First time I've seen Atlas. I'm immediately worried. If someone starts a company using this I presume it's subject to US laws? What does this mean:
1. For taxes? If I live in the UK and start my business with Atlas does the US get the corporation tax revenue or the UK (or a split of the two)?
2. For data security/privacy? Is the data I store now subject to access by the US government through National Security letters and the like? I believe that if I was storing EU citizen data I'm subject to privacy shield but all data would be more susceptible to US government requests. Is this accurate?
Edit: Quite shocked at the number of downvotes a completely legitimate question is getting...
We're based in South Africa and joined the Stripe Atlas beta earlier this year.
Solving the incorporation problem is only the first of many problems.
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Please understand that none of the following is a criticism of Stripe. If we hadn't been accepted to the beta we'd be dead in the water right now and our customers would have been screwed. I also expect the solutions to become easier as more people in more countries face the same problems.
(Btw… one small suggestion for the Stripe Atlas team if anyone there is reading this… how about a forum where Atlas users in the same countries can swap information?)
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So, the questions you asked are completely legitimate.
Trying to answer them ourselves has cost us an inordinate amount of money on legal & tax advice so far and we're still no closer to answers.
The problem is this:
The moment you're operating in two countries you are subject to the same legal, tax & accounting rules that multi-national corporations have to conform to.
There _are_ existing services that are geared towards tackling the insane levels of complexity involved but the pricing also assumes that you are a large multi-national corporation.
So, to give you an idea: Several reputable firms all quoted us the equivalent of an engineer's salary for a month just to _estimate_ the price of getting our ducks in a row.
For my company this is a LOT of money. We're bootstrapping and are barely ramen profitable.
Also, and I'm sure this happens to everyone at least once, at the time I did not understand that what they were quoting for was to prepare an estimate for what it would cost to answer our questions. I thought this was the quote to answer our questions!
When the estimate itself arrived it was for the equivalent to an engineer's salary for a year, with _no_ guarantee that further complexities (and costs) would not come up during or after the process.
An expensive lesson.
Currently we're trying to navigate the process ourselves by interacting directly with the .za & USA revenue services and the .za Reserve Bank.
Needless to say, this is hell on trying to get any actual work done in the meantime :-)
For South Africans it's more complex: we literally are not (legally) allowed to charge in any currency except ZAR (our local currency). When you're a small bootstrapped startup on the bottom of the world, charging in a relatively unknown currency doesn't sit well with international customers
> The moment you're operating in two countries you are subject to the same legal, tax & accounting rules that multi-national corporations have to conform to.
Was it necessary to set up a company in RSA? Why not just be employees or contractors of the US company you happen you own? That's what I was going to do when I looked into doing this (myself, not via Atlas).
That was also our original idea but it turns out to not be that simple:
1) Whether you are an individual or a company, you still need permission from the South African Reserve bank to "just happen to own" a US company.
2) Whether the offshore company is owned by an individual or another .za company, you are still liable for tax to both the .za government and the offshore country. If you don't want to be double-taxed you need to set up a structure that allows for transfer-pricing and that conforms with the international tax treaties in effect between the two countries.
tl;dr whether you or your company owns the offshore entity makes no difference to your legal & tax obligations. :-P
To rephrase the question slightly differently: "Is Atlas a suitable tool for a UK startup, selling to the UK/EU markets?"
To which the answer may well be "No. Right now, Atlas is US-centric, but could potentially broaden its scope in the future to include other jurisdictions".
Personally, I'm not worried about Atlas, in the same way as I'm not worried about other US company startup facilities.
When I started my latest UK company, I used a UK accountancy service, who handled the initial set-up for me.
You probably need to research these or see a suitable advisor before deciding if Atlas is the right answer. From a UK point of view wouldn't be surprised if Revenue look that little more carefully given the amount of government fuss about entirely legal tax avoidance recently.
I'm surprised at the downvotes too - I'd have thought anyone outside the US and not knowing the laws (probably of both countries) would have similar questions to avoid landing themselves with an expensive mess.
It can be complicated to start a corporation in a country you're a resident of.
Starting a corporation in a country you're not a resident of is usually even more complicated because now you have to worry about two tax regimes and the interactions between them. There's also the distinction between corporate taxes and personal taxes and the interactions between those (e.g. your Delaware corporation issues a dividend to the UK founders).
I think the idea is that as Atlas rolls out to each country, it will be run by the respective Stripe team in that country (ergo patio11 joining Stripe Japan) and be responsible for building Atlas's business-as-a-service model respective of that country's laws and customs.
