Many dev shops start the same way: two or three engineers, one foreign client, invoices from a personal account. Then a bigger client sends a vendor questionnaire, a product idea needs Stripe, and somebody asks which country the company should be in. This post is the checklist I would give that team. It comes from the corporate side of the job, so read it as a map of questions to settle before you pick a country, and take the final answer from a tax adviser in the countries where you actually live.
Start from where the people are
An agency sells people's work, so tax authorities look at the people first. Two concepts matter.
The first is permanent establishment. Under Article 5 of the OECD Model Tax Convention, it is a fixed place of business through which the enterprise's business is wholly or partly carried on. It can also arise when someone in another country habitually concludes contracts on the company's behalf. Profit attributable to that establishment is taxed where the team works.
The second is the company's own tax residency. The UK treats any company incorporated there as UK resident, while other countries may claim a company as resident if its directors actually run it from their territory. If the founder lives in one country, the developers in two others and the company is registered in a fourth, each of those countries has its own question to ask. A longer walk-through is in this guide on an international company for an IT agency.
The usual shortlist
Most teams end up comparing four options:
- UK Ltd: Corporation Tax of 19% on profits up to £50,000 and 25% above £250,000, with relief in between. Companies House charges £100 for online registration and £50 for the annual confirmation statement, and directors go through identity verification.
- US LLC: tax depends on the form and the state. A single-member LLC with a foreign owner files Form 5472 every year, and the penalty for not filing is $25,000.
- Estonian OÜ: the 22/78 model, where tax is paid when profit is distributed. e-Residency gives you a digital signature and does not make you an Estonian tax resident.
- A local company in the country where the team lives: often the simplest answer for employment contracts and payroll.
A UK Ltd is sometimes sold as a way to avoid tax. It pays UK Corporation Tax like any other UK company, so that pitch is a red flag.
If you are building a product, check payments first
A subscription business lives on card acquiring and recurring billing, so the first filter is whether your payment provider supports the country. As of October 23, 2026, Stripe listed 51 supported countries and regions, including the UK, the US, Estonia, Cyprus, Singapore, Hong Kong and the UAE. The BVI, Seychelles, Belize and Panama were not on the list. That single fact rules out most classic offshore jurisdictions for SaaS.
The alternative is a merchant of record platform that sells to the end customer, handles VAT in the buyers' countries and pays you the revenue minus its fee. It simplifies launch, but each platform has its own fees and allowed business types.
Then comes VAT on digital services sold to consumers:
- In the EU, a seller with no EU establishment can register for the non-Union OSS scheme in one country and file one quarterly return covering all EU states.
- In the UK, a business based outside the UK has no registration threshold at all; UK companies register once taxable turnover passes £90,000 over 12 months.
The comparison table with Singapore and a Delaware C-Corp is on the page about choosing a jurisdiction for SaaS.
The IP chain is a technical debt that compounds
Code belongs to the client only if it first belonged to your company. Before the first serious contract, put these in writing:
- Founders assign the rights to code written before the company existed.
- Every developer and contractor contract has an assignment of exclusive rights.
- Third-party libraries are tracked and open source licences respected.
- The trademark is registered where you sell.
Investors and acquirers check this chain in due diligence. Fixing it after a round is slower and more expensive than doing it on day one. Whether contributors can be contractors at all is decided by the law of the country where they live; full-time "contractors" can be reclassified as employees.
Contracts with clients
A large client will vet the MSA and statements of work. Make sure they cover transfer of exclusive rights after payment, acceptance and warranty periods, a liability cap, confidentiality, currency and who issues invoices. If you process personal data of the client's EU customers, you also need a data processing agreement under Article 28 of the GDPR. GDPR can apply to a company with no EU establishment that offers services to people in the EU (Article 3(2)).
Common mistakes I keep seeing
- Client money landing in a personal account or in another company's account.
- Contracts signed from your home country for a foreign company without anyone checking permanent establishment.
- A company registered where the payment provider you need does not operate.
- VAT left uncalculated until the platform or the tax office asks.
What to bring to the conversation
Before you talk to a corporate services firm or an accountant, write down the clients' countries, where each founder and developer lives, expected turnover, the payment provider you want and whether you plan to raise money. With that list, a comparison of two or three structures and a two-year budget becomes a short exercise. Offshora's overview of jurisdictions compared is a reasonable place to see the options side by side before that call.
Top comments (1)
The IP chain point deserves more attention than it usually gets. I have watched small teams treat it as paperwork to sort out later, and it only becomes urgent when a client asks for it in writing — usually at the worst possible moment. Your framing of it as technical debt is spot on. Of the four steps you list, which one do you see solo founders skip most often in practice? My guess would be the contracts one, because it feels like the easiest to postpone until the first dispute.