When looking for a suitable area of law to set up a company within the European Union (EU), many customers have difficulties in making a final decision in one country or another. Of course, every European country offers numerous advantages, but also potential disadvantages. That is why we always recommend our customers to carefully evaluate and clarify their goals and requirements.
The EU is an intergovernmental economic union with the aim of promoting free trade and achieving economic stability, as well as a common European internal market that encompasses the territory of the 28 EU member states. Setting up a business within the EU can therefore be a great opportunity for your company, not only in terms of access to this internal market, but also in terms of minimizing taxes and other financial risks.
Understand EU companies
In terms of incorporation, each country in the EU has certain specific advantages, not to mention specifics in the legal process for establishing a business, which may vary by jurisdiction. Some jurisdictions offer relatively quick and accessible remote business formation and maintenance, while others don't blacklist offshore jurisdictions or offer a great way to minimize taxation (sometimes as low as 0%).
Benefits of starting an EU company
The EU is currently one of the most important and respected trade unions in the world. With common European trade standards and financial and trade legislation, EU companies have a lot to offer when it comes to accessing the Western market.
Main advantages:
Friendly tax authorities
Understandable and predictable tax system
Ability to remotely integrate and maintain your company
Protection of confidentiality and nominee services
0% dividend taxation
Acquisition of VAT status and tax optimization
There are other advantages of being registered in the EU:
Possibility to use the common European internal market and apply tax and customs exemptions
The free movement of workers within the EU offers the opportunity to find highly qualified international specialists
Application of European accounting and auditing standards
Numerous tax planning solutions
Most EU jurisdictions are not offshore blacklisted
The EU has a long history and has a good reputation and political stability
The most common legal forms
Although the legislation of each EU member state contains different legal requirements for the procedure for setting up a company, the most common legal forms are usually the same across Europe.
According to statistics from the European Commercial Register, most companies within the EU are registered as Standard Limited Liability Companies (LLCs), with shareholders bearing no personal financial liability for the company other than the monies invested in its paid-up capital as shares.
The other three most common legal forms in the EU are the stock corporation (JS), limited partnership (LP) and limited partnership (LLP). While starting a public company usually involves a lot of legal work, it might be your best bet if you are planning to start a large company with investors and issue company shares. On the other hand, LPs and LLPs can be used in certain jurisdictions to achieve a corporate structure that minimizes taxation.
Onshore and offshore EU companies
There are certain differences between European onshore and offshore companies. Onshore companies can become tax resident companies in EU jurisdictions (such as Italy, Cyprus, Latvia, Netherlands, Estonia etc.) by incorporating in Gibraltar, Scotland or Malta.
European onshore companies typically require complex tax planning structures to minimize taxation. Some jurisdictions offer low corporate tax rates, making it easier to structure your business (e.g. Latvia or Cyprus). As long as an onshore company is tax resident in its territory, VAT numbers are usually readily available. However, in some countries it can be difficult to maintain this status. Double taxation treaties can easily be applied to resident businesses, but economic substance and presence are essential to receive tax benefits.
In offshore Europe, low taxation can be achieved through the use of a local tax system. It is possible to use agency structures to get a cheaper tax rate. Obtaining a VAT registration number for a European offshore company can be a little tricky - it is usually easier to buy a ready-made company.Â
Numerous shelf companies with sales tax identification numbers are waiting for you with us. If necessary, with our legal support you can purchase a shelf company remotely and assign a nominee director or a shareholder. Bookkeeping and record-keeping obligations are simplified and company maintenance can easily be carried out virtually or remotely.