It's similar to their rollout of payment processing across the globe - they've done it slowly as they've had to incorporate each jurisdiction's regulations.
I think if you had left off "I'm immediately worried" you might not have got the downvotes. It comes off as kneejerk criticism, event though you didn't mean it that way.
HMRC could easily deem the company as being controlled in the UK[0]. This could potentially cause you problems, but then again the corporate tax rate in the US is considerably higher so would there be any tax owed considering the double-taxation agreement[1]?
There is also transfer transfer pricing to contend with. You lose the some of the ability to have funds wherever you need them in your group without also having a plausible reason why your US entity is making no profit and all its funds are disappearing offshore.
1. Yes the US would get the corporate tax revenue. The company is based in the US even if its employees aren't. You'd pay your taxes to the UK government when you repatriated any of the income from it.
Do you know that this is the case based on UK tax law?
Because a lot of countries have provisions for taxing income of foreign corporations locally if they deem that the corporation is controlled and operated from their country.
My UK accountant did specifically warn me about tax risks around this years ago - I don't remember the specific conditions where it might arise, but you should not take this lightly.
The UK, for one. The HMRC has wide powers to assess tax if unilaterally if they suspect that the company is operating in the UK, and you are unwilling or unable to prove that it isn't.
In terms of taxing it, they would try to recover taxes from the entity itself first, but if the entity itself is non-responsive, they would go after its assets and directors and cash flows in or moving through the UK (and for now also the EU).
Since the issue here is specifically companies that are foreign entities operating out of the UK, there will be generally be something they can go after - if there isn't, then the company couldn't realistically be considered to be operating out of the UK for tax purposes anyway.
It's absolutely possible for UK owners to operate a foreign entity in ways that HMRC will agree does not imply taxes are due in the UK (been there, done that), but the point is that you need to be careful, because a few wrong moves and you may worst case have two jurisdictions both expecting you to pay taxes of the same money.
It is related and there is nothing unfair about it. I'm also not accusing them of anything. They're honest questions which should have relatively straightforward answers.
Yes, they are honest questions, but unrelated to Atlas. If you have doubts about taxes or privacy in the US, Atlas is not going to help you in anyway.
From the FAQ[1]
While incorporating in the U.S. can make many things much easier, it also comes with long-term legal and tax implications. You should think carefully about whether it’s best for your business and consult advisors as necessary.
While they seek to prevent double taxation (and tax evasion), they are packed with dense legalese full of clauses and subclauses designed to make certain types of income taxable in different places. To navigate that question, you'd need a highly experienced tax accountant/attorney with specific experience in UK/US tax treaties. Moreover, that person would need a strong understanding of what you do, how/where you sell, and how/if/when you plan to pay yourself.
Your second question is even more complicated. First, if you incorporate in a country like the US, your corporation is considered a person in that country and is thus bound by that country's laws. I trust that you did enough research to know that.
Second, recent history has demonstrated that the UK (as a Five Eyes nation) shares intelligence data with the United States. Moreover, recent history has demonstrated that the UK will work at the behest of the US intelligence community. This is governed by years of treaties and high level agreements. Consequently, the first thing you need to wonder is whether your government would just hand everything over, regardless of whether you have a US corporation or not.
Third, if you do incorporate in the US, you would be subject to US law, but US law can generally be fought in a court. The question becomes whether or not you could afford to fight an NSL. Could your business afford a long, highly distracting process where it is you versus a government??
But then, you need to look at yourself. Do you have any secrets that could be used as leverage against you?? If you plan to fight a well funded intelligence agency, you'd need to be prepared for them to fight hard.
I tend to argue that if a well funded intelligence agency truly wants information, they'll get it.
So, while your questions were honest, they were anything but straightforward. And, they aren't actually relevant to Atlas.
Rather, you and a group of experts need to sit down and figure out the costs, potential costs and the benefits of incorporating in the US. If it still makes sense, Atlas is a tool. But Atlas can't help you navigate the complicated relationship between your company, international law, agreements like NATO/other intelligence sharing agreements, EU law and two (possibly three) tax authorities.
And, with all due respect, neither can Hacker News. Every situation is so different that anyone who is qualified to answer those questions wouldn't as they understand how deeply complicated they are.
1. For taxes? If I live in the UK and start my business with Atlas does the US get the corporation tax revenue or the UK (or a split of the two)?
2. For data security/privacy? Is the data I store now subject to access by the US government through National Security letters and the like? I believe that if I was storing EU citizen data I'm subject to privacy shield but all data would be more susceptible to US government requests. Is this accurate?
Edit: Quite shocked at the number of downvotes a completely legitimate question is getting...