20 Best Offshore Jurisdictions for E-Commerce

Expanding e-commerce across borders isn’t just a tax play—it’s about getting reliable banking, compliant logistics, workable VAT/GST, and payment processing that doesn’t collapse under chargeback pressure. The right jurisdiction can lower your effective tax rate, streamline imports, and make PSP onboarding painless. The wrong one can freeze your money and trigger messy audits. Below is a pragmatic guide to the 20 jurisdictions I consistently see work for e-commerce founders, plus a framework to choose smartly based on your model.

What Makes a Jurisdiction “Good” for E-Commerce

Payment processing access: Can you get Stripe/Adyen/Checkout.com/PayPal or solid regional acquirers? This is the number one operational filter.

Banking and fintech rails: Does the country have reliable banks or modern EMIs (Wise, Revolut, Airwallex) and easy onboarding for non-residents?

Tax structure that fits your model: Territorial systems can be gold for drop-shipping and digital goods; onshore low-tax works for EU logistics and Amazon FBA.

VAT/GST and customs: If you ship into the EU/UK, how easy is IOSS/OSS/UK VAT compliance and warehousing?

Substance and residency: Can you meet reasonable substance expectations so you don’t trip CFC rules or “place of effective management” tests back home?

Cost, speed, and predictability: Setup and annual costs matter, but so does stability and clear rules.

A Quick Decision Framework

Map your sales and logistics: Where are your customers? Do you store inventory or drop-ship? Will you use EU/UK warehouses or ship DDP from Asia?

Pick your payments path: Confirm realistic PSP options for your target country list. If you need Stripe today, shortlist countries where you can onboard.

Choose a tax model: Territorial for lightweight operations (UAE/HK/SG/Geo/Panama), onshore low-tax for EU logistics (Bulgaria/Cyprus/Lithuania/Ireland), or US/UK for maximum PSP coverage with careful residency planning.

Check VAT mechanics: If you sell to EU consumers, plan for IOSS/OSS or appoint an intermediary. If you sell in the UK, plan for UK VAT from day one.

Add substance if needed: Appoint local directors, lease a small office, open local bank/PSP, and maintain board minutes in-country. This protects residency status.

Model total cost: Include corporate tax, VAT cash flow, payroll/social security, compliance, and PSP fees. Don’t forget customs and returns.

Pilot with one brand: Onboard one storefront first. Validate PSP flows, VAT returns, and shipping before scaling.

20 Jurisdictions That Work for E-Commerce

I’m grouping these by how founders typically use them. Tax rates and policies change; confirm locally before committing.

1) United Arab Emirates (Dubai, RAK, IFZA, DMCC)

Best for: Global sellers needing modern banking, mainstream PSPs, and a territorial tax system with low headline rates.

Headline taxes: 9% corporate tax introduced in 2023, but Free Zone companies can remain at 0% on qualifying income if they meet substance and do business outside the UAE. 5% VAT on domestic supplies.

PSP/banking: Strong. Stripe and Checkout.com operate; banks are careful but open to well-documented SMEs. Wise/Revolut often available for cross-border.

Setup and cost: 2–6 weeks. All-in year one often $6k–$12k including license, local address, and basic PRO support.

Substance: Expect real substance for Free Zone 0%—local director or manager, small office, and UAE-based decision-making.

Practical note: Works great for DTC and SaaS. If you sell into the EU/UK, plan for IOSS/UK VAT separately. Keep clean separation between UAE and onshore EU sales to preserve Free Zone benefits.

2) Hong Kong

Best for: Asia-centric sourcing and cross-border sales with a territorial tax model.

Headline taxes: 8.25% on first HKD 2M of profits; 16.5% thereafter. Territorial—offshore profits can be tax-exempt if properly documented.

VAT/GST: None.

PSP/banking: Stripe and PayPal supported. Traditional banks can be conservative; consider fintechs first, then HSBC/DBS once you have traction.

Setup and cost: 1–3 weeks with a provider. Year one $3k–$6k typically.

Substance: Offshore claim needs documentation—contracts, shipping, and management outside HK. Inland Revenue scrutinizes; maintain evidence.

Practical note: Ideal for drop-shippers and marketplace sellers. Keep immaculate transfer pricing and substance narratives if you claim offshore status.

