With the continuous expansion of the Web3 ecosystem, many freelancers are being drawn to the lucrative opportunities in the field.
If you're a Web3 freelancer and have decided to take the next step in professionalizing your activities by setting up a corporate entity, a critical decision awaits: choosing the right jurisdiction for incorporation.
This choice will affect various facets of your operations, including taxation, regulatory compliance, and access to relevant services.
This article aims to provide a comprehensive guide to help you make an informed decision.
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Where should I set up a corporate entity?
Your selected jurisdiction need not be your country of residency or citizenship. You can easily manage a corporate entity remotely using a corporate services provider.
But for tax purposes, you should ensure that your corporate entity is in the same jurisdiction where you are a tax resident.
Incorporating a corporate entity also involves some costs and responsibilities, such as:
- - Paying fees for registration, maintenance and compliance
- - Following the rules and regulations of the jurisdiction where you incorporate
- - Keeping records and reporting your income and expenses
- - Hiring professionals such as lawyers, accountants or agents
These can be more, or less onerous depending on the jurisdiction you choose to incorporate your entity as a Web3 freelancer.
The World Bank’s ease of doing business index used to be a global benchmark ranking how easy or difficult it is to manage and run a business in different countries. Unfortunately, it has been discontinued as of 2021.
However, it can still be a useful data point for freelancers considering which jurisdictions would be best for incorporating a corporate entity as a freelancer in Web3.
Different jurisdictions have different advantages and disadvantages for incorporating a corporate entity as a freelancer in Web3. Some general criteria that you can use to compare jurisdictions are:
- - The level of regulation and legal clarity for Web3, blockchain and crypto activities
- - The tax rates and incentives for freelancers and businesses in Web3
- - The ease of doing business and accessing banking services as a Web3 freelancer
- - The reputation and stability of the jurisdiction for supporting the growth of Web3, blockchain and crypto industry locally
Based on these criteria, some examples of jurisdictions that are considered favorable for incorporating a corporate entity as a freelancer in Web3, blockchain and crypto are:
Singapore: A leading global financial hub that has a supportive regulatory environment, low tax rates, high ease of doing business and strong reputation for innovation in Web3, blockchain and crypto
Estonia: A small European country that has a digital-friendly government, low bureaucracy, flat tax system, e-residency program and progressive attitude towards Web3, blockchain and crypto
Wyoming: A US state that has enacted several laws to attract and protect Web3, blockchain and crypto businesses, such as recognizing digital assets as property, creating a special purpose depository institution and exempting certain crypto transactions from taxes
Dubai: The Middle Eastern state has a zero tax policy for its residents, which can reduce the tax burden for freelancers and businesses. It also has a permissive regulatory environment for Web3, blockchain and crypto activities, and has established an independent authority called the Virtual Assets Regulatory Authority (VARA) to oversee the sector
Of course, these are not the only jurisdictions that are suitable for incorporating a corporate entity as a freelancer in Web3, blockchain and crypto.
As countries and cities compete with each other to attract talent and capital, regulations may become more favorable where they once may have been hostile. A good example of this is Hong Kong.
But the converse may also be true - in the wake of the FTX collapse, jurisdictions like the U.S. became actively hostile towards crypto companies.
When you’re considering incorporating a business to manage your Web3 freelance activities, speak with local Web3 communities, and consult with qualified professionals before making a decision.
How can Web3 freelancers set up a corporate entity?
So you’ve decided on setting up a corporate entity to manage your Web3 freelance business, and you’ve also found a jurisdiction that’s a crypto-friendly hub.
Managing a corporate entity as a freelancer in Web3, blockchain and crypto can be challenging, especially if you have to deal with multiple jurisdictions, currencies, regulations and platforms.
Fortunately, there are some corporate services providers that can help you with the administrative and legal aspects of running your freelance business, such as:
- - Incorporation and registration of your corporate entity
- - Accounting and bookkeeping of your income and expenses
- - Tax filing and compliance in your jurisdiction
- - Banking and payment solutions for your crypto and fiat transactions
- - Legal advice and support for your contracts and disputes
Some of the best incorporation services providers for Web3 freelancers in Singapore, Estonia, Wyoming and Dubai are:
Osome: A Singapore-based company that offers online incorporation, accounting, tax, payroll and secretarial services for freelancers and businesses in Singapore
Xolo: An Estonia-based company that offers e-residency, incorporation, banking, accounting and tax services for freelancers and businesses in Estonia
Doola: A YCombinator startup that helps Web3 natives start a US business with support including EIN, US address, bank account, and tax filings for freelancers and businesses.
Creative Zone: A Dubai-based company that offers incorporation, visa, banking, accounting and legal services for freelancers and businesses in Dubai
These are some of the examples of corporate services providers that can help you manage your corporate entity as a freelancer in Web3, blockchain and crypto.
However, you should always do your own research and compare different options before choosing a provider that suits your needs and budget.
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