Do you need a subsidiary when entering a new European market?

Do you need a subsidiary when entering a new European market?

December 03, 2019 || ReportsLegal

At Internago we are often asked about the costs related to setting up subsidiaries or branches on European markets. It is of course difficult to give an exact figure on such queries since there are many variables needed to be considered – establishment form, location, office space required, number of employees, administrative requirements etc.

Many of our clients are SME:s or startups and many times they just want to have the simplest cost-efficient set-up possible without comprising their local presence. Often it is wise to take a step back and ask whether a subsidiary is really needed, or if there are other alternatives to ensure foreign presence.

We always start by asking our customers – what do you actually need to do on the new market? Do you need to invoice your customers and handle VAT locally, or are these functions that can be handled centrally from the headquarters? Do you need a permanent establishment to be able to run the operations on the new European market or would it be sufficient to just register as a foreign employer? In many cases the answer to the latter question is “yes”. This means that administration can continue to be managed from the home country and hence there would be no need for local bookkeeping and local financial administration. Registration costs could be kept to a minimum. If this is the case the major costs to consider are salaries, social charges, pension, and insurances for the employees in addition to the office space. Moreover, the company would normally need to have someone on the market who can handle taxes and the communication with the local authorities. This is where we at Internago fit as your partner on the international market.

Today Internago handles local administration including payroll and local market tax representation for companies which want to keep their cost down, but still want full to benefit from local presence. Our customers want to be able to focus on their core activities and leave the administration to local experts.

Is your company thinking about setting up your business on a European market? Contact us at Internago and we’ll guide you through the different alternatives available and we’ll help you make a cost estimate based on different set-up alternatives. Once your company is happy with the proposed set-up, Internago will take care of all your international administration, while you can focus on your core business activity.



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