3) Singapore

Best for: Premium brand positioning, robust banking, and APAC logistics hubs.

Headline taxes: 17% corporate tax, but partial exemptions often reduce effective rate to ~8–11% for SMEs in early years. Territorial tendencies with foreign-sourced income remittance rules.

VAT/GST: GST at 9% (2024). Registration threshold S$1M local supplies.

PSP/banking: Excellent. Stripe/Adyen/Checkout.com support. Banks are world-class but expect stricter KYC.

Setup and cost: 1–3 weeks. Year one $5k–$10k with nominee/local director services if you’re non-resident.

Substance: Board control in SG strengthens residency and treaty position. Consider a small office and local staff for credibility.

Practical note: If you’re scaling multi-warehouse operations in APAC, Singapore pays for itself in stability and PSP acceptance.

4) Estonia

Best for: Digital goods and lean teams who want EU credibility with simple tax rules.

Headline taxes: 0% on retained earnings; 20/80 on distributed profits (20% effective).

VAT: 22% standard. Easy OSS registration for EU sales.

PSP/banking: Strong EMI ecosystem; Stripe supports Estonia. e-Residency streamlines remote setup.

Setup and cost: 1–2 weeks for e-Residents. Year one $2k–$4k plus accounting.

Substance: For EU tax residency, add real management in Estonia. Otherwise, your home country might assert residency.

Practical note: Perfect for SaaS or low-inventory e-commerce using EU IOSS/OSS. Keep an eye on digital VAT rules for e-services.

5) Cyprus

Best for: EU access with moderate tax and pragmatic administration.

Headline taxes: 12.5% CIT. IP box incentives and notional interest deduction available in specific cases.

VAT: 19%. Straightforward OSS/IOSS participation.

PSP/banking: Improving; PayPal available. Stripe availability can fluctuate—consider EU acquirers like Checkout.com/Adyen if Stripe is out of scope.

Setup and cost: 2–4 weeks. Year one $4k–$7k nominally.

Substance: Local director, office, and occasional employee help secure residency and treaty benefits.

Practical note: A good “EU base” for FBA and warehousing. Factor in local payroll if you appoint a resident director-employee.

6) Malta

Best for: EU credibility with effective rates for shareholders using refunds.

Headline taxes: 35% CIT with shareholder refund mechanisms bringing effective rates down to ~5–10% in many trading cases.

VAT: 18%. Supports OSS/IOSS.

PSP/banking: Stripe support varies by cycle; alternatives like Adyen and Checkout.com common. Banks expect thorough KYC.

Setup and cost: 2–6 weeks. Year one $6k–$12k, accounting heavier due to refunds.

Substance: Real management in Malta is advised if you rely on refunds and treaty network.

Practical note: Works well for holding brand/IP plus EU trading. Budget more for administration than in Eastern EU.

7) Bulgaria

Best for: Low-tax EU onshore entity for logistics-heavy models.

Headline taxes: 10% CIT; 5% dividend withholding to non-residents (treaty reductions possible).

VAT: 20%. Efficient OSS/IOSS registration.

PSP/banking: Access to EU acquirers. Stripe supports Bulgaria.

Setup and cost: 2–4 weeks. Year one $3k–$6k.

Substance: Director in Bulgaria and modest office recommended for clean residency.

Practical note: Excellent for Amazon/EU fulfillment with a cost advantage. Hire local bookkeeping—Bulgarian reporting has specific quirks.

8) Ireland

Best for: Strong PSP access and EU presence for larger teams.

Headline taxes: 12.5% trading income (15% for certain large MNEs under Pillar Two). Generous R&D credits.

VAT: 23%. OSS/IOSS available.

PSP/banking: Outstanding. Stripe HQ is in Dublin; onboarding is smooth for compliant businesses.

Setup and cost: 1–3 weeks. Year one $5k–$10k including registered office and secretarial.

Substance: Real Irish management strengthens residency claims and treaty access.

Practical note: Great for scaling brands and marketplaces. Higher payroll costs offset by talent and PSP stability.

9) Lithuania

Best for: EU base with strong fintech ecosystem and practical regulators.

Headline taxes: 15% CIT; small company rates can be 5% early on if you qualify.

VAT: 21%. Efficient OSS/IOSS.

