I'm curious if any HNers have any ideas for ways to use off-shore status to protect your website from frivolous libel claims. I run some forums in the automotive industry that have been around for about 15 years. I take pride on being pro-free speech and loosely moderating things, only taking down obviously illegal posts, copyright infringements, etc. Despite that, I still occasionally get legal threats from people who have gotten their feelings hurt. In one case, the threats came from an actual attorney who was representing a shady commercial seller who got into it with some of our members.
I would love to move the ownership of the forums to some sort of arrangement (offshore) where they are essentially immune to frivolous libel claims. I want attorneys to look at us and tell their clients that it's simply not worth going after us. Is there such a place?
edit: I forgot to mention that my site runs no ads and makes no money whatsoever...a rarity in the forums world. I keep it like this because I love the hobby and I hate all of the other shitty forums sites that are filled with adware garbage. Given this, it's a real hardship when some attorney threatens me with a lawsuit because I just don't have the cash to properly defend myself.
I run just under 300 forums on much the same basis and have been sued in the past in the UK.
Feel free to co-opt my very expensive lawyer T&Cs which were designed specifically for this scenario (if you haven't actually had a lawyer draw up yours they may be a better default for you): https://github.com/microcosm-cc/legal
Ultimately in Europe I now feel fine:
+ EU e-commerce directive has "mere conduit"
+ Reactive moderation sets you aside from a publishing company and fits into "mere conduit"
+ Key thing for you is to not engage in any incidents as a participant, deny you even know that they are occurring... but if someone contacts you and tells you something is shady, etc you should shut that down ASAP - bear in mind that to some extent this does mean the admin of a forum shouldn't be an active user of the forum.
So for just shutting stuff down within a reasonable time, you basically get to be very immune from any libel, defamation, slander, etc that occurs as a result of your users.
Together with the change in UK law that shifted burden onto those raising a claim (they must prove actual damages - a surprisingly hard thing to do), I have not now had any legal threats in about 4 years despite still running as many forums that are barely (if at all) moderated.
I can wholeheartedly echo your concern. Operating from Europe I am looking for the same.
For me, it is not just about protecting free speech by not having to fear litigation costs, but also privacy: Extremists from left to right make heavy use of what private data they can find about owners of websites and try to destroy them publicly or use threats/actions of violence against them.
(Other example: I repeatedly run across pyramid schemes. Setting up a simple, yet convincing set of facts as a website, that would keep people from being fooled into these is my initial response. But I always restrain from doing so when I look at two things:
- how litigious these schemes often are (it often takes years for authorities to catch up to them)
- how emotionally attached (and often shady) the scheme's propenents are)
If the suits are truly frivolous, you are fine. Threats and letters are utterly meaningless in and of themselves. No attorney will actually take a frivolous suit to court, although they will try to bully and scare your with formal letterhead and words.
And if there is a real suit, being offshore won't protect you from the suit. You may be able to get it tossed out for lack of jurisdiction, and ultimately be immune from consequences, but that still means you need to either argue that point yourself it court or hire legal help to get it tossed.
Panama might be a good place to start looking for a lawyer. I have friends in other Central American countries who can’t stop singing the praises of Panamanian incorporation. They seem very confident that they can get away with all sorts of cringe inducing shenanigans. Your use case is mild by comparison but of course ymmv.
Any chance you can drop the name here? I'm a motorhead and my beloved community-supported mazdaspeed community has basically dried up and migrated to facebook...
The data on places to incorporate are slowly becoming more and more open.
Generally you incorporate off-shore for one to many of these three reasons: tax minimisation, privacy and corporation structuring.
For most people, an LLC in New Mexico, US (provided you are able to enter the US) with a parent company in the BVI is the easiest option.
Overall this will cost you less than $1,000/yr to operate as an LLC with none of your identification or documentation on it, bank accounts and services available in a first-world country, however operating as a proxy corporation for a BVI-based company therefore not subject to corporation tax.
However there are risks associated with this setup, plenty of people have had bank accounts frozen or assets seized temporarily if their accounts are included in a "probably tax evader or drug cartel" report. So it's suggested to never keep funds in your US-based corporation. Use a reputable, US-based accountant for your annual filing to minimise this risk. If you're not a US citizen or resident, the only risk is the possibility you won't have access to your funds for a long period of time (and you'll likely have to fly back to the US to sort things out).
Now, what I've written above is technically legal provided you're not a US citizen, or if you aren't obligated by law to pay federal or state taxes. However, it - and many, many similar structures are used every day for corrupt, illicit and morally bankrupt reasons.
Nobody is interested in fixing this. We've put in Anti-Money Laundering and Know Your Customer regulations whilst simultaneously PROVIDING ways to make sure people can still get away with tax evasion and hiding dirty money (US: insane protection for corporate entities, UK: owning and operating some of the largest tax havens in the world). As the world begins to wise up to these methods, we're already seeing other super-powers begin to offer the same and in some cases much better services. Taiwan and China, I'm looking at you.
