On Carta and elsewhere, I have read the following:

Delaware also doesn’t require any state taxes for companies that are registered there but aren’t physically located in the state.

  • What exactly is meant by not being "physically located in the state"?
  • I'm assuming state taxes only refers to corporate income tax, and you'd still have to pay the franchise tax

Does that mean I do not need to pay Delaware's corporate income tax of 8.7% if, for example, I was resident in a different state e.g. WY and registered my corporation in DE?

1 Answer 1


DE assesses income tax from corporations based on the source of income. The source of income is determined in this manner:

Effective January 1, 2020, the apportionment calculation for Delaware will be based entirely on the sales or gross receipts factor on the Delaware corporate income tax return.

You would still need to file the Form 1100/1100EZ even if there's no tax due, since by registering your corporation in DE you're creating a domestic corporation there (same source):

Every domestic or foreign corporation doing business in Delaware, not specifically exempt under Section 1902(b), Title 30, Delaware Code, is required to file a corporate income tax return (Form 1100 or Form 1100EZ) regardless of the amount, if any, of its gross income or its taxable income.

In addition, you will need to pay the franchise tax.

Generally it doesn't make much sense for an individual proprietor to create an entity not in the state where they are actually doing business.

  • I checked Section 1902(b), Title 30, Delaware Code. And under (b)(6) it states: A corporation maintaining a statutory corporate office in the State but not doing business within the State [is exempt from corporate income tax]. What I am unable to find is how "doing business" is defined?
    – asd7
    Mar 7 at 6:39
  • 2
    @asd7 you'll have to ask a DE licensed attorney or CPA
    – littleadv
    Mar 7 at 17:06

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