Where to Host Your Servers
Choosing a hosting provider for your servers is an important task, and not just from a technical standpoint. While page loading speed, latency, and data center reliability are crucial for online projects without a significant tax base, the physical location of your servers becomes paramount when it comes to tax compliance and legal considerations.
Choosing a Jurisdiction for Server Location
Different countries have varying laws regarding the location of service provision. Some jurisdictions consider the location of the consumer, the place of registration of the service provider, or the physical location of the servers where the transaction occurs as the determining factor. Consequently, taxes may be payable in multiple jurisdictions. Even if you operate online through an offshore company, you may still be obligated to pay taxes if your servers are deemed to be conducting business within a particular territory.
Overseas Server Hosting
When renting servers abroad, establishing a separate company as the “owner” of the servers, domiciled in the country where the data center is located, can be advantageous. This arrangement allows you to redirect any claims from local tax authorities to the operating company within that jurisdiction and safeguard your assets.
Billing Server Location
The location of billing servers may be subject to specific requirements from payment processors. Moreover, certain banks only open merchant accounts for companies residing and hosting their billing servers in specific jurisdictions.
Security Considerations
It is worth noting that some countries, such as the United States, have legislation stating that if a US citizen receives services from a foreign company through a server located outside the US, that company may still be liable for US taxes. There have been instances where executives of reputable businesses have been detained upon entering the US on charges of tax evasion. Therefore, it is always advisable to mitigate risks, and server location is one area where this is crucial.
Our Services
Dear Sirs, our team possesses extensive experience in the development and legal support of online businesses. We highly recommend contacting us to optimise legal, tax, and security aspects. We are one of the few companies in the Russian market capable of providing such services with the highest level of quality. Don’t hesitate to reach out.
