Many businessmen would like to have and run a legal entity in Europe.
Why so? First of all, European jurisdiction counts as a very prestigious and low risk. Also, there are some countries in Europe that have great tax benefits. Of course, we cannot compare those countries with offshore jurisdiction in terms of taxation.
Many obtain European entities, to get a local residency and visa. Since this simplifies traveling and living in Europe. Also, it is sometimes possible to relocate your family or workers in the country where you a running business. But that requires a lot of effort and time.
How to choose a Proper Country in Europe to Start your Business?
First of all, it is needed to understand the planned business activity. Is it a high, mid, or low-risk activity? Where will be your main customer base? Do you have any partners or connections in European countries?
For example, It will be much easier to incorporate a company and open an account in Germany if you have customers or partners there.
Company formation is the easiest part of work. Account opening is much more complicated. Currently, European payment institutions have a very strict compliance level. Everything should be clear and understandable for them. Not only the account should be opened, but most of the transactions should be explained.
Taxation is another very important part. In this case, it would be better to choose a low-tax country. For example Estonia, Latvia, or Cyprus.
Company Registration Process
You might ask. Where can I register my company and how?
Usually, the process is standard for European countries with some minor local changes.
The following document list is usually required: Notarized/apostilled POA, utility bill, passport/id, and sometimes noncriminal record.
Please note that the utility bill should be not older than 3 months.
Investment company registration in EU has a similar process, but the documents package will be a bit wider.
Registration is Done through a Notary.
It is possible to register a legal entity remotely using legal consulting services providers. This way you will be able to save more time and money. There won’t be any need to travel. Sometimes it is possible to register an online company, name registration can be done using some specialized governmental websites. There is such a possibility in Estonia.
In some cases, traveling will be mandatory. For example, if you want to open a local bank account. The payment institution might require your physical substance when applying or finalizing an account opening process.
Also, it is better to double-check if the account can be opened in the same jurisdiction. Since some of the payment institutions do not work with non-residents.
Popular Licensed Types of Businesses in Europe
The first very popular one is an EMI business. Electronic money institutions are a very fast-growing type of business.
The requirements are fairly high to obtain a license since you are managing people’s money. Most important and easy to remember thing is that the minimum share capital requirement is 350.000 Euros.
At the moment Lithuanian jurisdiction is the most popular and favorable in Europe. Secondly, there is a crypto business. This is a highly variable option, in terms of the possible service that could be provided. From the crypto exchange to crypto loan services.
Those requirements are different and regulations are changing them swiftly. So it is more complicated to get a steady business.
The most popular jurisdiction for such a business right now is Estonia.
But now regulations might change for another, 3rd time and this type of business might disappear in this country because of the high requirements.
Also, it is worth mentioning the gambling business. Requirements are usually different depending on the jurisdiction. Note, some countries require you to focus on local people. Some regulators do not allow you to work with local citizens. Everything depends on regulatory and local laws.
Conclusion
If you want to have a clear business, company formation in Europe is your choice.
It is easy to operate when you have a low-risk activity. There won’t be any issues with an entity setup or account opening.
You will be able to operate worldwide with such a company.
But if you are planning to set up a mid or high-risk activity business, you should think twice. This will cost you a fair amount of money and the account opening process will be more complicated than a company incorporation procedure. Also, in any case, company formation in Europe will cost more money than most offshore companies.
Not only because of the services price difference. But because of the reporting, accounting, and taxation.