Nowadays the establishment of a company or even a business is simpler than it used to be. This is because of the systems introduced by the European Union and, on the other hand, to the Schengen area, the zone without internal borders, which is the most significant achievement of the Union. Thus one can travel freely, without internal borders, without being controlled by borders. The region has been gradually expanding since 1985, and now almost all EU member states and some non-EU associated countries are members.
Depending on the nature of the business, the investment risk, the expected revenue, profit, and the size of the business grow in a straight proportion if there is no sufficient capital and cash behind it. The higher the expected profit is, the greater is the risk of its realization.
Serious competitive advantage can be achieved – Most businessmen are open to foreign opportunities.
What aspects should be considered when establishing a foreign company?
– It is imperative to have political and economic stability in the country where the company is established. One should be familiar with local law, especially with corporate and tax law. Many foreign sites have adapted these provisions to the requirements of international business, which, in the long run, can also benefit their domestic economy.
What are the most popular target countries for setting up a business?
- Sites providing tax benefits can be classified into three main categories. There are fix-tax countries, where annual flat-rate taxes are payable regardless of profits. Such places are the Marshall Islands, Belize or the British Virgin Islands. Of course, it should be borne in mind that those companies which are established on fix taxation sites are regarded by several countries as offshore companies. The second category includes territorial taxation sites, where foreign income is not taxed, including Hong Kong, Singapore and New Zealand. Finally, there are mainly European states with low tax rates, such as Island, the Netherlands, Luxembourg, Malta, Cyprus, but recently Hungary has also been added to this map.
Which states are to most popular among them?
- It depends on the activity of the company. If intra-EU trade is involved, then EU based companies may be the solution, while concerning non-EU trade, tax-exempt and territorial-taxing sites are also common.
Are the business leaders distrustful concerning the establishment of a foreign company?
- Most of the businessmen are open to foreign opportunities, and in the first conversation they see that their company can achieve a serious competitive advantage by choosing the right target country. Legal tax planning is of a great significance, since after the economic crisis it matters a lot, how much a company can hold a reserve.
Overall we can say, that management wishing to maximize corporate value should also take into account the tax effects of operating and financing the decisions. The appearance at international level is an opportunity for tax optimization, but it requires a complex, multi-faceted analysis of a decision making situation. The chapter deals with the phenomenon of double taxation and international conventions to avoid this. The differences in tax system are a factor to be considered in reducing tax optimization and tax risk.
So if you do not want to struggle with your business in our country, as our government is impending your business at this moment, try either a Serbian, Dutch, Greek etc. company establishment, because it can be much more successful.