Where to incorporate in the EU?

[foliedouce]

I currently sell into France, Italy, Spain and Germany and have come to the conclusion that it would make life easier to incorporate in the EU.

Does anyone have any recommendations on where to do this? I want a jurisdiction where it is easy to manage the legal entity (I've heard Germany is really complex).

Many thanks

Jason

[StevieBee]

I'm partly involved with a European Cooperative Society (SCE) business we set up in Bulgaria in 2016 to mitigate the impact Brexit would have on our main source of revenue (i.e. various EU institutions).

We had a choice of - and looked at - Germany, Cyprus, Romania and Hungary. There exists great complexity in them all and opted for Bulgaria as that's where three of our group reside (and Sofia's quite a nice place to visit). Plus, corporation tax is quite friendly too (10% I think).

Even pre-Brexit, setting it up was not simple. Original documents needed notarising and we were required to present far more detail than is required in the UK. But day to day it is no more of a burden than running a company in the UK.

I believe that some EU countries do not permit companies to be owned 100% by foreign entities - some more than 50% owned.

The Department for International Trade offers a good service (sometimes free) assisting in setting up foreign companies so find your local DiT rep and have chat with them.

HTH

[loafer123]

foliedouce said:

I currently sell into France, Italy, Spain and Germany and have come to the conclusion that it would make life easier to incorporate in the EU.

Does anyone have any recommendations on where to do this? I want a jurisdiction where it is easy to manage the legal entity (I've heard Germany is really complex).

Many thanks

Jason

Are you mainly retail sub-€150, or bigger?

We do smaller, and have come to the conclusion we don't even need a VAT registration in the EU, despite having registered in 3 countries.

[foliedouce]

loafer123 said:

Are you mainly retail sub-€150, or bigger?

We do smaller, and have come to the conclusion we don't even need a VAT registration in the EU, despite having registered in 3 countries.

Thanks for this, do you need to fill in a customs form for each order?

Some of our orders are under and some over 150 euros

[loafer123]

foliedouce said:

loafer123 said:

Are you mainly retail sub-€150, or bigger?

We do smaller, and have come to the conclusion we don't even need a VAT registration in the EU, despite having registered in 3 countries.

Thanks for this, do you need to fill in a customs form for each order?

Some of our orders are under and some over 150 euros

You can send via courier on a DDP (Delivery Duty Paid) basis, and the courier will bill you the import VAT and any Customs Charges.

You have to put the details of the goods (country of origin, type of goods) into their system to ensure the right charges are made and it goes smoothly.

We use DPD and they seem pretty good.

If you also sell via an online marketplace like Amazon, they will be responsible for the VAT, not you.

If your goods incur Customs Charges because they are outside the trade deal (from China, for example), it might pay you to import them into the EU at cost and then sell at retail over there.

[foliedouce]

loafer123 said:

You can send via courier on a DDP (Delivery Duty Paid) basis, and the courier will bill you the import VAT and any Customs Charges.

You have to put the details of the goods (country of origin, type of goods) into their system to ensure the right charges are made and it goes smoothly.

We use DPD and they seem pretty good.

If you also sell via an online marketplace like Amazon, they will be responsible for the VAT, not you.

If your goods incur Customs Charges because they are outside the trade deal (from China, for example), it might pay you to import them into the EU at cost and then sell at retail over there.

Thank you, I'm ultimately planning to bring containers in directly from China and store them in an EU warehouse. It's just a bloody nightmare at the moment and I'm trying to find temporary workarounds.

[foliedouce]

StevieBee said:

I'm partly involved with a European Cooperative Society (SCE) business we set up in Bulgaria in 2016 to mitigate the impact Brexit would have on our main source of revenue (i.e. various EU institutions).

We had a choice of - and looked at - Germany, Cyprus, Romania and Hungary. There exists great complexity in them all and opted for Bulgaria as that's where three of our group reside (and Sofia's quite a nice place to visit). Plus, corporation tax is quite friendly too (10% I think).

Even pre-Brexit, setting it up was not simple. Original documents needed notarising and we were required to present far more detail than is required in the UK. But day to day it is no more of a burden than running a company in the UK.

I believe that some EU countries do not permit companies to be owned 100% by foreign entities - some more than 50% owned.

The Department for International Trade offers a good service (sometimes free) assisting in setting up foreign companies so find your local DiT rep and have chat with them.

HTH

Thanks, I hadn't considered Bulgaria and one of my team is Bulgarian so that may work for us.

[NorthDave]

I'd be looking at Portugal - purely because they seem really keen to get investment from individuals via their Golden Ticket scheme. It makes me think they might be really hospitable to new companies too.

Worth a look anyway!

