(If I'm correct) When a US company pays dividend to it's non US parent company, the US charges a withholding tax of 30%. This can be less if there's a tax treaty between the two countries.
That's a great reply. Thank you. Maybe you could save comments like these and put them on taxgeek.com :-).
I'm not trying to evade taxes. I'm European, and I pay taxes here. Still, even in Europe getting a Merchant Account is difficult. I'm simply looking at this because the cost (money/time) of starting and maintaining a Delaware Company might be less than the cost of setting up a Merchant Account over here.
Without US company:
1. Europe company sells subscription for 20/month
2a. Taxable income in Europe
2b. No taxable income in the US
With US company:
1. Sell subscription through a US company for $20/month
2. US company receives $18 (Merchant Account keeps 2)
3. US Company buys subscription at Europe company for $18
4a. Taxable income in Europe
4b. No taxable income in the US
Am I really "draining taxable income" if in the other scenario there wouldn't be any US taxable income either??
Is this what you recommend:
1. Sell subscription through a US company for $20/month
2. US company receives $18 (Merchant Account keeps 2)
3. US Company buys subscription at Europe company for $17
4. Profit of $1 per subscription per month
5. Business expenses (including accounting & tax return)
6a. (eg) 5% of total revenues is now taxable income in US
6b. (eg) 95% of total revenues is taxable income in Europe
Of course I would need a good accountant, but things still look pretty simple to me... The only thing I need to calculate business income / expenses is how many subscriptions were active during a month. Please do understand the cost (time/money) of getting a Merchant Account over here. I like to keep things simple too, and it might just be the US route is simpler.
I'm not trying to evade taxes or get into legal trouble. It just looks like it is easier to start (and maintain) a US company and get a Stripe.com account, than it is to get a merchant account and a payment gateway over here.
Because the US company is simply reselling the subscriptions, every sale will be passed through to my company here, so I don't really see any tax headaches.
I am simply wondering if it is legal to use a US company for this.
I once made a little list with many of the documentaries I've seen - browsing through that list; here are my recommendations:
God Grew Tired of Us - about three of the "Lost Boys of Sudan", a group of some 25,000 young men who have fled the wars in Sudan since the 1980s, and their experiences as they move to the United States. http://en.wikipedia.org/wiki/God_Grew_Tired_of_Us
Deliver Us From Evil - tells the true story of Catholic priest Oliver O'Grady, who admitted to having molested and raped approximately 25 children in Northern California between the late 1970s and early 1990s http://en.wikipedia.org/wiki/Deliver_Us_from_Evil_(2006_film...
Shadow Company - an introduction to the mercenary and private military company industry, concentrating on the role the industry has been playing in recent conflicts http://en.wikipedia.org/wiki/Shadow_Company
War Photographer - As well as telling the story of an iconic man in the field of war photography, the film addresses the broader scope of ideas common to all those involved in war journalism, as well as the issues that they cover. http://en.wikipedia.org/wiki/War_Photographer
Many documantaries are available on youtube. Do note though that some of these documentaries discuss horrible topics, aren't fun to watch and will be stuck in your mind for a very long time, if not ever.
> This bothers me. Yeah, rent and food is going to be cheap in Kenya, but an iPad will cost the same.
You do realise where iPads are built and how much those people make? :-)
Outsourcing work to cheaper places is part of this world, and sites like eLance bring the power to outsource to people like you and me instead of just letting large companies enjoy it.
Also, you don't know what job that Kenyan would have had to accept if it wasn't for eLance.
Hmm, so I guess the thresholds Patio11 mentioned exist.
iStock and Big Fish Games are very large companies with several offices around the world and a large share of B2C sales, so they started charging VAT.
Apparently, most SAAS companies don't make these thresholds, not even the larger ones, as github/slicehost/37signals/mailchimp/and many more don't charge VAT at all...
I (European) didn't know about it either until recently :-).
It is strange though, because it seems to keep the EU, and national VAT registrations quite busy [1][2], while no one on the outside seems to be aware of it, nor is anyone enforcing it.
"Suppliers of electronic services, such as anti-virus updates are obliged to charge VAT on the service. If the purchaser of these services is a taxable person, then in certain circumstances, it is the customer, rather than the supplier who must account for the VAT. For this reason, the supplier may ask for the VAT identification number of the customer, so that he can confirm whether it is he who must charge the VAT or whether the customer himself will account for the VAT. If the customer does not have a valid VAT number, then the supplier will charge VAT. For additional information, please see VAT on e-commerce (FAQ)"
Regarding #1: True, it seems that there are some countries like the UK [1] have thresholds, but others don't seem to have any (eg Ireland [2]). No matter if they exist or not, there are still companies that have large EU based turnover (Github, 37signals), and they too don't charge VAT.
Regarding #2: I agree. It's not that I want to convince anyone to start charging VAT. I'm simply trying to understand why this directive exists and why no one seems to care :-).
You don't need to be in America to 'make success'. There are many non US startups that did very well. Also, getting into the US to startup is nearly impossible, so you'll have to look for other options anyway.
1) You don't need an 'American friend' to pay for hosting, all you need is a creditcard.
2) You'll need to properly setup a company. Given your circumstances, I would look at the free zones in the UAE. There you'll find the most business friendly places of the whole (Arab) Middle East. No corruption and bureaucracy there. Second, given the focus you put on being a young Muslim Arab, I'm sure you'll find your way in the UAE, just a short flight from Egypt.
(If I'm correct) When a US company pays dividend to it's non US parent company, the US charges a withholding tax of 30%. This can be less if there's a tax treaty between the two countries.