An entrepreneur is a daydreamer… He always searches for new ways to bring a company to the next level and many times his decisions may be a little bit weird. We all met some people with crazy ideas that might have been taken out of George Orwell Sci-Fi novels, but in the end, they succeeded in a way nobody had thought was possible. An entrepreneur never stops dreaming about a multinational company, but only a few really put this idea on a drawing board and start “baking” a solid expansion plan. Very few people have the courage to open a company abroad.
Which are the situations when you need to extend or open a company abroad?
There comes a time when you may be having doubts about the potential of a company in your own country. You might have problems like:
- No demand for the service that you provide or some low request that could not allow a company to shine. Low demand on the market is not enough for hitting next level, or for achieving growth
- The market is fully saturated, it is like a bath sponge that cannot retain one more drop of water. It’s like trying to push a rope forward… For example, look at the mobile phone market. It’s absolutely insane.
- Having a company and completing your purpose in your own country may be like going through a labyrinth and hitting a dead end. You’ve completed all the goals and… Now what? It’s time to open a new company and that means going to the next level abroad.
- We do not live in a perfect world and there are countries on Earth that may push a little bit too far taxation for companies. The level of taxation may be a reason to go abroad, in countries that are VAT-less. Fewer taxes mean more money in your company’s bank accounts.
Which is the most important decision about how you should extend your company abroad?
Basically, there are no barriers when you are convinced that you can evolve as an entrepreneur. It’s about mentality. If you have the right mindset, there is only a matter of time until you will own a multinational corporation, with multiple offices located all around the world. All you have to do is be aware of the fact that the first decision is crucial: which are the first countries included in the expansion plan? Don’t go far and open companies in 10 different countries at the same time. Take it slowly and start by opening a company in countries like Hong Kong and Ireland, countries where the taxes will be low enough so you can evolve nicely.
Why should you open a company abroad?
If you are afraid of trying to open companies abroad because of foreign tax policies, you have to be aware of the fact that some countries encourage this type of business because there is a win – win situation: you make money and extend your horizon as entrepreneur, the country takes some impressive amount of taxes and offers people some nice, well paid jobs in foreign companies. Taxes for foreign companies are always lower in some countries/regions like Hong Kong, where the VAT doesn’t exist. Therefore, taxation is one of the most important reasons why you should open a company abroad. Fewer taxes mean more money in your company’s bank account.
Therefore, you want to open a company abroad. Let’s see TOP 3 countries/regions for a nice start
Hong Kong should be your first option when you decide to open a company abroad. Hong Kong has a tax system that allows you to expand and it is one of the few regions in the world that offers VAT free to foreign company holders. There is only a 16.5% corporate income tax that you have to pay. There is no withholding tax on dividends or interest; you can have 100% foreign members and there is also a very simple registration procedure. Every entrepreneur is a little bit scared of registration procedures, but in Hong Kong, everything is investor friendly.
Although small sized, Singapore is a global commerce, financial and transportation hub. Singapore is one of the few countries that has almost zero bureaucracy. Registration procedure of a foreign company is something easy. Taxation is as low as it can be, maximum 20% for amounts that exceed $220.000 (corporate income tax). There are no capital gains taxes, no dividend taxes.
Ireland is 3rd on our list and that’s because it is something else. Although it can’t be considered a tax paradise like Hong Kong or Singapore, Ireland is one of the first choices for entrepreneurs who want to start or extend businesses in Europe. Some of the major attractions for foreign investors in Ireland are:
- Lowest corporate tax in Europe – 12.5%
- No currency fluctuation for transactions inside E.U. Zone
- Duty- free access
- Double tax treaties with over 60 countries
*I refer HONG KONG as a country because it is an autonomous region in China. It has its own rules about taxation and has much more benefits than China itself.
To mention the fact that if Ireland would not have been Europe’s No. 1 country by potential for foreign entrepreneurs, Google wouldn’t have picked it for headquarters in Europe, the Middle East and Africa (EMEA). Therefore, if you want to open a private limited liability company in Ireland, you should be truly confident that it is a good decision. Let’s talk about some basic requirements for opening such a company in Ireland because things are really interesting…
Private limited liability companies opened in Ireland do not need minimum share capital. Only public limited companies need around 25.000 euros. The maximum number of shareholders is also insane, about 149 people could be part of a private limited liability company, although there can be only one director. (LTDs)
The registration of a private limited liability company in Ireland is pretty straight forward. The founder must file the company’s Articles of Association with the Companies Registration Office in Ireland. Everything can be performed online, no need to travel to Ireland. I suggest some legal advice for those who look up to open or extend companies in Ireland because it’s Europe and there are some complex rules which you can better understand by talking to someone authorized.