do draw dividends to invest in another company. If you're accidentally tax resident somewhere I'd think you could wait a few months to draw these dividends until you are no longer resident there? You have to pay capital gains taxes when moving out, but you would also have to based on the value of the holding company.

For long term planning if you stay in the new country you would probably want changes to your structure anyway.

If your two companies are accidentally resident in your new country you might face double the trouble, as you'd need to register and file locally for both of these companies. Depending on the country you might also have to do an audit, or at least prepare two sets of financial statements instead of one.

 

[JustAnotherNomad]

Good points. I was worried about a scenario where some county retrospectively considers me tax resident based on some vague rules in the tax code. But I guess you’re right, it’s better to just drop the complex structure, go with a single SMLLC and empty it as I go. Then even if they do claim me as a tax resident, at least it will be “empty.” So maybe they can her taxes for one year, but not the years before. Whereas, if the money was still in the company, I wouldn’t be able to get it out anymore without paying taxes. Makes sense, thanks.