Re: PROPOSAL UPDATED: Incorporate the Veres One Non-Profit Foundation

+1


On Sun, Aug 5, 2018, at 8:43 AM, Adam Lake wrote:
> **


> *The Veres One Community Group is currently discussing the topic of
> where to incorporate the Veres One Foundation. We would like to make
> this decision before we go into production. The original proposal was
> to incorporate in the US because it is the most cost effective and
> presents the least unknowns for those overseeing the incorporation
> process. Once incorporated, we would then move the Veres One
> Foundation operations to Switzerland once the Foundation’s cash on
> hand hit a particular threshold. In response to this proposal, several
> other countries were mentioned as candidates for incorporation. The
> following details are my findings and analysis to date.  *> *
*
> **UPDATED PROPOSAL*: After doing more research into the various
> country options for incorporation my proposal has changed somewhat. I
> propose that we incorporate in Canada to start with and leave the next
> country of incorporation more open ended. Canada may end up being a
> good long term home for the Veres One Foundation. The CG and the Board
> can decide where, when, and if the Veres One Foundation should migrate
> to another jurisdiction at a later date.*> *
*
> *Overall, it was not particularly easy to discover the requirements to
> incorporate as a Foundation in the various counties identified as good
> candidates by the group. I have included data points that I was able
> to acquire.*> *
*
> *I believe it is important to note that while Veres One is a nonprofit
> that it is also a lean startup. Cost effectiveness and simplicity are
> critical in the early stages. Achieving traction and sufficient
> revenue to grow is the first phase. Once Veres One achieves traction
> and a stable base of revenue, the community and the Board can always
> decide to migrate operations and incorporate in a more preferable
> jurisdiction.  *> *
*
> *It would be ideal for Veres One to move forward with incorporation as
> soon as possible as not to miss the target of going into production by
> the end of Q3 2018. It is also imperative that Veres One become an
> independent organization and that decision making authority related to
> governance be separated from Digital Bazaar.*> *
*
> *The country of incorporation provides a legal framework for the
> organization to operate but it does not have a lot of weight in
> shaping the character of the organization. The Community, Advisors,
> the Board, and the Foundation’s governing principles shape the
> character of the organization. While the country of incorporation is
> important it is not likely to determine the success of the project.*> *
*
> *Following are the notes on the costs and considerations for
> incorporating in each country mentioned. Note, all cash values are
> in USD.*> *
> 
*
> **Canada**


> *
*
> **Costs: *Startup, $5K-10K, more likely closer to $5K, with assistance
> from an Canadian law firm.*> *
*
> *Operating, $5.5 - $7.8K at most for first year, less after that
> because we will better understand the compliance requirements and
> won’t need as much legal advisement.*> *
*
> **Tax Rates: *Tax Exempt, but we can’t issue tax receipts to
> individuals. Organizations and foreign foundations can still donate to
> the Veres One Foundation and write the donation off of their taxable
> income.  *> *
*
> **Familiarity: *Familiar, we have a point of contact and an advising
> law firm.*> *
*
> **Neutral: *Yes*


> *
*
> **Stability: *Excellent*


> *
*
> **Human Rights: *Excellent*


> *
*
> **Pros: *One of the positives of starting in Canada vs the US is that
> we may want to continue operations there, whereas if we incorporate in
> the US we expect to later transfer operations from the US to
> Switzerland or some other country.*> *
*
> **Cons: *$2K-$7K more to incorporate and $4.5K - $6.8K more to operate
> in first year than in the US. *> *
*
> **United States**


> *
*
> **Costs: *Startup $3K, Operating $1K/year*


> *
*
> **Tax Rates*: Tax Exempt*


> *
*
> **Familiarity: *Very Familiar, fewest unknowns*


> *
*
> **Neutral: *Somewhat*


> *
*
> **Stability: *High, but potentially litigious*


> *
*
> **Human Rights: *Good*


> *
*
> **Pros*: United States is an attractive option because it is familiar
> to those that will be incorporating and administering the Veres One
> Foundation and because the startup and operating costs are low.*> *
*
> *Tax exemption is easy to obtain, good for early donations if the
> opportunity arises.*> *Political concerns should not affect the Foundation.*


> *
*
> *Incorporating in the US where startup costs are approximately $3K
> and operating costs for low revenue foundations are less that $1K
> per year.*> *
*
> **Cons*: The United States is not generally viewed as a neutral
> arbiter. There is historical baggage associated regarding governance
> of technical infrastructure for the Internet (e.g. ICANN)..*> *
> 
*
> **Estonia**


