Working digitally gives freelancers, contractors, and digital nomads the ability to work whenever and wherever they like, as long as they stick to possible preferred employer schedules. It’s only natural that those who work from their favorite locations across the globe might settle into their country of preference and want to incorporate a company there.
Incorporating a company in a different country can be tedious, depending on your country of residence and where you’ve chosen to set up shop. However, it can be wise if you’re facing zero restrictions regarding where you live and operate your business.
- Remote business Incorporation Considerations
- The Best Countries to Incorporate your Remote Based Business
Remote Business Incorporation Considerations
There are many considerations concerning your business and which country you plan to incorporate. It’s crucial to choose a location that will be beneficial to you and your operations. You must do enough research to know where your customers and suppliers are, any CFC (Controlled Foreign Corporation) rules, political and economic stability, the ability to use established payment methods (like PayPal or Stripe), and much more.
You will need to examine your company itself and how you plan on conducting your business as well as the countries you will be involved in. For digital nomads who are experienced in flag theory, look at whether your flags have a relationship with each other before you make a decision on where you will be creating your company.
Here are a few questions to ask:
1. What country are your customers and suppliers in?
In some cases, you are required to pay income tax on the income earned when you are “effectively connected” to the country your customers and suppliers reside in. The US, for example, has this rule and you are required to pay tax on US income regardless of whether you are incorporated there or a resident there.
2. Does the country have CFC rules?
CFC stands for Controlled Foreign Corporation, and refers to a company that is registered in a different country than the one the owners reside in. If the country has CFC rules, the governments will share business and banking information. This can impact your tax liabilities. You ideally want to look for a country that does not have CFC rules.
3. Is there a DTA between the country you are doing business in and the country you are incorporating in?
Look for countries that have a DTA. You want these two flags, your resident country and your company country, to have a Double-Tax Agreement so that you are not going to be taxed twice on your income.
4. Is the country politically and economically stable?
In areas with an unstable government, your accounts could be seized or closed. Look for a country with no political or economic unrest or instability.
5. Does the country allow you to use an established, recognized payment aggregator (Square, Stripe, PayPal)?
Many businesses worldwide feel more comfortable if you use a well-recognized payment processor such as Square, Stripe, or PayPal to handle payments. In some countries these payment aggregators aren’t an option and you may need to opt for a local payment processor in your company’s country instead. This can impact your business if people are not comfortable with a payment processor they don’t recognize or trust. Another disadvantage is that as an offshore company, you may be charged large transaction fees on any payments that you process.
The Best Countries to Incorporate Your Remote-Based Business
Technically, you can incorporate a business anywhere in the world, but the question remains; do you really want to? Different locations offer different benefits, and the reality is that some countries aren’t a great fit, typically due to economic or political instability.
This list features the best countries on Earth to incorporate your remote-based business. We’ll talk about the pros and cons and provide some background information regarding each country we suggest, so you can better understand which location will work for you and why.
Singapore serves over 100 different airlines going to and from over 60 countries. There’s no denying that it’s one of the best international airports in the world and that Singapore is easy to reach from anywhere. It also has a flourishing economy, and it’s only natural that digital nomads worldwide want to be a part of it.
The country boasts wealth, extravagance, and political stability. It continues to thrive economically and works as a fantastic place to integrate a remote-based company.
- Political stability;
- A higher GDP than most countries;
- Strong economy;
- Several tax incentives for companies;
- No capital gains taxes.
- Corporate tax is 17% regardless of the source;
- 15% withholding tax rate on interest;
- 10% withholding tax rate on royalties;
- Work permit required;
- Salary is taxable.
How to incorporate in Singapore:
- Hire a Singapore company to help you with incorporation paperwork because of Singaporean law
- Have a single local resident director and an office space
- Register your name with the government
- Once approved, the Singapore company you hired will notify you by email
- Sign up for GST if you exceed one million in revenue
If you’re looking for economic and political stability wrapped up in a small but exciting package in Europe, Andorra is for you.
Andorra is undeniably tiny, with only 85,000 citizens and residents in total. Much of the land is mountainous, so you’ll find most homes and businesses in the gorgeous valley below. Andorra typically requires a transfer during travel, depending on where you’re coming from. While it’s relatively easy to access, they do not have a local airport, which can sometimes be inconvenient.
To establish a remote-based business you have to operate your business from an office building, private apartment, or small office, but the startup costs are low, and there are local companies to help.
