A SaaS company is a legal entity that sells subscriptions to a software service, owns the rights to the code and takes recurring card payments from clients in different countries. For such a business the jurisdiction is chosen by three criteria: whether the payment service you need is available there, which taxes on digital services arise in the clients' countries and what investors expect. A classic offshore company with no corporate income tax rarely fits here, because payment providers are often unavailable in such countries.
Payments: where the choice starts
A subscription model relies on card acquiring and recurring billing, so the country of registration is checked against the payment provider's list. As of October 23, 2026, Stripe lists 51 countries and regions where it supports businesses. The list includes the UK, the US, Estonia, Cyprus, Singapore, Hong Kong and the UAE. The British Virgin Islands, Seychelles, Belize and Panama are not on it.
The second option is to sell through a merchant of record: the platform acts as the seller to the end customer, calculates and pays VAT in the buyers' countries itself and remits the revenue to you minus its fee. This simplifies taxes at launch, though each platform has its own terms, fees and permitted business types. Ways of accepting money are covered in detail in the article payment processing and card acquiring.
VAT on digital services
Tax on subscriptions sold to individuals is paid where the buyer is located:
- European Union. A seller without an establishment in the EU that sells services to consumers in the EU can register for the non-Union OSS scheme in one country and file a single quarterly return there covering all EU countries.
- United Kingdom. For a business that, like its owner, is based outside the UK, there is no VAT registration threshold: it must register with HMRC if it supplies goods or services in the country. For UK companies the threshold is £90,000 of taxable turnover over 12 months.
In B2B sales the tax is usually accounted for by the corporate buyer itself, but the rules for confirming the buyer's status vary by country. Budget for tax automation from the first month of sales.
Comparing typical jurisdictions
| Jurisdiction | Corporate income tax | What to watch |
|---|---|---|
| United Kingdom (Ltd) | 19–25% depending on profit | Companies House online registration fee of £100, annual confirmation statement of £50, identity verification of directors |
| United States (Delaware C-Corp or LLC) | Depends on the form and the state | Stripe Atlas forms a C-Corp or an LLC in Delaware; an LLC with one foreign owner files Form 5472, with a $25,000 penalty for failure to file |
| Estonia (OÜ) | 22/78 on distributed profit | Tax is paid when dividends are distributed; e-Residency provides a digital signature and does not make the owner a tax resident |
| Singapore | 17% | Requires a director who is ordinarily resident in Singapore, and a company secretary |
Details are on the pages offshore company in England, Delaware company formation and Estonian OÜ. We compare the two most common forms for small SaaS businesses in the guide UK Ltd vs US LLC.
Code ownership and investors
Buyers and investors check that the rights to the product are held by the legal entity. Before the first sales, put in place:
- agreements with the founders assigning the rights to code created before the company was registered;
- contracts with developers and contractors with a clause assigning exclusive rights;
- licenses for third-party libraries and compliance with open source licenses;
- trademark registration where you sell.
If a venture round is planned, align the company's form with the funds' expectations in advance. Moving the business to another legal entity after the first contracts requires assigning contracts, transferring the payment history and sometimes paying taxes on the transfer of assets.
Customers' personal data
The GDPR applies to an organization without an establishment in the EU if it offers goods or services to people in the European Union (Article 3(2)). For SaaS this means a privacy policy, data processing agreements with contractors acting as processors under Article 28, and rules for transferring data outside the EU.
Common mistakes
- The rights to the code stay with the founder or a developer while the company collects the money.
- The company is registered in a country where the payment service you need does not operate.
- VAT in the clients' countries is left uncalculated until the first review by the platform or the tax authority.
- The team manages the company from its own country, and the company's tax residency ends up there too. More in the article company tax residency.
Next step
Neighbouring models are covered separately: custom development in the guide to a company for an IT agency, selling physical goods in a company for an online store, and tokens and crypto-asset operations in a structure for a crypto project.
Send us a description of the product, the clients' countries, the planned payment service, the founding team and investment plans. Offshora will compare 2–3 structures with taxes, two-year costs and a banking route. Submit a request.
Tell us about your task, and we will propose a jurisdiction, the scope of services and the order of work.
Send a request →