Overseas incorporation for Indian founders, the full decision tree.

Setting up an entity outside India is driven by one or more of:

• Enterprise customers won't contract with an Indian entity. US / UK / EU Fortune 500 procurement teams require their vendor to be domiciled in a familiar jurisdiction. A Delaware C-Corp or UK Ltd is the common unlock.
• US venture capital invests only in Delaware C-Corps. If US seed or Series A is the plan, Delaware is non-optional.
• Payment rails require it. Stripe (US), Mercury, Brex, Apple Developer, Google Play, PayPal Business — many prefer or require a US entity for optimal onboarding.
• Lower corporate tax or no personal tax. UAE (9% CT), Singapore (17% but partial exemption), Delaware (21% federal + 8.7% Delaware). India 25-30% for corporates.
• Founder residence or planned relocation. If the founder is moving to Dubai or Singapore, an entity in that jurisdiction aligns residence with operation.
• IP ownership. Delaware or Singapore IP ownership is sometimes preferred by acquirors or VCs.

US (Delaware / Wyoming): Default for VC-fundable startups. 21% federal + ~1-9% state corporate tax. Delaware franchise tax USD 400+. Delaware C-Corp supports US VC term-sheet mechanics. Wyoming LLC: lower cost, pass-through, not VC-fundable. US employee hiring + Stripe + Mercury banking.

UAE (Mainland / Free Zone): 9% Corporate Tax above AED 375,000 (post-2023). Free Zone Qualifying Person: 0% possible on qualifying income. No personal income tax (relevant if founder is UAE resident). Golden Visa + residency pathway. Weaker: VC infrastructure, enterprise-customer familiarity, employee pool for tech.

Singapore (Pte Ltd): 17% corporate tax with partial exemption (effective 10-12% on first SGD 300K). GST 9%. Strong tax treaty network. Excellent VC infrastructure (Antler, Sequoia Southeast Asia, Golden Gate Ventures). Strong banking (DBS, OCBC, Mercury via partner). SGD 50-100K effective minimum operating cost per year.

UK (Ltd): 25% corporation tax (19% for small-profit companies). GBP 100 incorporation. UK tax treaty network strong. Easier EU-facing entity post-Brexit. Weaker: no capital gains preferential rate at exit (ETMO replaced), ongoing CA / company secretary cost.

Estonia (OU, e-Residency): 20% distributed-profit tax — no tax on retained profits. e-Residency program allows fully-remote company setup. Attractive for digital-only businesses that reinvest. Weaker: limited banking without physical presence, lower treaty rate ambiguities, EU VAT compliance.

Hong Kong (Private Limited): 16.5% corporate tax; 0% on foreign-source income. Historically strong banking (though tighter post-2020). CPA and HK company secretary required. Weaker since 2020 political environment.

Scenario 1: AI startup planning US VC round in 6-12 months. → Delaware C-Corp. Set up with 83(b)-ready founder stock, QSBS 5-year clock starts immediately, standard VC term-sheet machinery applies.

Scenario 2: SaaS startup selling to US and UK enterprises; founder in Bengaluru; bootstrapped and cash-flow positive. → Delaware C-Corp or Wyoming LLC. C-Corp if US customer contracts require signed-by-C-Corp paperwork. LLC if pure pass-through is sufficient and no US VC.

Scenario 3: Founder moving to Dubai; running a trading / consulting business with Middle East customers. → UAE Free Zone LLC. Golden Visa, 0% personal tax, Free Zone Qualifying Person for low corporate tax.

Scenario 4: Southeast Asia expansion; selling to Indonesian / Singaporean customers; need regional licensing. → Singapore Pte Ltd. MAS fintech licensing available, strong treaty network for intra-Asia operations.

Scenario 5: European customers; need VAT-registered entity in EU. → UK Ltd or Estonia OU (e-Residency). UK for enterprise-sales mechanics; Estonia for digital reinvestment-heavy businesses.

Scenario 6: Family office or UHNI capital structuring, not operating business. → UAE DIFC, Singapore VCC, Mauritius GBL, or Delaware LP depending on specific needs.

Any Indian resident setting up or investing in an overseas entity triggers Overseas Direct Investment (ODI) under FEMA. The 2022 Overseas Investment Rules provide an Automatic Route for most startup-scale investments and a specific Approval Route for larger or specific-sector investments.

Automatic Route key features:

• Investment via authorised dealer bank, no RBI approval needed.
• Investor must file Form ODI within 30 days of remittance.
• Investment capped at 400% of Indian net worth (for Indian company investors); unlimited for LRS individual up to USD 250K per financial year.
• Specific sector carve-outs apply (real estate, financial services, pharmaceuticals etc.).

Approval Route triggers:

• Investment exceeds Automatic Route limits.
• Target entity is in a restricted sector.
• Investment structure involves specific financial instruments (debt from Indian individual).

The flip side (US-side considerations) depends on jurisdiction — Form 5472 for Delaware foreign-owned LLC, UAE ESR compliance, Singapore LOB substance test, UK PSC (Persons of Significant Control) register, etc.