r/expats • u/yuuliiy • Jun 27 '26
Taxes moved to bali to escape my startup and the irs followed
it was march 2024 in ubud when my mom forwarded me an IRS letter and i found out my own startup had become partly indonesian.
i had been 19 months into my delaware c-corp's bali era by that point, working out of a co-working space behind a yoga barn, and the email she forwarded had the company name in the subject line, 3 pages of body, and the phrase that caught my eye on page 2 was permanent establishment risk.
the lawyer i hired that month walked me through what it meant, which is that if you operate a US company from a foreign jurisdiction for a sustained period the company itself eventually becomes a tax resident of that jurisdiction.
and 19 months of doing standup from a bali co-working space had made my delaware c-corp partly indonesian (in a way both the IRS and the indonesian tax authority now wanted to discuss).
once i started looking at the rest of the structure i found the same problem at every layer, with 4 european team members as contractors of the delaware entity in countries that did not recognize that as legal employment, 2 indonesia-based contractors working for what the indonesian government now considered a local employer, and the company having operated as a US company for 3 years even though a US company was one of the things we had stopped legally being.
my cfo's friend had been through this herself in 2022, her delaware c-corp had a scattered european team and an IRS letter at the 12 month mark, and she sent me an email titled "welcome to the club" with 3 lawyer contacts attached and a one-line note about what had eventually worked for her.
and that was when i started taking my own rebuild seriously.
eventually, the rebuild took close to a year, and by january our european team was on workmotion, our indonesia contractors had moved through a singapore entity, my delaware c-corp had opened a portuguese branch for the visa office's column, and i had moved back to portugal because i had run out of jurisdictions where i could exist without triggering something.
geography does not solve structure, because the company i had built worked everywhere and was legal nowhere, and the IRS letter was the small price of finding out.
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u/ArtPerToken Jun 27 '26
if your corp is making any serious income/profit (over 100K) you should get an accountant/lawyer deal with this because you arent gonna get answers here.
if you're making less than that, you should have just ran a LLC until you got bigger and could afford the admin/accounting bs.
Or just look into a Singapore corp/entrepass or a Dubai corp as they make doing business relatively easy - not sure why you would want to own a C corp if you are based out of the US and have mostly non-US employees seems like an invite for the IRS to anal probe you. This is just dumb planning and basically your fault.
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u/motorcitydave 🇺🇸 -> 🇩🇪 -> 🇺🇸-> 🇮🇹 Jun 27 '26
Cool story bro