Companies in the European Union
When looking for a suitable jurisdiction in which to incorporate a company within the European Union (EU), many clients experience certain difficulties in making a final decision in favour of one country or another. Of course, every European country offers numerous benefits, while also presenting potential disadvantages. That is why we always recommend that our clients carefully evaluate and clarify their goals and requirements.
We have more than ten years’ experience in company formation and maintenance worldwide. When you are looking to incorporate a company, it is important to scrutinise a number of factors in order to ascertain the most suitable jurisdiction for you. The Confidus team will assist you with your company formation at every step, and will provide full support. We will remotely incorporate a company within the EU (with nominee services to protect your confidentiality), optimise your corporate taxes (including VAT) and achieve 0% dividends tax to save your funds. Click here to get a ready-made solution to this problem.
The EU is an intergovernmental economic union, which aims to promote free trade and achieve economic stability, and a common internal European market spanning the territory of the 28 EU member states. Establishing a company within the EU may therefore be a great opportunity for your business, not only in terms of gaining access to this internal market, but also as a means of minimising taxes and other financial risks.
Understanding EU companies
In terms of incorporation, every country in the EU has certain specific benefits, not to mention peculiarities in legal procedures for company formation, which may differ between jurisdictions. Some jurisdictions offer relatively quick and accessible remote company formation and maintenance, while others don’t have any black-listed offshore jurisdictions or else may present a great opportunity to minimise taxation (sometimes even to 0%).
If you require more information in order to choose a jurisdiction within the EU, please continue reading this page. Otherwise, please contact us to proceed with company formation.
Benefits of establishing an EU company
The EU is currently one of the most significant and reputable trading unions on the planet. Because of common European trade standards and legislation relating to finance and commerce, EU companies have a lot to offer in terms of accessability to the western market.
- Friendly tax authorities
- Understandable and predictable taxation system
- Opportunity to incorporate and maintain your company remotely
- Protection of confidentiality and nominee services
- 0% dividends taxation
- VAT status acquisition and tax optimisation
There are other benefits of an EU-incorporated company as well:
- Opportunity to make use of the European common internal market and apply tax and custom duty exemptions
- Free movement of labour within the EU presents the opportunity of finding highly skilled international specialists
- Application of European bookkeeping and auditing standards
- Numerous tax planning solutions
- Most of the EU jurisdictions are not on the offshore blacklist
- The EU has a long history, ensuring a good reputation and political stability
Most common legal structures
Although every EU member state’s legislation contains different legal requirements for company formation procedures, the most common legal structures are usually the same throughout Europe.
According to statistics from the European Commerce Registers, the vast majority of companies within the EU are incorporated as standard limited liability companies (LLCs), whereby shareholders do not hold any personal financial liability for the company, except for funds invested into its paid capital as shares.
The three other most common legal structures in the EU are the joint-stock company (JS), limited partnership (LP) and limited liability partnership (LLP). While incorporating a joint-stock company usually involves a great deal of legal work, it could be the best choice if you plan on setting up a large operation involving investors and issuing company shares. On the other hand, LPs and LLPs, in certain jurisdictions, may be used to achieve a corporate structure that minimises taxation.
Choosing a jurisdiction within the EU
To help you choose a jurisdiction within the EU, we would recommend that you contact our lawyers, who will evaluate your case and offer a tailored solution. However, below is a list of our top-choice jurisdictions, based on several factors such as tax planning and exemptions, tax rates, cost and complexity of incorporation, maintenance and other benefits.
Our team will try to come up with a tailored solution to meet your needs, by establishing a company in one of the jurisdictions listed below and developing a suitable corporate structure. However, some jurisdictions are well known for offering certain benefits. For tax optimisation and confidentiality purposes, we highly recommend that you consider one of the following:
Ireland: Limited Liability Company (LLC)
Ireland is a natural gateway to Europe. Changes in commercial legislation regarding the residence of directors and the low corporate tax rate make Ireland the perfect place to incorporate your limited liability company, offering long-term, prestigious, low-tax solutions and ready-made companies, with VAT, nominees and remote services available.