„...or if you aren't obligated by law to pay federal or state taxes...“ this is the key sentence here and mostly not talked. Many people do not understand that you may have to pay income tax even though a foreign company/entity holds all profits/cash/assets. For Germany see the „Außensteuergesetz“ https://www.gesetze-im-internet.de/astg/__7.html
So, dumb question. One of the biggest impingements upon grey businesses (prostitution, pornography, imitation goods, gambling, social media profiles) is payment processing.
Now, VISA, AMEX, etc.. will never want to process these payments. If the Antigua, The Cayman Islands, or Panama have a healthy banking system, what prevents someone from setting up a VISA clone there? As a service provider, if you can work in their banking system as a legitmate bank, all you need is client banks -- And getting a bank account there is reasonable easy from my understanding.
The idea is for the money to get out of and back into the US financial system. The courts will stomp on whomever is facilitating the illicit payments and making that connection. Anti-money laundering regulations and regulators are competent and experienced.
If you want to start an online casino that just works for the cayman islands, sure. If you want it to work anywhere else you're going to have trouble.
> Now, VISA, AMEX, etc.. will never want to process these payments
Lots of legitimate business happens through the Caymans (for international finance) and Bermuda (for insurance). Wiring U.S. dollars between the Caymans and New York is instantaneous.
If I'm not mistaken, Gold and silver is considered money under the US constitution, not a commodity... You would have to use something like Bitcoin or some other commodity.
Well, not quite. From the article, 731.71 for the paperwork, but also an annual fee of 853.66. Additionally, a Registered Office is required, which they will provide for 2,500/yr. Rates are tiered based on income, and may be higher based on class of business. 731.71 just gets you in the door.
For what it's worth, this likely was submitted because of the California post that's currently #1 on HN, claiming you can have a California LLC for $70. It also states you'll need "An $800 LLC “tax” paid annually at tax time".
Cayman has no taxes. There are various fees required to register a corporation, but income and capital gains aren't taxed (for businesses or individuals). Note that the IRS still requires US citizens to file personal income tax returns, and they still have to pay taxes on foreign earned income.
I am not a lawyer or accountant, but I did live and work there for years. The main benefits are tax avoidance, but it's much more difficult for US citizens than for others (most countries don't tax their citizens on foreign income; capital gains laws vary).
People will make all the obligatory jokes about shady rich tax dodgers, and there are rich people and corporations that like to keep money in Cayman for ethically questionable reasons, but the majority of Cayman finance is completely legal, ethical, and above-board.
[+] [-] MikeEhrmantraut|8 years ago|reply
I would love to move the ownership of the forums to some sort of arrangement (offshore) where they are essentially immune to frivolous libel claims. I want attorneys to look at us and tell their clients that it's simply not worth going after us. Is there such a place?
edit: I forgot to mention that my site runs no ads and makes no money whatsoever...a rarity in the forums world. I keep it like this because I love the hobby and I hate all of the other shitty forums sites that are filled with adware garbage. Given this, it's a real hardship when some attorney threatens me with a lawsuit because I just don't have the cash to properly defend myself.
[+] [-] buro9|8 years ago|reply
Feel free to co-opt my very expensive lawyer T&Cs which were designed specifically for this scenario (if you haven't actually had a lawyer draw up yours they may be a better default for you): https://github.com/microcosm-cc/legal
Ultimately in Europe I now feel fine:
+ EU e-commerce directive has "mere conduit"
+ Reactive moderation sets you aside from a publishing company and fits into "mere conduit"
+ Key thing for you is to not engage in any incidents as a participant, deny you even know that they are occurring... but if someone contacts you and tells you something is shady, etc you should shut that down ASAP - bear in mind that to some extent this does mean the admin of a forum shouldn't be an active user of the forum.
So for just shutting stuff down within a reasonable time, you basically get to be very immune from any libel, defamation, slander, etc that occurs as a result of your users.
Together with the change in UK law that shifted burden onto those raising a claim (they must prove actual damages - a surprisingly hard thing to do), I have not now had any legal threats in about 4 years despite still running as many forums that are barely (if at all) moderated.
[+] [-] woodpanel|8 years ago|reply
For me, it is not just about protecting free speech by not having to fear litigation costs, but also privacy: Extremists from left to right make heavy use of what private data they can find about owners of websites and try to destroy them publicly or use threats/actions of violence against them.
(Other example: I repeatedly run across pyramid schemes. Setting up a simple, yet convincing set of facts as a website, that would keep people from being fooled into these is my initial response. But I always restrain from doing so when I look at two things:
- how litigious these schemes often are (it often takes years for authorities to catch up to them)
- how emotionally attached (and often shady) the scheme's propenents are)
[+] [-] myrryr|8 years ago|reply
The courts here are pretty sensible. They have 0 issues with telling someone they are just being silly and to leave.
