This article will explain why opening a company in Europe is advantageous by detailing company types, taxation, and incorporation requirements for different European countries.
Investing in European countries was always an attractive business and starting the popular limited liability companies on the European market is rewarding. Owning a European limited liability company has many advantages, as the owner’s accountability for the company’s debts is limited with the invested money. Other benefits are that the EU has lower capital for incorporation, that it has a single market, is administratively time-effective, has simple management and tax systems, and people are able to own a European company although not being EU citizens.
Gurcan Partners law and consulting firm operating in 9 countries, of which 5 offices are part of the EU. Incorporation & Establishment is one of our main practice areas.
The most popular forms of the corporation in Europe are limited liability company types. In Germany for example, the GmbH is most widely used. In Hungary, it is the KFT type. Investors in Poland choose the sp.z o.o limited liability company types more frequently. The Czech Republic is popular for the s.r.o company type. And in Estonia, the osauhing type is most commonly used.
Shareholders’ liability
In case of a company to become indebted, the shareholders of the limited liability company are not personally responsible but only accountable for the invested sum of money. This boundary protects the owners from bankruptcy by separating the business from its shareholders.
Single Market
The European Union is called a single market because it has transit trade regulations that allow the free movement of products, having no borders among the EU states to contribute to a more competitive and strong economy.
Administratively time-effective
The law used in most European countries is the European Union’s law system. Unifying the many administrative rules that are to be concerned with when establishing a company, makes it easier to have subsidiaries in several different countries.
Simple Management System
When transferring the headquarter from one European country to the other, this process is easy to accomplish and will not influence the company negatively, as moving headquarters would do outside of the EU.
Beneficial Tax System
The EU tax treaties give taxpayers the certainty that the companies’ income does not get taxed in each country because the double taxation is being avoided by double tax agreements (DTA). Therefore, the EU tax treaties make the economy’s competitiveness a major goal and benefit for all European companies.
Hungary for example is a popular country to start a company, as the Corporate Income Tax is only %9, which makes it the lowest in Europe.
The EU also gives out subsidies for infrastructure and environment under the Cohesion Fund to companies in countries with low national income like Estonia, Czechia, Poland, and Hungary.
Please check our blog writings ‘Company Taxation in Hungary, KATA Start-up Friendly Taxation’ and ’Taxation in Hungary, Taxes – Social Security’ and ‘Company Taxation in Germany’ and ‘Taxation in the Czech Republic’ for more detailed information.
Foreign ownership
Not being a European citizen is no obstacle for company ownership in Europe. The directors also do not need to be citizen of the company’s headquarter country. The investment regimes in the EU is very open and not comparable to anywhere else on the world.
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References
Lehne & Regner, 2012, ‘Directive on the cross-border transfer of a company’s registered office 14th Company Law Directive’, European Added Value Assessment EAVA, accessed 5 August 2021,
World Wide Tax Summaries, 30 June 2021, ‘Hungary, Corporate-Taxes on corporate income’, pwc, accessed 6 August 2021,
Zvinys, A.K., 3 September 2020, ‘Tax Treaty Network of European Countries’, Tax Foundation, accessed 5 August 2021
Gurcan Partners is a Foreign Economic Relations Board, Hungary Business Council, Association of German Chambers of Industry and Commerce, and International Chamber of Commerce member international law and consultancy firm.
All rights reserved. All rights of the Advantages Of Opening A Company In Europe article belong to Gurcan Partners. The author has no responsibility for the information in this article. This article is prepared just to inform.
Elif Şentürk
Gurcan Partners Europe
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Westend Business Centre, 7th Floor, Váci út 22-24, 1132 Budapest /Hungary
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