Best place to open offshore company?

My wife is a US citizen with ARC and living here in Taiwan 9 months a year. She is being hired as a part-time contractor by two companies, one in the US and one in the UK.

Any thoughts on whether she should start a business for receiving payment, and if so where? My very surface-level knowledge of this area is that she would see limited benefit in an offshore company since being a US citizen means she is subject to US tax beyond the FEIE. And in any case she’d technically be subject to tax in Taiwan on foreign earned income.

Is there any proper method around this? What if we don’t necessarily need to draw that income and can keep it in the “business?” She also has Macau PR and we expect to travel to Singapore/Malaysia/HK a few times a year if that makes any difference (Those are low corp tax jurisdictions but I assume doesn’t matter much since the real benefit of those places would be if we were residents there, with no tax on foreign income)

Just seeking any thoughts or advice since I’ve seen some folks appear to be knowledgeable about opening companies and contracting. Thanks!

If she spends less than 90 days in Taiwan during the year and performs all work while she is outside of Taiwan, she can probably get around filing in Taiwan.

no, unfortunately like I said it’s 9 months a year.

If she’s a US citizen anyway, she might look into starting a limited liability company in the US. Maybe not the most tax-advantageous way, but it might make administration and her US taxes much easier (not sure if these become more complicated if you chose to incorporate in HK or Singapore instead).

Regarding Taiwan: If that company uses corporate taxation, she might be able to pay herself through dividends only (which might count as overseas income in Taiwan and could be tax free up to very high thresholds). Technically, however, her business in the US might also be liable for corporate taxes in Taiwan if she’s leading the business from Taiwan - however, the tax authorities in Taiwan don’t seem to apply this rule to small corporations too widely.

But those things unfortunately will often require some professional help - many details to be aware about and some pitfalls only a professional can know about.

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There’s no benefit if she’s a U.S. citizen. Look up 5471 form, gilti, subpart F. It can take quite some time to fill out correctly.

Not true. In Taiwan it’s beneficial for her to form a foreign corporation and pay herself a salary through it. There’s no taxable GILTI if the corporation doesn’t make a profit after salaries, and the salary can be excluded from taxable income . Otherwise she has to pay ~15% SECA taxes to the USA on her net income. I do 5471s all the time for clients. Unless the business has very low revenue you’ll get a greater tax benefit than the cost of preparing a form 5471.

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How much income does your wife expect to receive?
I can’t tell you which jurisdiction is best to form a company in but your wife doesn’t form a foreign company 15% of her net income will go to US social security.
If she forms a foreign corporation her corporate net income will be taxable but she won’t have to pay US social security. She will have increased tax filing costs because handling GILTI is complicated.
If she forms a foreign corporation and pays all of her revenue out as salary to herself she won’t pay US social security and her salary can be excluded via FEIE. She will have increased tax filing costs because handling GILTI is complicated.

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Hmm, hard to project. Probably will ebb and flow depending on many factors. But if she decides to work a full-time schedule I would imagine it’ll be in the 100-130k USD range, so right around FEIE.

Would love to learn more, and what your services are. Thanks

Yeah so regardless of FEIE as a self employed person if she doesn’t offset that income with expenses she’d be looking at something like 15k going to social security, but you could whittle that down by tracking her business expenses. So doing it through a foreign corporation paying her a salary would be tax optimized.
I can’t do the setting up a business part for Taiwan but I can handle US tax returns. If you want to deal locally and have me prepare a return for tax year 2022 (more likely 2023 if the foreign corp isn’t set up yet) you can DM me and we can discuss further, alternatively you can search around on the internet, there’s firms that specialize in these situations.

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ok thanks! I’ll reach out as we move forward.

consider whether you actually want to whittle that down - it potentially reduces benefits down the line. consider that with uk and totalization as well, if eligible. not simple to figure out the best course.

You’d have to read the specifics of the UK totalization agreement, it varies slightly with each agreement but generally it allocates which country you’re supposed to pay according to where you’re residing. If you’re a dual citizen who lives in neither UK nor the USA, then there might be some tie breaker rule to determine which social security system you pay into, but you’d have to pay into one system or the other, if not to the UK then to the USA as a sole proprietor. If you’re living in neither country as a dual citizen I would do some further research and even if possible I’d require at a minimum a certificate of coverage from the UK before I’d sign off on a tax return claiming a SECA exemption due to that totalization agreement when you’re not residing in the UK(i.e. proof you’re paying into the UK social security scheme which is the intent behind totalization agreements to begin with). Too risky otherwise. You could end up getting dinged for underreporting 15k of taxes plus interest and penalties.

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There’s no 15% self employment tax for US S corp or C corp. You pay social security/FICA, whereas a Taiwan company pays NHI and possibly labor insurance/retirement. The only tax saving you’d get here is if US FICA is cheaper than the Taiwan equivalent which I’m not sure if it is.

Correct, but we’re not talking about paying yourself a salary in the USA from a US corporation where you’d have to pay FICA, we’re talking about being paid a salary in Taiwan from a foreign corporation versus earning income from a sole proprietorship in Taiwan. If you earn income from a sole proprietorship you pay SECA taxes no matter where you live unless there’s a totalization agreement. If you earn foreign wages in a foreign country, you don’t have to pay FICA. Do any of the buxiban teachers here pay US social security or medicare from their pay in Taiwan?

Look what the SSA says about the Taiwanese social insurance taxes at their planned maximum in 2030. 674NTD, a maximum of 2.4% on 43,900NTD, employer contributions of 8.4% on 43,900 and 6% of 150,000.

For perspective, US SECA taxes would be about 15% of roughly 300,000NTD per month in this person’s case.

It’s clear to me that it would be cheaper to incorporate in Taiwan and pay a salary, depending on what the local accounting and registration fees are, but it’d nonetheless be hard for me to see that Taiwanese taxes and fees would in total exceed 45,000NTD per month.


Does it make any difference what currency the self-proprietor/company is paid in? My wife’s potential UK employer would pay her in pounds by default, but they asked if there’s any other preferred currency.

Yes - different currencies will perform differently against the NTD. If the currency you are paid in depreciates, then it’s usually bad news.