Corporate business structuring
Registration of an IT company in the “correct” jurisdiction will create favorable conditions for the successful functioning of your business.
Thanks to a thoughtful approach to choosing a country for registering an IT company, you will:
- get access to a larger capital market;
- protect your company from government misconduct;
- reduce the tax burden on business;
- optimize your ownership structure;
- will be able to successfully protect your intellectual property rights.
At the same time, to make it clear, there is no ideal solution suitable for all businesses. Focusing on your goals, the optimal structure can be both a vertical holding and a horizontal one. In addition, the choice of jurisdiction is especially important. A quite possible variation, in the case of a slight complexity of your IT business, will be the re-incorporation of the company or the establishment of an affiliate in a “better” jurisdiction. We have answered the question “how to choose a jurisdiction for a business?” for You, breaking it down into 6 parts. Summarizing this answer, we advise you to evaluate:
- The reputation of the jurisdiction;
- Political and economic stability;
- Availability of legal preferences;
- Tax rates;
- Existence of double taxation agreements;
- Cost of establishment and maintenance.
There is no single solution for all IT companies. Horizontally or vertically integrated structure / offshore or onshore jurisdiction? To get an answer to these questions, we advise you to familiarize yourself with all the information posted on the site or write to us in order to get prompt advice.
Counterparties / Payments / Taxes
When registering a company and structuring a business in the IT industry, it is especially important to evaluate the base of counterparties with whom you usually work and their geographic location. The reason for this is an increase in operational mobility, because the movement of financial flows depends on financial institutions, participants in this system, which, in turn, are tied to the place of registration of the company. This means that for transactions with US counterparties, the best solution would be to set up a company in one of the US states (Delaware is a popular choice in this case), and not, for example, a company in Estonia. Of course, transactions are possible between companies registered in any part of the world, but this will increase the cost of transfers, reduce the range of suitable financial institutions, reduce trust between companies, and create conflicts of laws.
Business tax structuring is an important component in the process of a renewed company structure creation. Earlier, we described four main types of jurisdictions, divided by differences in tax systems: 1. countries with low tax rates; 2. countries with a system of deferred tax; 3. countries with special tax regimes; 4. countries with zero tax rate.
The primary impulse of any entrepreneur to move taxable profits to jurisdictions with a zero-tax rate in most cases is misguided and ends up in failure to operate. In its turn countries with a deferred tax system being in our opinion the most progressive, are not suitable for a business that is not capital-intensive and does not need reinvestment. Knowing the peculiarities of each of the jurisdictions and the differences within each of the above-described types, consisting in the difficulties of opening accounts, the behavior of tax authorities, etc., our experts will assist you in creation of the correct scheme for a group of companies.
Legarithm is always focused on solving the problem and an individual approach to each client. We take into account all the factors that matter and provide a result based on our experience, which includes various options describing all the advantages and disadvantages of those jurisdictions that best suit your goals.