How to Set Up a Company in Europe - Ultimate Guide and FAQs

August 18, 2023

The EU is one of the most attractive places for setting up a business, mainly because it is the most economically stable region of the world. With easy access to finance, investment, and skilled expertise, the EU offers access to many possibilities. If you’re thinking of starting a new business in the EU, then you will have to know how to set up a company in Europe and the rules and regulations that go along with it.

Setting Up a Company in the EU

The ease of access to multiple countries in the EU opens a whole new world of potential customers for established businesses and start-ups alike. That being said, there is a lot that one needs to consider before they dabble their toes in the European market.

The process of doing business in any country in the EU is going to start with setting up a business entity in any EU country. It is recommended to first do your research to find out more about the various rules and regulations of doing business in the many countries within the EU and choose one that fits your requirements or that’s more favourable to your particular business venture.

For instance, Denmark allows non-residents of the EU to setup up shop, but the directors that you name for said company need to be residents of the EU, meanwhile, Belgium provides a hassle-free company setup process that’s done and dusted in just ten days. But, business owners are required to pay steep corporate taxes.

Choose the Company Type

After deciding on a European country you want to go with for your business, you must choose a company type. This phase is critical since the laws and regulations that apply to your firm will be determined by its category. It will also have an influence on the safeguards you will have as a business owner in the European nation you choose.

Most European countries offer several variants of a typical business. Partnerships, sole proprietorships, and joint stock companies are examples of limited liability companies. However, this may vary, which is why you need to do your research on the particular EU country you are interested in setting up your business.

Residency Requirements

This is often the first step for all business entrepreneurs. Determine whether or not a financial investment is necessary for residence and then register appropriately. In most cases, you will be given temporary residence.

If you intend to live outside of the nation in which you will establish your business, you may be allowed to skip this stage. Some nations, such as Italy, have no residency requirements, allowing you to do business from anywhere in the globe.

Each EU country will have its unique regulations regarding permanent residence. While the phrase can allude to a geographical site, it does not have to be a physical location. A permanent establishment may also refer to all of the earnings created by commercial activity rooted in the country. Determine your country’s rules for a permanent establishment.

Another option for non-EU nationals is to launch a firm with a large investment (beginning at €250.000) that provides some work possibilities in Germany. The local chamber of commerce determines if the standards are satisfied, and the relevant authorities evaluate the completed procedure.

Non-EU nationals who start a business are granted a three-year residence permit, which can subsequently be converted to a permanent residence visa. A settlement permit is provided in line with Section 9 of the Residence Act (by demonstrating sufficient knowledge of the German language and ensuring your earnings).

Setting up a Bank Account (For your business)

The process of setting up a business in any country within the EU is not complete until you set up and register your company’s bank account. To do this, you will need to examine the many banks in the nation you have chosen and choose the one that offers the account kinds and terms that appear to be the most advantageous for your company structure.

In some scenarios, you will need to be present in person to open this bank account. You may be able to accomplish this remotely, though, if you have a power of attorney.

Intellectual Property Protection

This is one area of setting up a business in the EU that is often overlooked by entrepreneurs. Depending on the type of business you are looking to set up in the EU, you may need to sign up for certain protections of intellectual property that may need protection before you start your business.

It is recommended that this be done before you start your operations. Your intellectual property will include patents, copyright, and trademarks, and you will need to apply for trademark protection after you have completed the registration process.

Funding Opportunities

One of the reasons why business flourishes in the EU is because of the opportunities that the EU countries provide to new business owners and even non-EU residents who want to set up a business in one of the EU countries. Some of the platforms offering funding and support to business owners who want to start a business in the EU include the InvestEU Portal, Startup Europe Partnership, and Startup Europe.

While the process of registering a company in the EU may vary, depending on the country, the European Union has mandated that countries offer an easy business setup process for non-EU residents to set up their business in any EU country. These include;

Taking no more than three working days
Online registration
Costing less than EUR 100
Registration formalities being done online
Completing all procedures through a single administrative body

Consider Tax Treaties

The United Kingdom has tax treaties with a number of nations that can give relief from double taxation. Basically, a tax treaty is an agreement between two governments that specifies how and to whom taxes are to be paid. UK corporations can reduce their tax liability and prevent double taxation by leveraging tax treaties.

Tax treaties strive to eliminate double taxation by offering recommendations on how taxing powers should be allocated between nations. For example, if a UK firm operates in a nation with which the UK has a tax treaty, the treaty may allow the company to claim a tax credit for taxes paid in that country, lowering the company’s overall tax burden.

Starting a Business in the EU as a Foreigner

Most European countries welcome foreign entrepreneurs who want to start a firm, as new businesses contribute to boosting local economies. Most European nations do not require a visa or work permit to start a business, but you will usually need a resident permit in the country where you intend to establish your company.

Some nations demand a real estate investment from anybody wishing to gain residence. In Greece, for example, taking part in the country’s Golden Visa program costs €250,000. Similar schemes exist in other nations. Some nations, such as Portugal, eliminate the investment requirement if you create a company and contribute to the economy.

FAQs

Is it difficult to start a business in Europe as a foreigner?

No, most European countries welcome foreign entrepreneurs who want to start a firm, as new businesses contribute to boosting local economies.

What is a tax treaty?

Do I need to be present while opening a business bank account?

In some scenarios, you will need to be present in person to open this bank account. You may be able to accomplish this remotely, though, if you have a power of attorney.

What is individual property protection, and why does it matter?

Setting up a business in Europe can be a tough nut to crack for many folks, but the good news is you don’t have to go at it alone. To find out more useful information, you can visit Start Company Formations. Whether you are looking to set up a new business or a subsidiary in Europe, you are going to find all the information you need, along with valuable resources, all under one roof.