Because the EU is made up of so many different countries, there is a lot to consider when you want to register a business in Europe. There are some rules that apply to the EU as a whole and others that are different in each country. In this article, we will share as detailed information as possible, but we recommend contacting an expert in your chosen country to ensure that you are complying with all relevant laws and regulations.
Do I Need to Register my Business in the EU?
First things first - is it necessary to register a business in the EU? The answer is yes, if you would like to conduct business in a European country, you must register the business. If you already have a business and wish to expand operations to a different country within Europe, you can create a European Company. This lets you run your company across the EU using one set of rules as opposed to different rules in each place.
Do I Need to Register my Online Business in the EU?
Online businesses follow the same rules as brick and mortar businesses and therefore an online business would need to be registered. Of course an online business can have customers all over the world, so if you are headquartered and registered in the EU that does not limit you from selling in other locations. Just make sure you have a top-notch payment infrastructure like Pay.com’s that can handle payments in different currencies.
Once you have decided that it’s time to register your company, here are the 7 simple steps to follow:
Steps to Follow to Register a Business in Europe;
Step One: Do Your Initial Research
Because the EU is made up of individual countries with their own laws, it is very important that you fully understand what you are getting yourself into when you start a business in a specific country. Because your business must be registered in the country in which it is going to operate, you will want to become familiar with the laws of that country. You may find that it actually makes more financial sense to register and operate in a different country from the one you live in.
Your first step is to review the different rules and regulations and start to get a feel for what might make the most sense for you considering the type of business you are starting, how much income you expect to earn, and how local vs. broad you want your reach and target market to be.
Step Two: Choose a Country in which to Register your Business
Following are key reasons why or why not you might choose to register your business in each of the following countries:
- Ireland - There is a low corporate tax rate of 12.5% and minimal bureaucracy, making Ireland an attractive place to open a business.
- Cyprus - Profits are taxed at 10% and there is no limit on nationality of company owners and no need for any of them to be Cypriot natives.
- Germany - Germany’s booming economy makes it a desirable place to start a business, however it is known for complex and difficult bureaucracy throughout the process.
- UK - Although the UK is no longer part of the EU, many tax treaties remain making it attractive to open a business in the UK.
- The Netherlands - It’s easy to start a company in the Netherlands with no restrictions on the nationality or residency of the owners.
- Austria - Low minimums for setting up either a limited liability or joint stock company.
- Belgium - The country has streamlined the process making it one of the fastest and easiest places to register a business in Europe.
- Bulgaria - The corporate tax rate is among Europe’s lowest at 10%, going down to 0% in some areas.
- Croatia - The government offers incentives for foreigners to open businesses in Croatia.
- Denmark - Private company owners need not be EU residents, but public company directors must be.
- Finland - The corporate tax rate is 26%.
- France - Registration process is simple, provided legal requirements are met.
- Gibraltar - Low taxes with strict compliance regulations.
- Hungary - Corporate income tax is 10% up to 1.8 million Euro of profits and 19% above.
- Isle of Man - Full corporate tax exemption.
- Italy - No restrictions on foreign shareholders, but the registration process is complex.
- Jersey - Jersey is not officially part of the EU, but it has a special relationship and free trade of goods is permitted.
- Luxembourg - Easy to set up a business.
- Malta - Corporate tax can be as low as 5% with generous tax exemptions and no withholding tax.
- Norway - If the director or shareholder is not an EU citizen, then 50% of the board members have to be residents of Norway.
- Poland - No restrictions on foreign shareholders.
- Portugal - Great location to set up a business because of easy access to rest of Europe.
- Romania - Minimum registered capital is 60 Euros and maximum number of shareholders is 50.
- Russia - The Civil Code covers Russian business activity and allows permits foreigners to form Joint Stock Companies (JSC), Limited Liability Companies (LLC), or Partnerships.
- Slovakia - 19% flat rate corporate tax and no taxes on dividends.
- Slovenia - 25% of the capital from each contributor has to be fully paid before registration can be complete.
- Sweden - Sweden is third in the world on the World Bank’s list of connections with international markets.
- Switzerland - Low corporate tax rate.
- Turkey - At least 5 shareholders and a minimum investment of 24,000 Euros are required.
Step Three: Choose your Company Type According to the Country
Once you know in which country you would like to operate, you must choose the type of company you wish to register. Following is a brief description of the different options offered in each EU country:
Step Four: Provide Information to the Head Office
In whichever country you decide to register your business and whichever type of business you choose to set up, you will need to provide basic information to that country’s Head Office. This information includes a copy of your passport and your contact information including your address, phone number and email.
Step Five: Register your Company Online
Most European Union countries have made it very easy to complete the registration process online. Countries each have their own “point of single contact” which is an online portal that gives a potential business owner access to all that is needed to register a business in Europe. This is especially useful if you plan to register your business in a country that is different from where you live, as completing the process online will save you the time and hassle of traveling.
Step Six: Register your Business Bank Account
You will need a bank account in the country in which you register the business. Rules are different in each country regarding whether you need to physically be present in order to open an account or if you can do it remotely or via power of attorney. This is something you will have to look into for your specific situation, but opening a bank account is an important step in the process. Having a business bank account will keep your personal finances separate from your business and provide a place for your income to go and from which you can pay business expenses.
Step Seven: Think of your intellectual property
Depending on the type of company you are running, you may have some valuable intellectual property that you will want to ensure you protect.
- Trademark - Trademarking your business name is something you will have done as part of the registration process, but if you develop product names or other design elements that you want to ensure remain proprietary to your company, make sure you trademark those as well. It generally takes around 4 months for the trademark process to be complete.
- Copyright - Copyrights are applicable to any original written work, software, web content, film and other sound recordings. You don’t have to apply for a copyright as it’s automatically granted as soon as you create something new. It’s your responsibility to make sure that no one is violating your copyrights and stealing your material.
- Patent - If you invent a new product or piece of machinery, you will definitely want to patent it so that no one else can take the credit and you will reap the financial benefits. The patent process is extensive and can take up to 5 years so make sure you start the process early.
No matter what type of business you are registering as or where you are registering there is certain documentation you will always need, including:
- Articles of formation or incorporation
- An official business name
- An official business address
- Identifying information about the company owner(s)
How Does it Cost to Register a Business in the EU?
The EU has put out a guideline encouraging all countries to ensure that it costs no more than 100 Euros to register a business. This does not include any business start-up costs, but only the cost of officially registering the business.
It may seem overwhelming to think about the idea of registering a brand new business. But, truth be told, it’s just a little bit of bureaucracy in exchange for a lifetime of entrepreneurial creativity and freedom! Just follow the simple steps laid out for you in this guide and you’ll be on your way.