| # Cross-border rules & transactions |
| as_of: 2026-08 (verify before relying) |
| |
| ## Common multi-entity structures |
| - **Delaware flip**: foreign co becomes subsidiary of a new Delaware C-Corp (share swap). Done to access US VC. Watch: taxable event risk in home country, India FEMA round-tripping rules, exit-tax regimes. |
| - **Singapore holdco + India opco**: the standard structure for Indian startups raising global VC. SG parent owns IP + raises capital; India sub employs and executes. FDI flows SG→India under automatic route. |
| - **UAE holdco**: for MENA operations or founder tax residency; weaker treaty access than SG (treaty benefits require substance). |
| - **UK topco + subsidiaries**: common for European groups; SEIS/EIS only work at the UK topco level. |
| |
| ## Permanent establishment (PE) |
| An entity in country A with employees/dependent agents habitually concluding contracts in country B creates a taxable PE in B. Remote teams create PE risk — use an Employer of Record or a local subsidiary once headcount in a country is real. Management "place of effective management" (POEM) rules can drag a whole company's tax residency to where the founders sit (India applies POEM; UK/SG have similar central-management tests). **A UAE/SG entity run day-to-day from India or the UK is likely tax-resident there.** |
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| ## Withholding taxes (typical treaty-reduced rates) |
| - Dividends: US→foreign 30% default (15%/5% under treaties; no US treaty with SG or UAE — full 30% on US dividends to SG/UAE holdcos). India→abroad ~20% + surcharge (10–15% treaty). UK: **no dividend withholding**. SG: none. UAE: none. |
| - Royalties/interest/fees: each pair differs; check the specific DTA. India's TDS on foreign payments is the most aggressive. |
| - Treaty benefit requires beneficial ownership + substance (post-BEPS principal-purpose test); letterbox holdcos get denied. |
| |
| ## Transfer pricing |
| Any intercompany transaction (IP license, services, cost-plus dev center, loans) must be at arm's length with documentation. India enforces hard (dev centers typically cost-plus 15–20%+ markup). Moving IP between entities later is a taxable disposal — **decide IP ownership at day one**, it's the most expensive thing to fix retroactively. |
| |
| ## Controlled Foreign Corporation (CFC) rules |
| - US: GILTI/Subpart F tax US shareholders currently on foreign sub profits. |
| - UK: CFC regime taxes UK cos on low-taxed foreign sub profits. |
| - India: no formal CFC rules, but POEM achieves similar results. |
| - Practical meaning: a founder's personal tax residency and the parent's location decide whether "0% in UAE" is real or illusory. |
| |
| ## OECD Pillar Two |
| 15% global minimum tax for groups with €750M+ revenue. Irrelevant to startups until very late stage, but it has ended the pure-zero-tax endgame (UAE DMTT, SG/UK top-up taxes all live from 2025). |
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| ## Sanctions/export controls |
| US export controls (EAR/ITAR) and OFAC sanctions follow US-origin tech and USD payments everywhere. UK/EU equivalents. India PN3 restricts Chinese investment. NSIA (UK) and CFIUS (US) screen foreign investment in sensitive sectors. |
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| ## Payment rails reality |
| - US entity: Stripe/ACH/wires trivial. |
| - UK: Stripe + faster payments + SEPA access easy. |
| - SG: excellent rails, multi-currency accounts standard. |
| - UAE: improving; Stripe available; USD correspondent banking scrutiny. |
| - India: inbound easy, outbound controlled (FEMA); Stripe India for domestic; international pricing usually via foreign parent. |
| |
| ## Rule of thumb |
| Incorporate where your **investors and customers** are, employ where your **people** are, and never let IP or effective management sit accidentally in a third country. |
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