Host Site in Own Country or the US?
Does anyone have any advice or recommendations for those not based in the USA, on whether to host your site in our own country or in the US?
I am based in New Zealand. According to our tax department there can be some dispute on where an internet business is deemed to be operating for tax purposes. The location where the site is hosted can sometimes be considered the location where business is taking place and where you are liable for tax. If I set up my business as a New Zealand equivalent of an LLC and have the site hosted in the USA there is risk of double taxation. While NZ does have a 'double taxation agreement' with the US I would really prefer not to deal with two tax departments (one is bad enough!).
I could host in NZ, but it is more expensive and the services have less bandwidth/storage compared to US options. Most of my target market is likely to be outside of New Zealand, so another downside is that there will be latency (slow performance) issues with hosting in NZ compared to the US for most visitors to the site.
Thoughts? Anyone been through this and can advise?
Thanks Brendon
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Answers
I had a similar dilemma. My current Aussie web provider does not do multiple domains very well or even have an option to use a vps.I have had the same dillema. I live in Australia and just recently got a joyent (because of it's scaleable archetechture) account (based in US) . I was also looking at hostgator.
I have no advice about the tax implications - It seems a bit wierd though for the NZ government to be happy for you to live in NZ and use NZ services whilst paying tax elsewhere.
Paul
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Interesting question. I would recommend getting a server as close as possible to your users for performance reasons. I don't know how the international tax laws work, but within the U.S. for state taxes it matters where you physically are, and not where your servers are or where you ship goods to. Ask a tax lawyer or CPA what they think.
One other factor to consider is that google might make some decisions about how you rank in certain countries based on where your server is. You can override this in Google Webmaster Tools, but make sure you tell google what country/area your site is targeting. It might think that it's a US site and rank you lower for NZ.
Another option is to use a CDN like Amazon S3 + CloudFront or Rackspace CloudFiles to make the static content of your site faster, and reduce the load on your wordpress/shopping cart/etc server. I try to do this with most of my sites. They serve your content from 10-20 data centers distributed around the world to make content delivery FAST! There are plugins for wordpress to make this easy... just search for CDN.
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Great answers guys. Some things for me to think about and research. I'll let you know how I get on.
Brendon
I think I now have the full answer to my question. I promised to update this question once I had done so, so here goes. I dug into the fine print of the double taxation agreement between New Zealand and the USA, and it appears that:
a. If my business is based in New Zealand and it has a 'permanent establishment' in the USA (e.g. my business owned the server in the USA and this is used this for business transactions), then the profit would need to be apportioned to that made in NZ and that made through the permanent establishment in the USA and tax paid appropriate to each country's tax department.
b. but if my business is based in NZ and it hosts its business website in the USA, this is not considered to be a 'permanent establishment' in the USA, and as such I am only liable to pay NZ business tax.
My intent is only to host in the USA, so I am most happy that I will only be dealing with one tax department. I guess a similar approach would exist for most other countries, but others may be best to investigate to confirm if they face a similar issue.
Thanks again to Paul and Matt for their assistance with this question.
Brendon