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I'm planing to open company (C Corporation) with my friend in US, specifically Delaware. But I am not US resident nor is he. Him and I live in Croatia, Europe. We will be owners of company and only workers. That means we will be self employed. Since we don't live in US and we will send our salary on Croatian bank account (Company's bank account will be in US) do we need to pay taxes on our salary, self employment tax, health insurance and pension funds in US? Since Croatia is not in agreement with US to avoid double taxation, what is our best option? Will we have to pay everything in US and again in Croatia? If we need to pay health insurance in US will it work for Croatia?

Thank you for your answers.

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do we need to pay taxes on our salary, self employment tax, health insurance and pension funds in US?

No mandatory pension in the US, check DE state laws. You're not self-employed since you're being a salaried employee of the corporation. With only two employees your corp is not required to provide you health insurance. Check FICA laws, you may be exempt from FICA taxes as foreigners. The corporation will have to pay employer taxes (FUTA, UI, etc).

You will have to pay your income taxes in Croatia on that income.

You will have to pay taxes in the US on dividends/deemed dividends distributed by your corporation.

Talk to a US-licensed tax adviser (EA/CPA licensed in DE) and to a Croatian tax accountant. If you don't have a very good reason to setup this as a C-Corp - don't do it.

  • Do you recommend to open an LLC instead of Corporation? – Micko Jan 10 '15 at 10:51
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    If its all the same to you then LLC will most definitely be less troublesome. You can convert LLC to C-Corp if needed. But I suggest you talk to a startup-specializing business attorney and US-licensed tax adviser (EA/CPA). – littleadv Jan 10 '15 at 21:12

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