They can still bring a case against you - but, it isn't expensive to defend like the US is.
[+] [-] codingdave|8 years ago|reply
And if there is a real suit, being offshore won't protect you from the suit. You may be able to get it tossed out for lack of jurisdiction, and ultimately be immune from consequences, but that still means you need to either argue that point yourself it court or hire legal help to get it tossed.
[+] [-] throwaway9980|8 years ago|reply
[+] [-] tim333|8 years ago|reply
[+] [-] unknown|8 years ago|reply
[deleted]
[+] [-] philg_jr|8 years ago|reply
[+] [-] rdrey|8 years ago|reply
- 100% foreign ownership
- No corporate/capital gains taxes
- 5-year work/residence permits for the team
-- No personal income tax in the Caymans for anyone moving here
From a friend who has gone through the process of setting one up for consulting, the initial setup cost ~30k USD and renewal costs ~15k USD per year.
- you still need an office package https://www.caymanenterprisecity.com/service-packages
- setup is not really that quick and painless
If you'd otherwise pay income tax pretty much anywhere else it might still make financial sense.
[+] [-] mattsfrey|8 years ago|reply
https://en.wikipedia.org/wiki/Foreign_earned_income_exclusio...
There is no more tax advantage to the law abiding citizen in this scheme versus just registering an llc in wyoming/nevada and living abroad.
[+] [-] unknown|8 years ago|reply
[deleted]
[+] [-] Mandatum|8 years ago|reply
Generally you incorporate off-shore for one to many of these three reasons: tax minimisation, privacy and corporation structuring.
For most people, an LLC in New Mexico, US (provided you are able to enter the US) with a parent company in the BVI is the easiest option.
Overall this will cost you less than $1,000/yr to operate as an LLC with none of your identification or documentation on it, bank accounts and services available in a first-world country, however operating as a proxy corporation for a BVI-based company therefore not subject to corporation tax.
However there are risks associated with this setup, plenty of people have had bank accounts frozen or assets seized temporarily if their accounts are included in a "probably tax evader or drug cartel" report. So it's suggested to never keep funds in your US-based corporation. Use a reputable, US-based accountant for your annual filing to minimise this risk. If you're not a US citizen or resident, the only risk is the possibility you won't have access to your funds for a long period of time (and you'll likely have to fly back to the US to sort things out).
Now, what I've written above is technically legal provided you're not a US citizen, or if you aren't obligated by law to pay federal or state taxes. However, it - and many, many similar structures are used every day for corrupt, illicit and morally bankrupt reasons.
Nobody is interested in fixing this. We've put in Anti-Money Laundering and Know Your Customer regulations whilst simultaneously PROVIDING ways to make sure people can still get away with tax evasion and hiding dirty money (US: insane protection for corporate entities, UK: owning and operating some of the largest tax havens in the world). As the world begins to wise up to these methods, we're already seeing other super-powers begin to offer the same and in some cases much better services. Taiwan and China, I'm looking at you.
[+] [-] philfrasty|8 years ago|reply
[+] [-] sargun|8 years ago|reply
Now, VISA, AMEX, etc.. will never want to process these payments. If the Antigua, The Cayman Islands, or Panama have a healthy banking system, what prevents someone from setting up a VISA clone there? As a service provider, if you can work in their banking system as a legitmate bank, all you need is client banks -- And getting a bank account there is reasonable easy from my understanding.
Similar to: https://en.wikipedia.org/wiki/E-gold https://en.wikipedia.org/wiki/E-Bullion
Could you build a similar model to "GoldMoney" (https://en.wikipedia.org/wiki/GoldMoney) without KYC?
[+] [-] colechristensen|8 years ago|reply
If you want to start an online casino that just works for the cayman islands, sure. If you want it to work anywhere else you're going to have trouble.
[+] [-] JumpCrisscross|8 years ago|reply
Lots of legitimate business happens through the Caymans (for international finance) and Bermuda (for insurance). Wiring U.S. dollars between the Caymans and New York is instantaneous.
[+] [-] um_ya|8 years ago|reply
[+] [-] oceanswave|8 years ago|reply
[+] [-] ocdtrekkie|8 years ago|reply
[+] [-] eloff|8 years ago|reply
[+] [-] bigtones|8 years ago|reply
[+] [-] mozumder|8 years ago|reply
[+] [-] caymanjim|8 years ago|reply
I am not a lawyer or accountant, but I did live and work there for years. The main benefits are tax avoidance, but it's much more difficult for US citizens than for others (most countries don't tax their citizens on foreign income; capital gains laws vary).
People will make all the obligatory jokes about shady rich tax dodgers, and there are rich people and corporations that like to keep money in Cayman for ethically questionable reasons, but the majority of Cayman finance is completely legal, ethical, and above-board.
[+] [-] linkmotif|8 years ago|reply