Buying off-the-shelf companies in Netherlands and/or France
Discussion
As per the title, one of my clients is looking to establish an EU subsidiary for obvious Brexit-related reasons.
We've been looking at a provider of pre-registered (but "clean") companies. I'm familiar with the process in the UK, but not in EU jurisdictions.
Does anyone have any experience of this, and perhaps some pointers as to the pitfalls (obvious and not-so-obvious) to be mindful of?
Thanks!
We've been looking at a provider of pre-registered (but "clean") companies. I'm familiar with the process in the UK, but not in EU jurisdictions.
Does anyone have any experience of this, and perhaps some pointers as to the pitfalls (obvious and not-so-obvious) to be mindful of?
Thanks!
Ean218 said:
What is the obvious Brexit related reason? I'm sure the reason would have a fundamental impact on the location.
Hi sorry. The obvious Brexit-related reason has to do with servicing of B2B customers in the EU, selling goods imported from the Indian sub-continent.At present (post-Brexit), my client lands goods in the UK and pays Duty at the Generalised Scheme of Preference (GSP) rates on the (ex-works + shipping) price. My client re-sells to the EU. A logistics partner in the EU imports the goods into the EU (dealing with import Duty and VAT) and then onwards-ships to the B2B customers.
GSP is relevant, because it is helpful to be the importer in order to help ensure that GSP rates continue to apply.
The problem is that duty is assessed again at the EU border post-Brexit. Worse, the value for Duty purposes is now the wholesale sales price (which might be many times the landed cost), so the Duty payable is much higher. And to avoid "double Duty" may require a UK bonded/customs warehouse.
We'd like to land the goods directly in the EU. To do so realistically requires an EU subsidiary company. Unlike the UK, there's no same-day incorporation in most EU countries.
For a variety of reasons, we may need both NL and FR companies.
However, also unlike the UK, we have no experience of the potential pitfalls here, hence my question
Ean218 said:
OK, If you just needed an EU based entity I would have gone for Estonia as it is all done on-line.
As you actualy want a physical presence you are constrained by logistics as much as anything else.
Sorry, you're right about the constraint. We need to register in a Western EU country where we can hold stock; for what my client wants to do, it turns out there's little to choose between several of them As you actualy want a physical presence you are constrained by logistics as much as anything else.
Estonia cannot be done as a non-resident electronically unless you first register as an "eResident" - which can take 12 weeks. We may actually want an Estonian company *as well* because there's no corporation tax there on undistributed profits - so "EstoniaCo" might logically be attractive as the parent for "DutchCo" and management fees etc. used as a legitimate mechanism of intra-EU profit-shifting (the EU Tax Treaty removing withholding taxes on intra-EU transactions between parents and subsidiaries provided both are based in the EU). That said, the OECD/EU BEPS project may remove some of those advantages - that's another thing I'm monitoring!
skwdenyer said:
Hi sorry. The obvious Brexit-related reason has to do with servicing of B2B customers in the EU, selling goods imported from the Indian sub-continent.
At present (post-Brexit), my client lands goods in the UK and pays Duty at the Generalised Scheme of Preference (GSP) rates on the (ex-works + shipping) price. My client re-sells to the EU. A logistics partner in the EU imports the goods into the EU (dealing with import Duty and VAT) and then onwards-ships to the B2B customers.
GSP is relevant, because it is helpful to be the importer in order to help ensure that GSP rates continue to apply.
The problem is that duty is assessed again at the EU border post-Brexit. Worse, the value for Duty purposes is now the wholesale sales price (which might be many times the landed cost), so the Duty payable is much higher. And to avoid "double Duty" may require a UK bonded/customs warehouse.
Would the GSP not be honoured at the EU point of entry? Rule of origin, origin - India which has a GSP agreement with the UK as well as the EU? At present (post-Brexit), my client lands goods in the UK and pays Duty at the Generalised Scheme of Preference (GSP) rates on the (ex-works + shipping) price. My client re-sells to the EU. A logistics partner in the EU imports the goods into the EU (dealing with import Duty and VAT) and then onwards-ships to the B2B customers.
GSP is relevant, because it is helpful to be the importer in order to help ensure that GSP rates continue to apply.
The problem is that duty is assessed again at the EU border post-Brexit. Worse, the value for Duty purposes is now the wholesale sales price (which might be many times the landed cost), so the Duty payable is much higher. And to avoid "double Duty" may require a UK bonded/customs warehouse.
I have owned / set up / operated several BVs over the last 15years. Some in trust status, some outright.
There are many pit falls, as with all such choices, but the Dutch have probably the best regime of all of the primary EU countries. Yes Cyprus, Latvia, Luxembourg et al are available but they all have that “off shore tax haven” kind of vibe.
Please though bear in mind you do need (officially) Dutch citizens as shareholders/ directors and a proper functioning office. (Not a P.O. Box)
With a BV you also have access to NV structure should you require it.
Obviously the Dutch container ports are also central to all shipping into Northern Europe.
Happy to add to this off the board should you wish.
There are many pit falls, as with all such choices, but the Dutch have probably the best regime of all of the primary EU countries. Yes Cyprus, Latvia, Luxembourg et al are available but they all have that “off shore tax haven” kind of vibe.