- No local shareholders required
- Can be 100% foreign-owned
- Set up costs only €3,000
- Cannot have a completely offshore company; a small office, private apartment, or business center is required
- Local employees are highly recommended
- Criminal record checks from where you live and where you were born, as well as a notarized copy of your passport
How to incorporate in Andorra:
- Reserve a company name
- Request authorization from the government for foreign investment
- Request a bank account
- Incorporate with a notary
- Register in the company registry
- Reserve your trade name
- Register your company in the business registry
Cyprus is an island in the East Mediterranean Sea, but don’t let the seclusion fool you. Cyprus is relatively well populated, and though the economy has some vulnerabilities, it’s fairly advanced and high-income. Cyprus might not be suitable for you if you’re looking for accessibility and easy travel, as it is an island, after all.
However, Cyprus has two heliports and international airports, though flight times and availability may not be as plentiful as in other locations. In general, Cyprus makes island life seem a little less secluded, primarily due to the size of the island. It’s large, well over 3,000 miles, so you’ll rarely feel stuck. With simple regulations and a landscape to die for, Cyprus is an excellent pick for starting or integrating your business.
- Tax freedom for income from dividends and interests, including income from the stock market
- The residency requirement is two months per year
- European country that is legally recognized
- The corporate tax rate is 12.5%
- The economy is highly vulnerable
- CFC rules
How to incorporate in Cyprus:
- Register your company name
- Apply to the central bank
- Submit all Articles of Incorporation
- Appoint a local director and set up a local office space
The Republic of Malta sits between Sicily and the North African coast. It’s a small island nation, but it has miles of coastline and views that have a hard time competing with any other location in the world. Malta is politically and economically stable, with over one million tourists visiting annually.
The currency in Malta is straightforward if you’re used to operating in Europe, as they exchange and accept only Euros. There are several prominent and international banks on the island, though the tax rate is high, and it takes quite a while to receive a business tax return if it’s accepted. Business tax returns can be notoriously challenging in Malta and one of the downfalls of integrating your business there.
To open a business, you need a local bank account with a minimum balance, so it’s crucial to be prepared for that. Malta is small but easily accessible and has over 500,000 residents. If you’re ready to jump through a few hoops to get established, it’s a good place to integrate your remote-based business.
- The tax rate can potentially be brought down to 5% if you apply for all grants and tax relief programs
- Large amount of payment options and banking opportunities as part of the EU
- Tax agreements with the EU
- Cost to get licensed for a business is the cheapest in the EU and is transferable
- The tax rate is 35% before any grants or tax relief programs
- Having to wait an unknown period of time—sometimes beyond six months—to get your tax return back, or potentially even be denied
- Tax returns cannot be made out to the company and instead need to be given to a third party
- Has CFC rules
- The minimum presence period requires you to be in Malta for 183 days a year
How to incorporate in Malta:
- Reserve your company name
- Open a local bank account with a minimum balance of €1165
- Apply to be incorporated
- Get your tax identification number
- Get an employer registration number if you will be hiring any employees
5. Hong Kong
You’ve likely heard of many people from around the world doing business in Hong Kong, and that’s because it’s effortless to get there, offers ample living spaces and opportunities, you’ll never experience boredom, and there are lots of business perks. Hong Kong is home to almost 7.5 million people, and the towering skyscrapers are a beautiful sight for those that revel in city views.
Small businesses don’t get the tax perks that those who generate substantial income do, but that doesn’t mean it’s pointless to integrate your remote-based business there. Hong Kong makes it easy to begin, and e-registration takes only a bit of time to complete. There’s quite a bit of information available online, so you can know where you stand before you begin the process.
- Fewer restrictions on foreign businesses than most other countries
- Among the lowest tax rates; 8.25% on the first HKD 2,000,000, going up to 16.5% after that
- Non-complex tax system
- Audit costs are low
- No sales tax
- No CFC rules
- Capital gains and dividends received are usually exempt from being taxed
- Selling in China can benefit from the Closer Economic Partnership Agreement that Hong Kong has with China, making it easier to sell goods and services in China
- Many payment aggregators, including Stripe and Paypal, are available
- Can be complex to create bank accounts in Hong Kong
- Unless you generate a large amount of income, being a business owner does not grant you any special privileges
- Lots of regulations on establishing a company
How to incorporate in Hong Kong:
- E-registration is available for company set-up and takes only a couple of hours to get a certificate of incorporation and a business registration certificate
- Appoint a company secretary based in Hong Kong and establish an office
Registering your company and providing proof that you’ve registered are the first steps to integrating your company. At the intersection of Eastern Europe and Western Asia, Georgia lies on the Black Sea coast, full of genuine charm and locals that offer endless hospitality.
