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COMPANY FORMATION IN THE CEE REGION

By 21 January 2023No Comments

In this article, our colleague from Gurcan Partners Budapest Office will mention Business Formation in the CEE region with all the advantages and tax descriptions for example countries in this area.

CEE PROFILE

Usually used to refer to former communist republics from the Eastern Bloc and Warsaw Pact in Europe, the phrase “Central and Eastern Europe” includes the Baltic States, Central Europe, Eastern Europe, and Southeast Europe (primarily the Balkans). The initials CEE or CEEC are frequently used for this topic in academic literature.

Source: https://www.researchgate.net/figure/The-map-of-the-considered-CEE-countries_fig2_233331613

This region’s multicultural diversity and business-friendly atmosphere work together to provide a favourable environment for investments. Its attraction is also boosted by a burgeoning business culture, quickly rising living standards, and a stable political climate.
Businesses in Central and Eastern Europe have a lot of chances because of the region’s cost-efficient and productive labour market, rising consumer spending, and potential for trade.

So far we have assisted over 400 companies.

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ADVANTAGES OF SETTING UP A COMPANY IN THE CEE REGION

The economic outlook in Central and Eastern Europe (CEE) is now quite beneficial. This area is the appropriate international base since the transitional economies of Poland, the Czech Republic, Slovakia, Hungary, and Romania, in particular, offer great long-term development potential.
Additionally, CEE can rely on a workforce that is highly skilled, improved infrastructure and has political stability. This region is a top choice for foreign investment due to its large geographic distribution, free-market economic ideals, and economic freedom.
Central and Eastern Europe is a dynamic region with more than 80 million people. It serves as a major trade route into the European Union and its 500 million customers. The area provides a highly competitive labour force, and its residents enjoy excellent educational opportunities. In these nations, productivity growth continues to outpace pay growth.

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TAX ON FOREIGN-OWNED ENTERPRISES AND EXAMPLES

Instead of opening branches in the region, the majority of international companies opt to establish subsidiaries instead. Subsidiaries are often established as limited corporations, which restricts liability to the subsidiary. However, local directors may be held accountable for any indebtedness. Branches are simpler to establish, but because they act as the parent company’s representative in the foreign nation, the parent is responsible for the branch’s operations, debts, and liabilities. Of course, not every firm will benefit from the same structure. However, both branches and subsidiaries are required to pay the proper local taxes.

Poland allows investors to request state assistance in the form of income tax exemption. Previously available in 14 Special Economic Zones, this incentive was made available across the entire nation in 2018. The size of the firm and the unemployment rate in the relevant area are two criteria that affect the exemption rate. There are exemptions for 10, 12, or 15 years.

Similar to other countries, the Czech Republic offers an R&D allowance as well as investment incentives for Czech companies, including those that are Czech subsidiaries of international companies, in the areas of real estate acquisitions, job creation, and staff training programs.

Incentives are offered for businesses wishing to establish themselves in Slovakia for initiatives involving technological centres, tourism, and industry. Additionally, businesses are eligible for 25% R&D tax deductions.

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Hungary has launched several initiatives in the meanwhile. From regional assistance to development taxes, support for SMEs and start-ups, green tax credits, tax holidays, and relief for those who support filmmakers or sports teams.

Romania also provides tax breaks for profits reinvesting in IT and other technical equipment, incentives to promote education and training, and relief for R&D. Industrial park businesses are likewise excluded from paying property and land taxes.

However, all of the aforementioned tax benefits must go by the rules governing state assistance set forth by the European Union.
Please contact us to be sure when opening your business in the CEE region. Give your business a sure start.

Company Formation in CEE region 

Marta Akça

All rights reserved. All rights of the Company Formation in CEE region article belong to Gurcan Partners International Law Firm. The author has no responsibility for the information in this article. This article is prepared just to inform.

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