Latvia: Limited Liability Company (LLC)
Latvia the optimum solution for VAT triangle trading operations in Europe, allowing you to establish a tax-resident company from day one, with cheap and easy maintenance. A residence permit programme is available for company shareholders. Ready-made companies with VAT are available, as well as nominees and remote banking services.
Lithuania: Limited Liability Company (LLC)
Another perfect choice for VAT triangle trading operations in Europe, allowing you to establish a tax-resident company from day one. Lithuania is the biggest of the Baltic states, with a rapidly developing internal market. Ready-made companies with VAT are available, as well as nominees and bank accounts. Most of the procedures can be completed remotely.
Estonia: Limited Liability Company (LLC)
A top solution for a trading company in the Scandinavian region. Estonian corporate taxation requires limited companies to pay corporate income tax only during profit distribution, which means that taxes do not apply to undistributed profits. Ready-made companies with VAT are available, as well as bank accounts.
Cyprus: Private Limited Company (LTD)
Cyprus is the most flexible jurisdiction when it comes to taxes and confidentiality, and provides a solid base for trading in the EU and overseas, as well as the most competitive holding structures in the whole of the EU. Cyprus does not have any black-listed countries for any business purposes.
Ready-made companies are available, as are nominee services and bank accounts. Everything can be done remotely.
UK: Private Limited Company (Ltd)
A UK Ltd company with VAT provides extensive options for tax planning, together with nominee services — this is one of the most popular jurisdictions for many trading companies. Ready-made companies with VAT are available as well as nominees. Bank accounts can be set up and managed remotely.
The Netherlands: Private Limited Liability Company (LLC)
The Netherlands provides a perfect legal environment for establishing a holding company, with 0% withholding tax on interest and royalties. This jurisdiction also offers numerous opportunities to reduce the corporate tax rate (20/25%) and dividend withholding tax (15%). There is currently no minimum holding period. Dividends paid to Dutch holding companies are not subject to corporate tax, and neither are capital gains from selling shares. Ready-made companies are available as well as nominee services, bank accounts and remote services.
Other jurisdictions that are worth considering when incorporating in the EU.
Austria provides a solution for those who wish to protect their assets. However, the minimum share capital required is fairly substantial when compared to other EU countries, meaning you have to be ready to make a large investment. Austrian company can be efficiently used for asset protection purposes, provided your business has correct corporate structure and planning.
Incorporating a company in Belgium will require shareholders and directors to provide personal data, making it less effective in terms of confidentiality. Non-residents may be directors of a Belgian company, raising the possibility of using a nominee director service. Bank account for Belgian company can be opened in any EU country: often Netherlands are used for corporate bank account purposes.
Bulgaria offers a quick and simple incorporation process, easily completed by following certain steps. Bulgaria applies flat tax rates as well as a worldwide tax system, which means that taxes are applied to residents’ worldwide incomes.
Croatia may not be the most efficient solution in terms of taxation (20% corporate income tax, 25% VAT), but it offers a fairly low minimum requirement for share capital (HRK 20 000).
Prior to setting up a company in the Czechia, you should be aware that every business established in this jurisdiction is required to pay a corporate tax, which is applicable to the profits of the company. Depending on the legal structure of the company, the tax estimation formula may differ slightly from case to case.
One of the key features of Danish partnerships is the fact that corporate tax can be entirely avoided if the trading company carries out all of its activities outside of Denmark and if some partners are non-resident. Danish companies are popular for local trading, as it is easy to open a bank account for such business.
Finland offers a great business environment due to its strong economy and political stability. The most common legal structures for businesses are partnerships or limited liability companies. Incorporating a Finnish branch office of a foreign company may also be a viable option.
You can incorporate a private limited liability company in France. Despite strict banking regulations, France is really struggling to attract foreign investors, resulting in a very easy and straightforward company formation procedure.
The official name for a limited liability company in Germany is Gesellschaft mit beschränkter Haftung, or GmbH for short. The minimum share capital of a German limited company is 25 000 EUR, but there only needs to be one shareholder. The German GmbH has a very simple internal structure, which can be easily used as a basis for constructing a more complex corporate structure.