[loafer123]

foliedouce said:

loafer123 said:

You can send via courier on a DDP (Delivery Duty Paid) basis, and the courier will bill you the import VAT and any Customs Charges.

You have to put the details of the goods (country of origin, type of goods) into their system to ensure the right charges are made and it goes smoothly.

We use DPD and they seem pretty good.

If you also sell via an online marketplace like Amazon, they will be responsible for the VAT, not you.

If your goods incur Customs Charges because they are outside the trade deal (from China, for example), it might pay you to import them into the EU at cost and then sell at retail over there.

Thank you, I'm ultimately planning to bring containers in directly from China and store them in an EU warehouse. It's just a bloody nightmare at the moment and I'm trying to find temporary workarounds.

On that basis, DDP courier in the short term, then either use a EU based dropshipper or get your own warehouse in the longer term.

[skwdenyer]

loafer123 said:

foliedouce said:

loafer123 said:

You can send via courier on a DDP (Delivery Duty Paid) basis, and the courier will bill you the import VAT and any Customs Charges.

You have to put the details of the goods (country of origin, type of goods) into their system to ensure the right charges are made and it goes smoothly.

We use DPD and they seem pretty good.

If you also sell via an online marketplace like Amazon, they will be responsible for the VAT, not you.

If your goods incur Customs Charges because they are outside the trade deal (from China, for example), it might pay you to import them into the EU at cost and then sell at retail over there.

Thank you, I'm ultimately planning to bring containers in directly from China and store them in an EU warehouse. It's just a bloody nightmare at the moment and I'm trying to find temporary workarounds.

On that basis, DDP courier in the short term, then either use a EU based dropshipper or get your own warehouse in the longer term.

Temporary workarounds depend upon your margin position. If you've got margin to burn, it is easy

DPD DDP (it is actually not DDP, it is DT1) is fine, but:

- you're paying a handling fee for the privilege;
- the surcharges are pretty awful;
- you're hit for duty at the actual selling price.

If you're selling B2B, DT1 won't work - the VAT will be irrecoverable by your customers. For some context of costs, the business I'm working on this with have had to put EU P&P up to €34 per delivery (typical order values around £150) just to break even...

If you're in the garment space, I can help with a ready-made solution with an EU company, warehouse, logistics, etc. I'm not touting for trade, just we've done all of this over the last few months so we could work out a deal to share the benefit.

[loafer123]

Thanks, but we have to cut each order to size so unless we set up a full EU operation with stock and staff, it won’t work for us.

On the bright side, this is a barrier to competition and stops people like Amazon from moving in on us, so margins are maintained.

As for DPD, you do pay charges, but we do enough volume and use the cheaper offering they don’t publicise as much, so it is a little more bearable.

[cjt1979]

I ended up setting up in Malta. Companies law based on UK system and English is main language... Definitely worth a second look IMO

[williaa68]

I have been looking at the Estonian digital nomad scheme:

https://e-resident.gov.ee/become-an-e-resident/

it seems quite attractive for my business, but that is services not goods.

[skwdenyer]

williaa68 said:

I have been looking at the Estonian digital nomad scheme:

https://e-resident.gov.ee/become-an-e-resident/

it seems quite attractive for my business, but that is services not goods.

It doesn’t of course change the place of supply rules, nor the place of business. There appear to be some tax risks

[captain.scarlet]

I appreciate I'm late to this topic, but I'm surprised nobody has mentioned the Republic of Ireland.

I don't know the ins and outs, but are there reasons why Ireland, given the current deal between the UK and the EU involving the North, is not top on anyone's lists?

I anticipated geographical proximity, language, the same time zone and a similar legal system would be some of a variety of reasons for.

[Redarress]

For logistics it’s cheaper to have containers come into mainland Europe for breakdown and the onwards distribution through Europe. Poland is popular

[loafer123]

captain.scarlet said:

I appreciate I'm late to this topic, but I'm surprised nobody has mentioned the Republic of Ireland.

I don't know the ins and outs, but are there reasons why Ireland, given the current deal between the UK and the EU involving the North, is not top on anyone's lists?

I anticipated geographical proximity, language, the same time zone and a similar legal system would be some of a variety of reasons for.

Probably because anyone who exports to the EU has found the most difficult country to get goods to since 1st January has been Ireland.

They may be brothers, but they haven’t been very helpful. Leo has a lot to answer for.

Would you believe we ended up choosing France (!) for IOSS? I’m still surprised myself!

[rdjohn]

I thought the Netherlands would be an obvious choice. Ship into Rotterdam, everyone speaks English, is well educated and the nation is enterprising in nature, as well as being culturally similar to the UK.

Less good if you are in need of cheap unskilled labour.