Company registration in Europe
Company registration in Europe

Registering a company in Europe has many benefits and advantages such as prestige, free trade within the European Union, single currency market and legal protection. Spread over 28 countries, the European Union is the largest single market economy in the world made up of over 500 million potential customers with incredible prospects for growth and development for the business. Despite the unification, the EU member states are very diversified and include some of the wealthiest countries in the world as well as countries of a much lower economic standing which opens doors to a limitless market for trade and supply of both goods and services for any target consumer class. It also provides an extensive choice of skilled employees of any profession that can be easily contracted to work in any EU state without the headache of undergoing scrutinous immigrational procedures. For international investors opening and successfully running a business in the EU, may give opportunity to obtaining residence, citizenship and tax residency for the entire family as some countries within the European Union such as Cyprus and Malta among others offer various programs and incentives to attract foreign investment.

The single Euro currency is also a major advantage for businesses operating across the European Union as it eliminates unnecessary losses and expenses related to currency exchange. The lack of a border and a single set of rules for import and export allow companies and manufacturers to operate more efficiently and significantly reduce delivery timeframes and costs by avoiding the bureaucracy involved with complicated paperwork and custom clearance procedures. Furthermore, Value Added Tax (VAT) is only paid once when trading within the European Union either by the supplier or the final consumer depending on the transaction particularities allowing the freedom of movement of goods between warehouses or store chains, similarly VAT is exempt for exports of goods to countries outside the EU and is only paid by the buyer at the rate of the country of import. It is however, poignant to mention that a company incorporated in the European Union can also be an excellent financial instrument for international businesses not related to trade or sale of services within the EU. In fact, many countries in the European Union pride themselves in offering very attractive tax benefits, enhanced confidentiality legislations, investor-friendly business incentives and secure banking systems all specifically designed to cater to the international investor and their corporate needs whether they be for holding, investment or asset protection purposes.

Despite the numerous advantages, there are also quite a few disadvantages and complexities that come alongside running a company in the EU. One must keep in mind that the European Union enacts very strict and complex regulatory frameworks and rules and regulations related to compliance, economic substance and annual financial reporting that can vary significantly from country to country and have a tendency of changing regularly in accordance to newly enacted Act and Directives. Without a proper structure and professional assistance this can become a very costly and time taking burden for your enterprise, especially when considering that almost every European country has its own local language for reporting and corporate documentation. Moreover, because one is dealing with a European member state rather than an individual country in a geopolitical sense, failure to comply can have very drastic consequences that will not only lead to hefty fines and company dissolution but can also have a significant impact on the tax and legal liability of its beneficial owner.

It is worth noting that the European Union, also opens doors to a very unique financial instrument called the Societas Europaea (SE) and often referred to as a European Company. In general terms, a SE is a public limited liability company that can be formed in any member state of the European Economic Area and is governed by a single set of rules defined by the European Company Statute. There are certain particularities that need to be taken into account when forming a SE. For example, every Societas Europaea must contain the abbreviation "SE" in its name and must be published in the European Company's Official Journal. In comparison, to other joint stock companies, the authorized share capital of a SE is quite substantial and is set at a minimum of 120,000 Euros, and in some countries and for some business activities, it can be even higher. Furthermore, a SE is not simply registered like a traditional legal entity but can only be set up via one of the following ways:

  1. Merger of two or more joint stock companies provided that at least two of them are governed by different EU member states;
  2. The incorporation of a holding company by public or private legal entities from two different EU member states or that hold a branch or subsidiary in another EU member state for at least 2 years;
  3. Formation of a subsidiary by two or more legal entities from different EU member states;
  4. Incorporation of Every Societas Europaea by an existing SE;
  5. Conversion of a public joint stock company that has had a subsidiary in another European member state for at least 2 consecutive years.

Despite its complexity there are a number of advantages and administrational benefits of a Societas Europaea. As it is governed under a unified set of rules and regulations, it provides simplification of operational management throughout the European Union without the need of maintaining a network of representative offices in various EU countries and as such eliminates potential conflicts between the laws and legislations of different EU member states. It also adds a certain flexibility in terms of registration and physical location, movement of capital, market outreach and place of production of goods or provision of services. A SE can have a unified permit or license to carry out its economic activities throughout the entire EU without the requirement for additional registrations and regulatory compliance procedures in other member states, other than its country of registration. Furthermore, if the entity wishes to change its administrational jurisdiction to another member state or participate in a cross-boarder merger, this can be done in a simple seamless procedure without the need for liquidation and re-formation ensuring cost-efficiency and business continuity. Last but not least, a SE enjoys an enhanced reputation and corporate image through the acquisition of the status of a pan-European company.

Regardless of the type or form, if a company in the European Union is essential and beneficial for your business our multinational team and sound market knowledge can help you build or restructure your enterprise in the optimal country for your particular needs. Our consultants can advise and offer invaluable insight to help you structure your business in the most tax efficient and cost-effective way without compromising on legal and compliance requirements. By entrusting your company formation to us you are guaranteed excellent service from the start and throughout the day-to-day administration of your company. Our firm can guide you through all the formalities relating to set-up, physical presence in your country of choice, bank account opening as well as accounting, annual submissions and legal support.

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