PSP/banking: Excellent access to EMIs; Stripe supports Lithuania; many fintechs licensed locally.

Setup and cost: 1–3 weeks. Year one $3k–$6k.

Substance: Local management improves everything—banking, VAT, and audit tolerance.

Practical note: Helpful for DTC brands that rely on EMIs and quick onboarding.

10) United Kingdom

Best for: PSP access, English law, and brand credibility.

Headline taxes: 25% main rate; 19% for small profits band.

VAT: 20%. Post-Brexit, you’ll register for UK VAT if selling to UK consumers or storing inventory.

PSP/banking: A-list—Stripe, PayPal, GoCardless, traditional banks, and modern EMIs.

Setup and cost: 24–72 hours to incorporate. Year one $1.5k–$4k plus accounting.

Substance: If directors and decision-making are outside the UK, watch tax residency; HMRC can assert management is abroad or in the UK depending on facts.

Practical note: Excellent operating company, but don’t try “non-resident UK Ltd” games without advice. Align management with your tax plan.

11) Isle of Man

Best for: Zero-CIT operating company with access to UK VAT area.

Headline taxes: 0% corporate tax for most trading; 10% for bank/retail, 20% for some sectors.

VAT: Part of the UK VAT area—practical for EU/UK e-commerce logistics pre-clearance into the UK.

PSP/banking: Niche but workable with the right provider. Expect thorough KYC.

Setup and cost: 2–4 weeks. Year one $6k–$12k.

Substance: Office, local director, and real management recommended.

Practical note: Attractive for certain logistics-heavy models into the UK; budget for higher admin compared to mainland UK.

12) Gibraltar

Best for: No VAT, English-law environment, close to UK for payments and regulation.

Headline taxes: 12.5% on income accrued in Gibraltar.

VAT: None, which simplifies pricing for non-EU/UK sales but not EU consumer sales, where VAT still applies at destination.

PSP/banking: Growing set of options; many businesses still use EU/UK acquirers alongside.

Setup and cost: 2–6 weeks. Year one $5k–$9k.

Substance: Expect local management and office for a clean profile.

Practical note: Interesting for digital goods and services billing outside the EU/UK. For EU sales, plan VAT collection per destination.

13) Georgia

Best for: Low-cost base with distribution-based taxation and straightforward operations.

Headline taxes: 15% on distributed profits; retained earnings not taxed until distribution (Estonian-style).

VAT: 18%, threshold-based.

PSP/banking: Decent banking for local needs; for global PSPs, pair with EMIs.

Setup and cost: 1–2 weeks. Year one $1.5k–$3k.

Substance: Easy to establish; simple bookkeeping helps with audits.

Practical note: A nimble play for drop-shipping or marketplace models where you don’t need EU-based PSPs.

14) Armenia

Best for: Low overheads and straightforward compliance for early-stage brands.

Headline taxes: 18% CIT. Reduced turnover regimes may apply at low revenue levels.

VAT: 20% with thresholds.

PSP/banking: Domestic banking is fine; for global PSPs, rely on EMIs or EU/US acquirers via group structures.

Setup and cost: 1–2 weeks. Year one $1.2k–$3k.

Substance: Easy to meet; practical for genuine operations (support, fulfillment coordination).

Practical note: Good as a back-office and engineering base with a separate EU/US front-end entity for PSP and VAT.

15) Mauritius

Best for: Holding and trading companies with partial exemptions and strong treaty network.

Headline taxes: 15% CIT with 80% partial exemption for certain foreign-source income categories (effective ~3% if conditions met). Check eligibility for trading income.

VAT: 15% domestically.

PSP/banking: Better for B2B and holding; retail PSP onboarding can be slower. Pair with global acquirers if eligible.

Setup and cost: 2–4 weeks. Year one $6k–$12k with management company fees.

Substance: GBC status requires local directors and some substance.

Practical note: Strategic as a holding or IP hub combined with an EU/UK operating company.

16) Labuan (Malaysia)

Best for: Asia trading with a predictable 3% tax regime for trading companies that meet substance.

Headline taxes: 3% on audited net profits (trading), with substance requirements.

VAT/GST: No GST.

PSP/banking: Niche; payment processing usually routed via Malaysia or global acquirers. Banking available with Malaysian banks.