It features snow capped mountain ranges and incredible wine and is home to some of the oldest communities in the world. Georgia is undeniably beautiful, and integrating your business is a simple process. Georgia is diverse regarding landscape, and it’s somewhat easy to access depending on your preferred methods of travel.
Georgia is still highly mysterious to many, but more and more digital nomads are taking advantage of the perks it offers, both business and lifestyle-wise. Working and traveling provides the perfect balance of professional and personal benefits, and Georgia does a fantastic job of providing digital nomads with all aspects.
- A company can be established in three days
- There are few licenses and permissions needed
- Withholding tax rate on dividends, interest, and royalties is only 5%
- Corporate tax rate is 15%
- Most banks in Georgia will not be able to keep up if you have an income of over $10 million USD
How to incorporate in Georgia:
- Pay a registration fee and register your company; this involves your completed application, proof that you have paid your registration fee, confirmation of your legal occupancy of the premises of your company’s registered address, a notarized copy of your company’s charter, and the written approval of your appointed director
- Open a bank account
If you choose to integrate your remote-based business in Estonia, you might have trouble with the lack of available banking. However, the situation continues to improve, and you can technically bank with other E.U. countries.
Estonian can be a complex language to learn, but the locals are patient with those in the process. Most digital nomads are skilled at picking up bits and pieces of the language spoken wherever they currently exist. Many Estonians speak Russian as their first language as well. Estonia sits in Eastern Europe, and it’s breathtaking to visit, work, and integrate a business.
Estonia includes almost 1,500 islands and inlets, so there’s endless beauty to see and hundreds of places to set up to complete your daily work. The Estonian economic and political states are solid and steady, and the government makes it easy for digital nomads to work and integrate businesses in the country.
- No tax on any retained profit
- Electronic filing with the e-residency card
- Agreements with the EU which allow access to payment processors
- Reputation as being part of the EU
- CFC rules only apply to individuals
- Takes about an hour to set up a company with the e-residency program
- Capital gains, dividends, royalties and interest are considered income and are taxed
- Banking can be difficult; you may need to look at other EU countries for banking
How to incorporate in Estonia:
- Submit your application for your digital ID
- Obtain a legal address and choose an Estonian contact person
- Register your company
- Apply for company banking
You can do it all online through the Estonian e-Residence program here.
If you’re looking to work remotely in a location that offers fantastic weather year-round, then Portugal is a fantastic option. Though it can become cold in the winter, and most houses lack the insulation to keep the chill out, it’s a small price to pay for beautiful weather 90% of the time.
Portugal is incredibly affordable and offers a digital nomad community that many find appealing. Portugal is one of the friendliest LGBTQ countries, according to those who live and work there remotely. There is plenty to do in your time off, and the cost of living is low, with the average meal under $10 and coffee under $2.
The internet in Portugal is reliable, and there are plenty of ways to communicate. The food scene is incredible, and you might find that you’ll want to extend your stay far past 183 days.
- Lowest cost in the EU for company registration and operational costs;
- Favorable tax systems for businesses and employment;
- Fast company registration (10 days or less);
- Affordable spaces to rent for office space, even under a remote business;
- Low cost of living;
- You must live in Portugal for more than 183 days to become a resident.
- Business posts can be slow through customs;
- The language can be challenging to learn.
How to incorporate in Portugal:
- An “Empresa Online”: Allows some types of businesses to be set up and registered online with 1-2 days for a cost of €360.
- A “Company on the Spot”: Sole traders and limited companies can be establish in an hour for €360 in an on the spot reception desk.
The best countries to incorporate a company as a digital nomad will depend on a number of factors, including your country of residence, the nature of your business, and where your customers reside. Each option has its advantages and disadvantages that may impact your decision, and the process can be highly facilitated by hiring a business focused lawyer and tax advisors to help with the process.
If you found this article useful you might want to take a look at:
- Flag Theory and Perpetual Travel: What is it and How Digital Nomads can benefit from it?
- What is the Estonian e-Residency Program and how can it help remote based entrepreneurs?
- How to Manage Your Remote Based Business Finance and Accounting as a Digital Nomad
- Best Mobile Banking Apps and Online Services for Digital Nomads
- 5 Online Money Transfer Services for Digital Nomads & Remote Working Professionals
- Best Remote Based Working Companies Hiring Now
- Best Virtual Mailboxes for Digital Nomads & Remote Professionals