One of the biggest misconceptions about the best place to incorporate your company? That you are bound to incorporate your company either in the country where you’re operating or the country where you’re living. This is the best option for businesses that are strictly reliant on suppliers and customers in a single location. For others however, it’s not always the best choice.
In an increasingly globalized and digitalized world, there’s also increased opportunity. If you’re developing a product or a service with potential for international expansion, there are ways to maximize the benefits of where you incorporate your company. Here are the three key points to take into consideration when making this choice.
Tax rates vary from country to country and depend on the type of legal entity you are planning on for incorporation. It is an important factor, as it defines how much money will reach your bank account. That being said, people often get clouded by quick judgment and simply pick the country with the lowest rate. Remember that tax rates are often a sign of governmental and social support. Therefore, countries with higher tax rates offer more support to entrepreneurs or employees if necessary. For example, France has some of the highest tax rates in Europe. Those higher taxes set up a strong system of support for entrepreneurs.
Take time to research what kinds of grants and subsidies countries offer to different industries. Developing countries support mainly investment, real estate and technology-related projects. Developed countries offer more financial and bureaucratic support to sustainable and social initiatives. For example, Norway has many financial initiatives to support the solar panel industry. You might have easy access to government funding if your company fits into one of these categories.
Thinking about growth, even in the beginning, is important for your planning. External investments could potentially be part of your growth. Some countries have better equipped Venture Capital and Incubator landscapes. To apply for some of these, you may have to be registered in the respective country. Additionally, you may need to have someone on your team who speaks the local language. Great examples are The Netherlands and Germany, who have world renown incubators, accelerators, Angel Investor networks and VCs. This may be a worthwhile factor to consider during your incorporation.
Feeling ready to incorporate your company yet? Go for it! You have any more questions about this process or want more personal advice. Feel free to schedule a one-on-one call with one of our consultants.
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