I have read many helpful posts in this discussion forum about US companies looking to enter the European market and the pros/cons of establishing a branch vs. a subsidiary. I work for a US company registered in Delaware. We are an online business dealing in virtual goods and we are considering expansion to Europe. The most likely scenario is that we start by launching in the UK and expand to other European markets from there. Ultimately, we'll want an in-market presence (in the form of a branch or subsidiary) in the markets where we offer our service. However, I wonder whether we can get started with no in-market presence at all. For example, we could offer our service on localize domains (.co.uk, .de, etc.) and use a payment processor (like Planet Payment) that offers local currently billing (or perhaps work with an local payment processor). All of our employees supporting these local sites would be in the US. After we gain some traction, we would decide to open a branch or a sub. Has anyone entered Europe in this way? If so, what are the pitfalls of this approach?
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I would subscribe to what David said above. The main advantage of having a company incorporated and domiciled in an EU member state is that all states have to treat EU companies equally. This may turn out to be an advantage in certain states, but I wouldn't worry about it until it's obviously necessary. |
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The tax rate and amount of administration in each country are important considerations. Ireland has proved very popular in recent years for these reasons. That said, their government budget is direly in the red at the moment and the EU loans did try to pressure the Irish to raise those rates. We're based in the UK, the current rates aren't competitive. That said, the current government is going to reduce the main rate of corporation tax down by 5% in the next 4 years, they're somewhat pro-business than the last one. Thing is, could all go up or down with any government. To be honest, my thinking reading your question, is why do you think you need a company in Europe at all? If you're not physically shipping anything, you don't need a company in that country to accept local currencies, nor to obtain country specific domain names (so yes, you can get started with no physical presence. I'm just wondering what additional you need that justifies opening up here? As an aside, I always wondered if there was any site that matched up companies that wanted a marketing presence in each other's countries and they just do a deal to market each other's stuff... |
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