Please though bear in mind you do need (officially) Dutch citizens as shareholders/ directors and a proper functioning office. (Not a P.O. Box)
With a BV you also have access to NV structure should you require it.
Obviously the Dutch container ports are also central to all shipping into Northern Europe.
Happy to add to this off the board should you wish.
Edited by AlvinSultana on Wednesday 3rd February 21:17
MechMovement said:
skwdenyer said:
Hi sorry. The obvious Brexit-related reason has to do with servicing of B2B customers in the EU, selling goods imported from the Indian sub-continent.
At present (post-Brexit), my client lands goods in the UK and pays Duty at the Generalised Scheme of Preference (GSP) rates on the (ex-works + shipping) price. My client re-sells to the EU. A logistics partner in the EU imports the goods into the EU (dealing with import Duty and VAT) and then onwards-ships to the B2B customers.
GSP is relevant, because it is helpful to be the importer in order to help ensure that GSP rates continue to apply.
The problem is that duty is assessed again at the EU border post-Brexit. Worse, the value for Duty purposes is now the wholesale sales price (which might be many times the landed cost), so the Duty payable is much higher. And to avoid "double Duty" may require a UK bonded/customs warehouse.
Would the GSP not be honoured at the EU point of entry? Rule of origin, origin - India which has a GSP agreement with the UK as well as the EU? At present (post-Brexit), my client lands goods in the UK and pays Duty at the Generalised Scheme of Preference (GSP) rates on the (ex-works + shipping) price. My client re-sells to the EU. A logistics partner in the EU imports the goods into the EU (dealing with import Duty and VAT) and then onwards-ships to the B2B customers.
GSP is relevant, because it is helpful to be the importer in order to help ensure that GSP rates continue to apply.
The problem is that duty is assessed again at the EU border post-Brexit. Worse, the value for Duty purposes is now the wholesale sales price (which might be many times the landed cost), so the Duty payable is much higher. And to avoid "double Duty" may require a UK bonded/customs warehouse.
If you land goods from, say, Bangladesh in the UK, you can pay zero duty (GSP tariff rate). However, what happens then is complex. Unless there's a proper customs procedure in place, and an unbroken chain of documents (Bill of Lading etc.), there's no automatic eligibility to claim GSP on subsequent export to the EU from the UK. A Certificate of Origin only applies to the actual (unbroken) consignment it was provided with, not the individual goods in general. It *may* be possible to get a "replacement certificate" for a broken shipment, but that's additional cost and time. All of that's problem 1
Problem 2 is that, as I said above, if you land the goods in the UK, the GSP rate is on the landed price. If you onward-sell to customers in the EU, the relevant price is now the wholesale sales price. If you can't get GSP, you pay (say) 12% on that wholesale sales price (ouch). However, if you own your own subsidiary, you can sell at cost (no markup) to your EU subsidiary - even if GSP doesn't apply, the marginal rate of 12% now only applies to that original landed price. That's a *very* useful saving.
Medium term, there's little doubt that goods will have to be landed in the EU directly, to a (say) NL subsidiary. Then GSP will apply, all the other problems drop away. The only problem then is deciding how to split the stock, or whether to land the stock in the EU, split it there (under customs control, so as to maintain the chain for GSP purposes, with a replacement certificate of origin), then forward some of it to the UK for sale there.
It is a merry old mess. In the general sense, this "global Britain" nonsense is just that, nonsense. In no sensible universe would you now choose to locate a business in the UK that imports from the world and re-sells into the EU - even if we can find a way around some of these hurdles, (a) we won't clear all of them, and (b) we'll remain reliant upon the whim of customs officers as to which rules apply on any given day.
I don't want to make this political. I'll say only that I don't think many folk have fully understood the implications not only of leaving the EU, but of the manner in which we've left. Given 6 months, this stuff is easy to fix - just relocate most of the business inside the EU. But it won't do much for the UK's bottom line!
AlvinSultana said:
I have owned / set up / operated several BVs over the last 15years. Some in trust status, some outright.
There are many pit falls, as with all such choices, but the Dutch have probably the best regime of all of the primary EU countries. Yes Cyprus, Latvia, Luxembourg et al are available but they all have that “off shore tax haven” kind of vibe.
Please though bear in mind you do need (officially) Dutch citizens as shareholders/ directors and a proper functioning office. (Not a P.O. Box)
With a BV you also have access to NV structure should you require it.
Obviously the Dutch container ports are also central to all shipping into Northern Europe.
Happy to add to this off the board should you wish.
Thanks ever so much. I'll send you a DM.There are many pit falls, as with all such choices, but the Dutch have probably the best regime of all of the primary EU countries. Yes Cyprus, Latvia, Luxembourg et al are available but they all have that “off shore tax haven” kind of vibe.
Please though bear in mind you do need (officially) Dutch citizens as shareholders/ directors and a proper functioning office. (Not a P.O. Box)
With a BV you also have access to NV structure should you require it.
Obviously the Dutch container ports are also central to all shipping into Northern Europe.
Happy to add to this off the board should you wish.
Gassing Station | Business | Top of Page | What's New | My Stuff