Starting a company abroad: a step-by-step-guide

2020. June 26.

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Nowadays, starting a business abroad is easier than ever – but still not everyone who takes advantage of the opportunity can take advantage of the opportunity.

This is understandable, as it is an unfamiliar terrain, where regulations may vary from country to country, so it is important to take the time to get to know the local conditions. On the other hand, if we do this, we can not only discover that the process, which was thought to be complicated at first, is much simpler in practice, but we can even obtain tax benefits that would be impossible to obtain at home.

Let’s see what other benefits foreign business start-ups can have.

What are the opportunities for starting a company abroad?

1. Resuscitating an existing company

It could easily be that a company that works well at first abroad will sooner or later lose momentum and then go bankrupt because simply the market in that country is already too saturated and there is no longer enough purchasing power to support the company.

If you have enough international experience to develop your existing business model internationally, it is a great opportunity to invest in such a company and then serve the market of other countries where there is a demand for the service, only much less market competition in that field.

2. Opening up to developed economies

The European Union is one of the largest and most diverse markets in the world. Tax incentives between countries, as well as facilitated transport and logistics, make it very easy to cross borders in economic terms as well. In addition, setting up multilingual customer service centers is easy, so you can choose from many multilingual employees.

3. Tax benefits

If you already have a well-functioning company, but the tax burden is much heavier than you would like, you may also have the chance to start a company in another country under much friendlier tax rules without having to make significant changes to other areas of your company.

4. State aid

In addition to tax breaks, state subsidies can also be expected. Many countries are supporting the recovery of their economies in this way by providing various subsidies to start-ups on favorable terms. This is also very common in the European Union, where there is even a lot of support at EU level.

Types of foreign company formation: onshore and offshore company formation

Before choosing which country we want to start a company in, we need to consider whether we want an offshore or onshore company. There can be significant differences between the two not only in operations but also in business goals. Let’s see what these are:

Onshore companies

  • They typically operate in countries where there are no special levels of tax breaks, but are significantly more economically developed than average.
  • It is easier and safer to work with subcontractors and find an expert workforce.
  • Most of their income and expenses change hands in the country of operation.
  • They may be subject to stricter controls due to stronger state control.
  • It is typically mandatory to maintain a registered office for employees, but in return it is possible to apply for a residence permit.

Offshore companies

  • They typically operate in countries with extremely favorable tax conditions.
  • It is harder to find a skilled workforce, but in return, employment can come at a much lower cost.
  • They do not do business in the country where the company was established.
  • With a high level of data security, company information will not be released unless we want to.
  • It is usually not mandatory to maintain an office, so it is not always possible to apply for a residence permit.

Popular foreign start-up locations

  • USA
    • It is one of the most stable and entrepreneur-friendly countries in the world.
  • Cyprus
    • Not only because of its central geographical location, but also because of its favorable tax system, it is a popular destination for starting a company abroad.
  • Dubai
    • Dubai is no longer famous not only for its oil or tourism, but also for its favorable conditions for starting a business – if we take the time to get to know the opportunities the country has to offer.
  • Canada
    • Business travel from Canada to the US is easy, but not only because it is a popular destination, but also because of the favorable conditions for starting a business.
  • Hungary
    • It is one of the Union’s most popular trading centers in the heart of Europe.

How to start a company abroad?

Before we get into the process, it is worth thinking about the following aspects, and if you already have a company in operation, find the similarities and key differences with it. This will help you avoid any obstacles or unforeseen pitfalls.

  1. What is the purpose of starting a company abroad?
  2. What activities will we do in that country?
  3. What kind of employees are needed to start a company?
  4. Where do we create the headquarters of the new company?
  5. When will the new company start operating?
  6. What business goals do we want to achieve?

If we know the answer to all this, there is nothing stopping us from getting into starting a foreign company.