Things to consider when building an international structure
It’s very important thing to note from the beginning that there is no one size fits all structure for a business, investment, operation, etc.
Every case is different and there are lots of things to consider:
- Who are the owners?
- Who are the customers?
- Where are the suppliers?
- What type of business is it?
- Where the staff are located?
- What the assets are?
- What the risks are?
- What regulations apply?
- How you accept payments?
- What are you trying to accomplish?
When considering international corporate structuring you want to pay attention to lots of things.
First of all, you want to pay attention to tax.
This breaks into the three pillars of residency: you as an individual, your income, and your corporation.
Second, you want to pay attention to liability consequences.
What if you get sued? What happens if you get divorced? What if some government intervention occurs?
Third, you want to pay attention to banking. This is a huge thing today.
Historically, you were able to form a company anywhere. You could open a bank account very easily just walking into a bank. Bank account opening in Switzerland was very common among rich people. Those days are long gone.
Banks do lots of screening today. Whether they accept you or not depends on lots of factors. Some banks are easier to deal with then others. This is why when planning international structure banking is one of the things that we consider first.
Besides this, we need to consider how are you going to accept payments. Some countries don’t support certain services, such as PayPal.
Fourth, you need to pay attention to regulations in a foreign country.
Maybe you are in the industry that’s not supported in that country.
Then, you need to worry about audit. Do you need audited financials?
What about VAT, what about sales tax?
What are regulations around investing? There is lots of other rules and regulations that you need to pay attention to.
Finally, one thing that’s changed in the world today is that you really need to have some substance in a foreign country when setting up a structure. Or at least if you don’t you’re going to have a hard time maintaining a stable structure and even a harder time with tax.
Ideally, you’ll want a real office, team, customers and everything else that proves that you are doing legit business in that place. If you don’t have what the country is looking for you might end up having lots of issues.
This is why we need to be very thorough when setting up an international business structure.
It’s why a lot of the advice from those unqualified in the field, or even lawyers or accountants who might just look at one component and save you on tax but screw up your business operations are dangerous.
We help clients legally reduce their tax through international tax planning, as well as help with company formations, bank account openings, residency, citizenship, and payment processing. Have a question you want answered? Book a consultation now!