Due to financial and political difficulties in Greece, this jurisdiction does not offer the best environment for investors and entrepreneurs. Corporate taxes are quite high, while employment rates are low. If you do wish to incorporate in Greece, please consult our lawyers first, as the country currently experiences complicated economic situation, making business start ups a risky venture.
Shareholders of Hungarian companies can be legal entities, which makes this jurisdiction perfect for creating a holding company within a larger corporate structure. Low corporate tax rates provide extra benefits for domestic companies.
Italy is one of the most influential countries in the EU, and unarguably one of the richest in history and culture. The minimum share capital for a company is 10 000 EUR; however, foreign business leaders often prefer to establish a local branch or a representative office, rather than a full-scale enterprise.
Luxembourg is a small country in central Europe, offering many different options for foreign investment. One of the most well-known legal structures in this jurisdiction is the investment fund. Over last 50 years, around 3500 investment funds have been incorporated in Luxembourg.
Malta’s tax system is based on tax refunds and is therefore very attractive for those seeking tax optimisation solutions. Incorporating and maintaining a company on Malta can be very cost effective, given that English is one of the country’s official languages. Popular application of Maltese legal vehicle is for intellectual property rights holding and royalty corporate structures.
Poland provides quick and inexpensive solutions for company incorporation within EU territory. However, VAT acquisition may be a long and complex process, as tax authorities are quite demanding. It will require some perseverence to acquire and maintain a VAT number for your local company.
Portugal may be widely known for having the lowest share capital requirement for limited companies, but it will take some effort to open a bank account, as local banks require certain documents and will take time to evaluate your application. One advantage is that all communication with state authorities normally happens via email, which makes running a company much easier.
Currently, Romania is more stable in economic terms than it was ten years ago. Being a member of European Union has made a great difference to the country’s welfare and development. However, the incoporation process has its peculiarities, and so we would advise you to consult with our lawyers prior to incorporation.
Slovakia has no tax on dividends and profit distributions, which makes this jurisdiction attractive for foreign business leaders seeking access to Central European markets. The due diligence requirements are not overly strict, so Slovakia can be a good choice for establishing a holding company.
In Slovenia, the company formation procedure is not unduly complex and does not take too much time. If you are seeking to make a solid investment while protecting your assets, Slovenia may be a good solution for both.
We can assist you in lowering the tax burdens associated with purchasing property in Spain by incorporating a company for use within a larger corporate structure and in tax planning. Spanish companies are renowned for this purpose, as many investors apply for a residence permit in Spain and purchase residential real estate.
Sweden may not be the most efficient jurisdiction in terms of tax rates and tax planning; however, its strong and growing economy has proven itself to be a perfect business environment. Swedish markets are among the most stable in the world, so if you are looking for a jurisdiction in which to set up a local trading company, this may be the solution.
Onshore & offshore EU companies
There are certain differences between onshore and offshore European companies. Onshore companies can be defined as tax-resident companies within EU jurisdictions (such as Italy, Cyprus, Latvia, the Netherlands, Estonia, etc.), while offshore European companies are non-tax resident companies incorporated within European territory, and can be achieved by incorporating in Gibraltar, Scotland or Malta.
Onshore European companies usually require complex tax planning structures in order to minimise taxation. Some jurisdictions offer low corporate tax rates, thus allowing simpler solutions for structuring your business (e.g. Latvia or Cyprus). Normally, as long as an onshore company is tax resident in its jurisdiction, VAT numbers are easily obtainable. However, in some countries it may be difficult to maintain this status. Double-tax treaties can be easily applied to resident companies, but economic substance and presence are essential for receiving tax benefits.
In offshore Europe, low taxation can be achieved by applying a local tax regime. It is possible to use agency structures in order to achieve a more favourable tax rate. Acquiring a VAT number for an offshore European company can be somewhat complicated — it is usually easier to purchase a ready-made company. We have plenty of shelf companies with VAT numbers waiting for you. If necessary, with our legal guidance you can acquire a shelf company remotely and assign a nominee director or a shareholder. Bookkeeping and record requirements are simplified and company maintenance can be easily carried out virtually or remotely.
Contact us now to know more.