Setup and cost: 3–6 weeks. Year one $7k–$15k including licensing and substance.

Substance: Mandatory—director, office, and sometimes local staff.

Practical note: Solid for wholesalers and B2B e-commerce. For high-volume B2C, ensure your PSP plan is solid.

17) Delaware or Wyoming (US LLC for Non-Residents)

Best for: Maximum PSP coverage (Stripe/PayPal/Amazon), simple pass-through taxation for non-US income.

Headline taxes: LLC is pass-through; if no US trade or business, generally no US income tax, but careful analysis is needed (marketplace nexus and ECI rules can bite). State sales tax issues apply if you store inventory or have nexus.

VAT: None, but US state sales tax/marketplace collection applies.

PSP/banking: Best-in-class PSP access. Bank accounts possible with ITIN/EIN; EMIs (Mercury, Brex) help.

Setup and cost: 24–72 hours. Year one $500–$2k. FinCEN BOI reporting required from 2024.

Substance: If management occurs in your home country, that country may tax profits. Keep clean records.

Practical note: This is the most pragmatic route for many non-US founders. Pair with a local accountant who understands sales tax and ECI.

18) Puerto Rico (US Territory) – Act 60 Export Services

Best for: Digital commerce and services businesses selling outside PR, with low corporate rates if structured properly.

Headline taxes: Qualifying export services companies can obtain a 4% corporate tax rate under Act 60. Owner distributions can be tax-advantaged for PR residents.

VAT: Sales and Use Tax (SUT) locally; not relevant to foreign sales under the decree.

PSP/banking: US rails and PSPs; great access.

Setup and cost: 4–8 weeks including decree application. Year one $8k–$20k including legal/filing.

Substance: You need real presence in Puerto Rico—residency for owners and employees performing services in PR.

Practical note: Powerful for digital goods/services; for physical goods shipped into the US, analyze sourcing and US-source income rules carefully.

19) Panama

Best for: Territorial taxation with a large logistics footprint.

Headline taxes: 25% CIT only on Panama-source income; foreign-source income generally exempt.

VAT: ITBMS 7% domestically.

PSP/banking: Banking is available but onboarding can be lengthy. PSP coverage for retail e-commerce is patchy; often solved with EMIs or group structures in the US/EU.

Setup and cost: 2–4 weeks. Year one $2k–$5k.

Substance: Keep proper records to support foreign-source classification.

Practical note: Good as a sourcing and coordination entity; less ideal as a sole retail-facing vehicle without PSP solutions.

20) British Virgin Islands (BVI)

Best for: Holding IP/brand rights and simplified corporate structure, sometimes paired with onshore operating entities.

Headline taxes: 0% corporate income tax; economic substance rules apply for relevant activities.

VAT/GST: None in BVI.

PSP/banking: Weak for direct retail processing. Use in a group with EU/US operating company for PSP and VAT compliance.

Setup and cost: 2–5 days. Year one $1.5k–$3k plus substance filings.

Substance: If performing relevant activities, you’ll need local directors, premises, and expenditure.

Practical note: Not ideal as a standalone e-commerce seller, but effective as an IP owner or holding company with royalties charged to operating subsidiaries.

Matching Jurisdictions to E-Commerce Models

Drop-shipping and lean DTC without EU warehousing: UAE, Hong Kong, Singapore, Georgia, Delaware/Wyoming LLC.

EU-focused with warehousing/FBA: Bulgaria, Lithuania, Ireland, Cyprus, Malta, UK, Isle of Man (for UK flows).

Digital goods and SaaS: Estonia, Ireland, Singapore, Puerto Rico (with Act 60 and substance), UAE.

Holding/IP plus onshore ops: Mauritius, BVI, Malta.

Asia procurement with regional sales: Singapore, Hong Kong, Labuan.

Payment Processing Realities

Stripe/Adyen/Checkout.com typically require the merchant to be domiciled in a supported country with matching bank account. Check the latest country list—they expand regularly.

PayPal is more flexible but requires strong risk controls and compliant KYC/AML.

EMIs (Wise, Revolut, Airwallex, Payoneer) can bridge gaps but read their allowable use policies and volume limits.

High-risk MCCs (nutraceuticals, subscription boxes with aggressive billing, CBD, adult) need specialized acquirers and bulletproof compliance. Budget higher rolling reserves.

