Best country of incorporation for a SaaS business with partners

[OffshorePhantom]

I have specified in my answer that you should︁ not be engaged in a US trade or business, namely having a US facility or︂ employees or have FDAP income and in this case, the taxes transparently are passed on︃ to the US LLC members since the LLC is tax transparent.
The setup with a︄ single member disregarded US LLC is used by a lot of foreigners that do not︅ have direct trade or business in the USA for example they use it to do︆ freelancer activities without being to the USA.

 

[Marzio]

In my experience if there's‌ no office, no dependent agent, no staff and no work is rendered in U.S. those‍ profits can't be considerd ECI.

Having FDAP income doesn't mean you are engaged in a US trade or business.

It only⁠ means that the income is US source income.

 

[OffshorePhantom]

Yes, in fact I put an OR in my sentence 🙂

FDAP income for example is royalties,‍ dividends etc and it is subject to WTH tax so both the US source income⁠ connected with an effective trade or business in the USA but also FDAP income are⁤ subject to taxation in USA.

 

[Marzio]

I found this definition that could be helpful "FDAP income consists primarily of passive investment‌ income, including interest, dividends, rents, royalties, etc. In contrast, ECI generally consists of income from‍ active trade or business activities."

https://www.irs.gov/pub/int_practice_units/RPWCUP_081_02.pdf

 

[juul2]

Delaware C Corp
Each of your shares owned via Cyprus company

5% withholding tax on‌ dividends for C corp, no Cyprus CIT, 2.65% GESY, no capital gains

Depending on your‍ aims for the business, the 21% US CIT can be worth it for ease of⁠ access to VCs and capital