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Can't I open a company in an EU country by myself? Just simply fly there, found the company and come back home - or via a remote procedure with an incorporation agency from Germany, Austria or Switzerland.
Of course, it's up to you! We also don't want to stand in the way of such a personal project. At GO EU, we are an association of successful entrepreneurs who all run ongoing business operations. The full service cosists on assistance with founding a company, notary appointments, accounting, office address, account opening, and much more. We are able to offer everything from a single source due to our own experience in Eastern European EU countries.
Do you use such an EU company yourself?
Since this concept convinced us so much and we became aware of the advantages and tax savings of up to more than 50% every day, we decided to offer this company foundation in the form of a full service for the self-employed and entrepreneurs.
Can I found a company completely remotely?
We have experienced for ourselves how complex bureaucracy can be in Eastern European countries, paperwork from post-communist times, and that setting up a company including a bank account remotely is not possible at all. And if you do it remotely - then without a bank account - it takes several months, since notary appointments including a sworn interpreter still have to be provided with an apostille in Germany.
What does the service include?
After years of effort we have now created a setup that allows us to offer a company formation including bank account within 5 days turnkey accompanied on site. I.e. you arrive in the best case on Monday and we arrange for you all the necessary steps, accompanied every day at offices, notaries, bank appointments, accounting. On Friday you leave 100% ready to start the business - with a newly established company including company address, bank cards of the company account and accounting.
What exactly does a company incorporation contain?
The company formation includes:
- Articles of association drawn up by a notary
- Sworn interpreter for all notary appointments (mandatory)
- Registered office of the company – possibility of a company address
- Signature sample of the managing director created by a notary
- Application for registration of the company
- Evidence of the deposit of the share capital
- Bank account opening
- Authorization of an accountant/tax firm by a notary public
If I opt for the full service package from GO EU, will I still be helped afterwards with tax, company or personnel issues?
Of course. We do not charge ongoing consultant fees. Since our clients have been very satisfied to date - we are always happy to receive recommendations - and will coach you as long as you have earned at least €10,000 through tax savings!
Is an EU company (e.g. in Romania) always approved by the local tax office in DE, AT and CH?
Approval is a flexible term. It is perfectly legitimate and legal to open and run a company branch in a European country - due to the freedom of establishment in the EU. Such company openings take place thousands of times a day by small, medium and large companies. The decisive factor is the approval of the double taxation agreement or the avoidance of double taxation in both countries.
What do I have to do so that the DTA applies and I only pay taxes in the source country (country in which the income is generated) and not in the country of residence?
The DTA is a bilateral agreement between 2 countries. Now, in order to pay taxes only on income generated in the "foreign company", one must find oneself in the catalog of the agreement - i.e. the activity of the company or the natural person. A large number of services and types of trade are included or exempt from double taxation.
Germany, for example, has DTAs with over 100 countries worldwide. Then I could set up a company in Dubai and pay 0% taxes right away?
Yes, that is also possible – but very difficult to implement in practice. There must be real business operations in the state away from home, such as all executive meetings and decisions, office, etc.
This is what the legislature prescribes. If this is not the case, the "foreign company" is only seen as a permanent establishment and the right to tax stays in Germany.
It is therefore much easier to set up a company that is also based in the EU, so that it only pays taxes in the country of foundation and not in Germany.
In addition, an EU company does not attract any attention from the local tax office - in contrast to a Dubai offshore company.
What happens if the "EU company" is not approved? Can I get in trouble with the local tax office?
The worst possible case that can occur is double taxation - i.e. I pay additional taxes on the income not only in the source country, but also in my home country or country of residence (for example in Germany).
The foreign EU company should be notified to the tax office in the country of residence (DE) from the very beginning. If this is the case, no complications with the domestic tax authorities are to be expected. Such EU company formations are common practice and take place 1000 times a day. Up to now, all our clients have been successfully approved by the local tax office.
Can I get confirmation from my local tax office that if I plausibly establish my business in the EU outside my country of residence, there will be no double taxation and I will only be taxed at the low tax rates in the EU mainland?
Yes, that is possible! This is also used more often than you think. However, since such an application is very time-consuming and costly, due to the fact that the hourly rates of the tax office employees plus fees must be taken over, this is only recommended for companies of a certain size. This is very common for auditing companies such as Deloitte, PWC, EY and KPMG.
However, you need to pay attention! It is only a company branch in an EU country and it is not a tax constructs. If a few things are taken into account, then nothing stands in the way of approval even without an application! The worst case scenario we have clarified in the previous question and is more harmless than you might think - namely paying taxes in 2 countries instead of only one - without consequences or being branded in any way at the tax office. Until now, approval at the domestic tax office has worked successfully for all our clients without exception.
Is all the effort worth it? Another company also causes administrative costs such as office, accounting, personnel, etc.
We can say in advance that it is not worthwhile for German, Austrian and Swiss companies that make very small profits to open an additional EU company far away from home. With an annual profit of 1-3% is not advisable.
However, if you want to make profits, not to put off unnecessary things just to save taxes - but to grow with your company in the profit zone, then this model will stand up to any cost comparison.
Office, accounting and personnel is very affordable in Eastern European countries and is of little importance. A tax of only 1% on the turnover is hard to beat.
Isn't it only worthwhile for medium-sized and larger companies?
Quite the opposite. Setting up an EU company as a foreign permanent establishment is particularly interesting for small and medium-sized enterprises. As you already know, tax is paid on the income of up to EUR 0.5 million per year - and only at 1%. More details in another article from us.
So much for 1-20 employees companies - but now the special advantage for self-employed:
Romania has one of the most liberal small business regulations in the EU. The upper limit is 65,000 EUR per year and not 17,500 EUR as in Germany - to be completely exempt from VAT. This means that you can confidently generate more than 5,000 EUR per month in sales, pay no sales tax and tax your company income at only 1%!