Common mistake: Setting up in a low-tax island and assuming Stripe will onboard you. It often won’t. Start from PSP availability, not from the lowest tax rate.

VAT, IOSS, OSS, and Customs—Don’t Wing It

EU distance sales to consumers: If you’re EU-established, use OSS to file a single return. If you’re non-EU, you can still register for OSS via an EU establishment or intermediary.

IOSS for low-value consignments (≤ €150): Non-EU sellers typically need an IOSS intermediary. This speeds delivery and avoids surprise duties at the door.

UK: Separate VAT system post-Brexit. Register if selling to UK consumers or storing inventory there. Marketplaces often collect VAT on certain consignments.

DDP vs. DAP: Using DDP with IOSS/UK VAT registered entities improves customer experience. DAP leads to abandoned carts when couriers demand taxes on delivery.

Practical tip: If you’re outside the EU but heavy on EU sales, consider a small EU company (Estonia, Lithuania, Bulgaria, Ireland) purely to manage VAT/IOSS and warehousing. It often pays for itself in reduced headaches.

Substance, CFC Rules, and Where You Actually Work

Tax residency follows control, not just documents. If you sit in Country A making all decisions for a company in Country B, Country A may claim it as resident or tax profits under CFC rules.

How to protect your structure:

Align reality with paperwork: Board meetings, key decisions, and contracts executed in the chosen jurisdiction.

Local footprint: Director, modest office, local phone number, and a bank account help.

Payroll: Hiring at least one local staff member can be a strong factor in substance tests.

Documentation: Minutes, travel logs, and emails—create a record that shows management location.

If you can’t create substance, use a jurisdiction that matches where you actually work, or accept onshore taxation with better PSP access.

Costs and Timelines at a Glance (Estimates)

Fast and budget-friendly: Delaware/Wyoming, Estonia e-Residency, Bulgaria, Lithuania (from $1.5k–$6k to start).

Mid-range with strong benefits: UAE, Singapore, Ireland, Cyprus, UK ($4k–$12k year one).

Higher admin/complex: Malta, Isle of Man, Labuan, Mauritius ($6k–$15k year one).

Holding/IP-only: BVI, Mauritius (lower ops cost but add substance if relevant).

These ranges exclude VAT compliance, payroll, and audit—plan for those separately.

Common Mistakes and How to Avoid Them

Chasing 0% tax at the expense of PSP access: If you can’t take payments, you don’t have a business. Start with payments.

Ignoring VAT and customs: EU/UK consumer sales need planned registrations. Fix it early to avoid retroactive liabilities.

“Paper” management: Running everything from your home country while your company is “offshore” invites residency challenges and CFC issues.

Overcomplicating too soon: One entity and one PSP can still take you to multi-seven figures if you choose well. Add holding/IP and regional entities later.

Neglecting bookkeeping: Territorial systems and offshore claims rise and fall on documentation. Invest in consistent, monthly accounting and proper transfer pricing.

A Step-by-Step Setup Plan (That Actually Works)

Validate PSP availability: Shortlist three jurisdictions where your preferred PSP will onboard today.

Model VAT and logistics: If selling into EU/UK, price in IOSS/OSS/UK VAT and pick a warehouse strategy.

Choose the jurisdiction that balances PSP, tax, and admin: Don’t optimize just one dimension.

Build substance: Hire a local director, get a modest office, and open a local bank/EMI.

Implement airtight accounting: Monthly books, document flows for offshore claims, and timely VAT filings.

Start with one storefront: Test chargeback rates, refund flows, and customs. Optimize before scaling.

Add a holding/IP entity only when needed: Once your brand and margins justify it, layer in a holding company for asset protection and tax efficiency.

Final Thoughts

For most e-commerce founders, “offshore” success is less about tax rates and more about operating cleanly with reliable payments and VAT compliance. If you’re EU-centric and warehouse-heavy, pick an EU base with low tax and strong PSPs (Bulgaria, Lithuania, Ireland, Cyprus, Malta, UK). If you’re global DTC without local warehouses, territorial hubs with strong banking (UAE, Hong Kong, Singapore) or a US LLC for PSP access are hard to beat. Keep your structure honest, your substance real, and your books immaculate. That combination outperforms clever diagrams every time.