In the next couple of months we’ll be reincorporating the Ghost Foundation in Singapore and closing down all operations in the UK. This is easily the biggest business change we've made to Ghost since it started, and will hopefully give us a much easier time trading internationally!
This was a huge decision which represents the conclusion of a full year of research, planning and hard work. So, we wanted to take a moment to share exactly how and why we’re doing it.
Let’s start with a simple question: Where should any business legally incorporate?
For a regular business, the answer is typically synonymous with the location of the business’ premises, staff, customers or investors. In most cases, they’re actually all in the same place.
But, of course, Ghost has never been a regular business.
- We’re a distributed company: we have no business premises, and our staff are all over the world
- We’re an online company: thanks to the power of the internet, our customers are all over the world
- We’re a non-profit organisation: we have no investors, and don’t need to optimise for their legal needs
So: Where should Ghost be incorporated?
We don’t really know.
In the early days, we just went with what was easiest. Hannah is English and I’m half-English. Hannah lives in the UK, and I’d been freelancing through my Sole-Trader business in the UK for years. So I flew over to the UK once more and we filled out some paperwork and opened a bank account. At the time it just seemed like the most straightforward thing to do.
It worked out just fine, at first, but as Ghost grew and we started making money, we started to feel more and more uncomfortable with the way things were panning out.
We had to deal with Her Majesty’s Revenue & Customs (HMRC, for US readers, is the UK's IRS) - who, I’ve come to believe, are unequivocally the most incompetent organisation in the world. They would send us notices and demands for tax, all of which were incorrect - and whenever we tried to call them to tell them it was incorrect, we’d usually get their automated answering service: “We are too busy to deal with your call right now. Goodbye.”
More than 12 million calls per year are hung up on like this before ever being connected. It's a very bad joke.
Then January 2015 came, and the introduction of new European legislation called VATMOSS. For anyone not familiar with the implications: we had to rewrite our entire billing system twice, charge many of our customers more money, and submit to woefully complex and inadequate new accounting requirements. All of which had been put in place to stop multibillion-dollar corporations like Apple and Google from tax-avoidance in Europe. All of this was a constant, constant source of pain.
We started to wonder why we’d picked the UK at all.
As we looked around at what the potential alternative options might be, we narrowed down our requirements for a country which might make a good home for Ghost:
- Must support Stripe, for all our payments
- Must be outside the EU to avoid the disaster of VATMOSS
- Must allow incorporation by non-residents
- Should have progressive government with sane accounting
- Should support an equivalent of our Company Limited by Guarantee, Non-profit legal structure
We started thinking about all of this around December 2014, and by November 2015 we had settled on Singapore - one of just a couple of countries in the entire world which was able to fulfil all of our needs.
Singapore has Stripe support, is outside the EU, and allows simple incorporation by non-residents. So it has all our needs covered, but it also has a great many other benefits which add up to make it the 2nd most efficient economy on the planet, according to the World Economic Forum.
- Singapore is ranked #1 globally by the World Bank for ease of doing business.
- Ranked #1 in the world for economic investment potential
- Ranked #1 in the world for best business environment
- Ranked #1 in the world for transparency of government policymaking
- Ranked #1 in the world for public trust in politicians
- Ranked #3 in the world for least corrupt economy
- Ranked #3 in the world for quality of education
Not bad for a country which is, geographically, smaller than New York City.
Singapore is a progressive country with a fast-growing startup scene, and is exceptionally in tune with the times. This is in no small part due to its short (independent since just 1965), but rich history. Singapore has no natural resources or land mass to speak of, so it has always relied on continuously making itself as attractive as possible for international trade.
Ghost was previously subject-to and protected-by UK laws, so what’s the deal when we go to Singapore? Remarkably little changes. As both a former British colony and a current member of the Commonwealth, the Singapore legal system is actually based on British Common Law. In fact, Singaporeans can actively vote in UK elections or run for UK office. They even drive on the left.
As a result, we will have exactly the same legal structure in Singapore as we had in the UK: A Company Limited by Guarantee called “Ghost Foundation” - with a constitution defining our charitable objectives and non-profit status.
Figuring all of this out took a crazy-long time, and would’ve been basically impossible without the tireless help and advice of our good friend Derek Sivers. After selling CD Baby a few years back and moving to Singapore, he literally wrote the book on doing business there.
As a Ghost(Pro) customer, how will this change impact me?
Nothing changes. All customer data will remain safe and sound in Amsterdam.
Do the founders or employees of Ghost Foundation stand to gain financially from this move in any way?
Nope. We literally will not make a penny from it.
Is this really just tax-avoidance?
Nope. UK corporation tax is 20%, Singapore corporation tax is variable, going up to 17%. We will be paying all taxes which we are responsible for just like we always have. Plain English SG Corporate tax details here.
So this is all cause of VATMOSS?
Partially. The current EU legislation around VATMOSS is completely untenable. We’re in the very fortunate position of being able to vote with our feet and change service provider to one who treats us better.
Why not [this other country]?
One or more of the following reasons:
- It’s in Europe
- It doesn’t have Stripe support
- It’s hard for non-residents to incorporate there
- It has extortionately high tax rates
So are you actually going to live in Singapore?
Negatory. Previously we had a virtual address in London, soon we will have a virtual address in Singapore. That’s it.
Does any of this post constitute legal or financial advice?
Do you know any other cool shit about Singapore?
I thought you’d never ask! Here are some of my favourite Singapore facts:
- Singapore is one of only three surviving city-states in the world. (The other two are Monaco, and The Vatican)
- Selling chewing gum is illegal in Singapore (and the streets are spotless as a result).
- Singapore, originally called Singapura (Meaning “Lion City” in Sanskrit), was named by a Sumatran Prince after he saw a lion on the island. (There were no lions on the island)
- Singapore has the world’s highest percentage of millionaires. One in six households has at least $1,000,000 US dollars.
Will Ghost Foundation stay in Singapore forever now?
We’ll go wherever gives us the best service and is the most advantageous for Ghost as an organisation. We’ll continually re-evaluate where that is, as we do with all service providers.