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Top 3 Strategic Investment Hubs in EU

Doing business in Europe gives many advantages especially if it is set in a country member of the European Union.

The single currency policy along with the great level of mobility and only one set of rules rather than 28 different sets gives you the opportunity to reduce costs and focus on other important business activities.

But as an entrepreneur you are probably looking for an ideal tax rates as well. Since the level of corporate taxes reflects on your business profit you definitely need to take it into account when choosing the ideal location for your company.

With this in mind, I researched some of the best business destinations in Europe and created a list of the top 3 tax and business friendly countries in the EU:

It has strategic location that puts it on the crossroad of three countries. Its position between the mature Western economies and the emerging Far East markets enables you to build up a business that operates across many countries and is directly connected to the Mediterranean area.

The population of Cyprus is generally considered to be high skilled, well-qualified and hardworking. Furthermore, since the country is known to enforce low corporation tax rates, extensive Double Tax Treaties network and special taxation regimes it is one of the popular options for doing business in EU.

Here we will encompass the rules applicable to the incorporation of a limited liability company as it appears to be the predominant type of structure for doing business in Cyprus. The foundation of such type of a company happens after the following information and documents are provided to the Registrar of Companies:

Time frame needed for a limited liability company to be registered and applicable incorporation documents to be issued varies from two to five business days considered from the submission date of all documents. Here is not deliberated the time required to receive approval for the proposed company name.

As of the registration fees that should be paid to the Registrar of Companies they depend on the amount of the authorized share capital. The minimum payment amounts to 105 Euro. And an additional charge comprising 0.6% of the authorized share capital should be paid as well. Further specific fees are also to be added to the total amount of all company incorporation expenses until it is completely accumulated.

Tax Overview and Benefits

All companies that are registered in Cyprus pay a corporate tax rate of 12,5% on their worldwide incomes. There is one rule that should be met before a company could benefit from this low corporation tax rate — it should be a resident in Cyprus which means that its management and control should be exercised in the country. In order to prove this the company should have a majority of local resident directors and hold board meetings in Cyprus.

Every company which is tax resident in Cyprus must submit its annual tax return at the latest, twelve months after the end of the assessment year (i.e., 31 December every year). In addition each company must present two provisional tax returns on 31 July and 31 December of the year of assessment.

As of the capital gains tax it is enforced on the net profit and its rate is 20%. This tax refers to all profits acquired by immovable property situated in Cyprus, or shares in companies, which own immovable property in Cyprus.

The tax rates for individuals, whether residents or non-residents in Cyprus, are calculated

as follows:

Approximately 80% of the people who are at working age have secondary or higher education. Vast number of people speak fluent English and languages such as German, Russian and Spanish are also spoken.

Being an official member of the EU, Bulgaria makes use of all the economic, political, legal, labor, environmental and consumer benefits of the union. Furthermore, the tахеѕ іn this country аrе аmоng thе lоwеѕt іn thе ЕU. This in turn mаkеѕ іt оnе оf thе mоѕt favored соuntrіеѕ for doing business.

In Bulgaria like in Cyprus the limited liability company is the most common type of structure for doing business. The country legislation enables entrepreneurs to establish a Ltd with one or more shareholders.

One of the reasons for being a preferred type of business formation is the minimum required capital for its creation which equals to 2 BGN or about 1 EUR. Before establishing a Bulgarian limited liability company you should consider its name, number of partners, scope of company’s activity, physical address, amount of initial capital and manager post.

The registration procedure of a limited liability company formation requires the following:

And it takes from two days up to two weeks from the date of submission of all applicable incorporation documents before a limited liability company gets registered and all documents issued.

As we mentioned the country has excellent reputation for its low tax costs. The taxes in Bulgaria are among the lowest in the European Union.

Each company that is registered in Bulgaria is obligated to pay an annual corporate tax of 10% on its profit which compared to the highest tax rate in the Union (Belgium 34%) is two times less.

Companies subject to corporate income tax fees must submit annual financial statements and an activity report by 31 March of the following year.

Another benefit of doing business in Bulgaria is that it has signed agreements for the elimination of double taxation with countries such as United Kingdom, Turkey and Russia.

This means that companies that are operating both in Bulgaria and another endorser will pay taxes only in the country where the income is resultant from.

The set up fees and all social security contributions are also affordable. The country has a lower minimum wage compared to other EU countries as well as low social security costs — 19.62% for the employer and 13.78% for the employee.

The value-added tax (VAT) rate at 0% within the EU is yet another good advantage of setting a company in Bulgaria. Regarding the standard VAT rate valid on the territory of the country it is 20%.

The Value added tax is generally charged on the supply of goods and services that are offered across the country. It is paid regardless of the customer being a private person or a business.

Not every entrepreneur is obligated to register for VAT but only those whose annual turnover on transactions exceed 50 000 BGN. Voluntary registration is available for persons whose turnover falls below this limit as well.

As of the annual tax on dividends from company’s profit it is 5% while all capital gains of movable and immovable property are subject to tax at general rate of 10%.

The Irish language is declared to be the official one but since English is recognized as a second official language it is the predominant spoken language in Ireland.

Among the most important economy sectors of the island are industry, IT services, wholesale and retail trade, transport, accommodation and food service activities, education, human health and social work activities.

The population of Ireland is well educated with a high percent of adults with a college degree. The Irish workforce is productive, skillful and highly adaptable.

The Irish Government welcomes foreign investments and encourages international companies to choose Ireland as a European base. There are no restrictions intended to prevent ownership of Irish companies or businesses and most sectors are open to private enterprise.

Furthermore, a government agency called IDA Ireland supports the development of foreign industry and enterprise in Ireland. The corporate tax rate of 12% is yet another benefit of doing business in Ireland.

According to some researches, the private limited companies are the most attractive business structure in Ireland. This type of company may be maintained by a single member. In the case that there are two or more shareholders their liability is limited to the amount of their shares. To set up a company it should be registered with the Companies Registration Office (“CRO”). Steps that should be considered in accordance with the creation of a limited liability company include:

A facilitation for investors is that they are not required to maintain a bank account in the country.

Owners of business structures that are resident in Ireland are obligated to pay a corporate tax of 12.5% on their worldwide profits. A company considered to be resident is one that is managed and controlled in Ireland respectively its directors’ meetings are held in the country.

As of the annual financial statements that should be filed with the CRO they must be prepared in accordance with the Companies Act 2014.

And in case that you choose to live in Ireland you should also pay taxes on your income. In case that it is up to 34,550 Euro your income tax rate will be 20%. Over €34,550 it’s 40%.

As an entrepreneur who is looking for the most suitable atmosphere and location for your business you have the difficult task to take into consideration all benefits and disadvantages offered in the different countries.

This difficult choice will be definitely motivated by the percentage of your profit that will be taken from the government each financial year. So we hope that our research will be of help for your final decision.

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