> *
*
> *Costs: Startup, ~$1000, includes drawing up the articles of
> association and other documentation as well as state fee, does not
> include applicable translations. Operating Costs, $8.4K-$11.3K/year*> *
*
> **Tax Rates:* 20% VAT, would likely get tax exemption*


> *
*
> **Familiarity:* Somewhat familiar, some unknowns*


> *
*
> **Neutral: *Yes*


> *
*
> **Stability: *Good*


> *
*
> **Human Rights:* Good*


> *
*
> *Estonia is not known for being a neutral country or for its civil
> rights but there doesn’t seem to be any red flags or concerns in these
> areas either.*> *
*
> **Pros:* Estonia is increasingly known for its innovation in digital
> services including it’s eGovernment  and eResidency programs. Veres
> One being incorporated in Estonia could increase the chances that the
> Estonian government would use Veres One identifiers but country of
> incorporation is unlikely to be a significant factor in their
> adoption.*> *
*
> *Incorporation can be settled in a matter of days once all the
> paperwork is prepared.*> *
*
> **Cons: *Tax exemption is likely but not guaranteed.*


> *
*
> *Estonia has not automated, through their eGovernment services, all
> aspects of starting and operating a nonprofit Foundation like they
> have for for-profit entities. This means that some of the
> administrative tasks such as filing certain documents and bookkeeping
> would need to be done within Estonia. This results in higher costs
> than what was previously estimated when we thought we could start and
> operate the Foundation exclusively through their eGovernment
> services.*> *
*
> *If all board members are foreigners, appointment of a contact person
> in EE is required.*> *
> 
*
> **Switzerland**


> *
*
> **Costs: *Startup, $65K Operations, $10K/year*


> *
*
> **Tax Rates:* Tax Exempt within 6 months*


> *
*
> **Familiarity: *Not particularly familiar but have done a lot of
> due diligence and feel comfortable with incorporating here if we
> decide to*> *
*
> **Neutral:* High*


> *
*
> **Stable:* Very*


> *
*
> **Human Rights:* High*


> *
*
> **Pros: *Switzerland is globally viewed as a neutral country and is
> home to many international non-profits and UN agencies. Swiss cultural
> support for civil society organizations is strong.*> *
*
> *They have been easy to work with and I feel comfortable executing on
> incorporation in Switzerland if and when the Veres One Community
> decides that it's the appropriate course of action.*> *
*
> **Cons: *Swiss incorporation requires $65K USD in startup costs and up
> to $10K USD per year in operating costs. This includes $50K for a
> capital requirement that could be placed in a Swiss bank account and
> used for operations.*> *
*
> *Swiss incorporation also presents additional regulatory risks since
> the Maintainer/Founders (Digital Bazaar) are US-based and the
> nonprofit Foundation would be Swiss-based. The risks are minimal and
> the additional costs are not astronomical but it would be far more
> lean and cost effective to incorporate in the US or Canada, or Estonia
> to start with.*> *
> 
*
> **Liechtenstein**


> *
*
> **Costs: *N/A*


> *
*
> **Tax Rates: *N/A*


> *
*
> **Familiarity:* Low*


> *
*
> **Neutral: *Good*


> *
*
> **Stable:* Very*


> *
*
> **Human Rights: *Good*


> *
*
> **Pros:* Liechtenstein has a favorable environment for blockchain and
> cryptocurrencies.*> *
*
> **Cons: *It is a monarchy which does not send the right message for a
> multistakeholder global public utility.*> *
> 
*
> **Iceland**


> *
*
> *I had trouble getting information about Iceland. I could not find
> basic details about starting a Foundation in Iceland. The attorneys
> that I corresponded with were not willing to provide me with many
> details without first giving them a retainer. It does sound like it is
> possible to incorporate the Veres One Foundation there but it’s
> unclear what value Iceland provides over other countries that would be
> worth going through the extra trouble and costs of incorporating
> there.  *> *
> 
*
> **Umbrella Org, Internet Governance Forum or Internet Society**


> *
*
> *The idea of operating the Veres One Foundation under another
> foundation, more specifically the Internet Governance Forum and the
> Internet Society was mentioned.   The advisement I received on this
> option was “ whether the Veres One Foundation could be incorporated
> under ISOC or the IGF: the answer to the latter is not, as legally
> this would not be possible (the IGF has no separate legal entity - it
> is a platform convened by the UN Secretary-General). ISOC could be an
> option in theory, I suppose, but it would be too mind bogglingly
> complex to consider.*> *
*
> **Multi-country**


> *
*
> *It is an option to incorporate the Veres One Foundation in multiple
> countries. This is more of a phase II option.*> **
>


> -- Adam Lake Director, Business Development Digital Bazaar Veres.io
> 540-285-0083
--
Joe Andrieu, PMP
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