What is the best european country for a scalable, exit-friendly and low-taxes company?

[JeremyCos]

Hi,

I'm currently in Estonia and I would like to confirm if opening a PLC here is a good idea for scalable revenues (+3M€), low taxes and an easy way to sell when exit?

The main advantage I see is the ability to put different sources of income streams into the company (multiple fields of activity).

But maybe you have better company structures in mind with another european country?

It's better if the country is not so expensive, easy with paper and less setup/run costs.

Thanks!

 

[Martin Everson]

Estonia is very good and easy in general for business.

For low taxes it is good as your only taxed upon distribution⁤ of profits meaning you can reinvest profits. Nothing wrong with having an Estonia company with⁣ +3m euro revenue. When you say "exit" do you just mean leaving the company after⁢ a sale of it? You don't mean exit EU or something and are concerned about︀ EU Exit Taxation. Please clarify.

Depends what you find wrong with Estonia︂ company structure?

 

[JeremyCos]

Yes, for exit, I mean leaving the⁣ company after a sale of it. Company could be bought by another foreign company for⁢ example.
Nothing's wrong. But maybe it exists better schemes for a tech company in Europe.︁

Thanks for the response

 

[Martin Everson]

Then it‍ is fine for acquisition.

Ahh ok I get you. Good question.⁤

Estonia ranks high in Europe but would have said UK (had it still been in⁣ EU) due to its higher standing, proximity to one of the biggest capital markets, access⁢ to M&A firms, EIS (which is tax advantageous for investors), language, clear legal system, talent︀ pool and networking ability. There is a reason lots of tech firms were setup in︁ UK as you know by Eastern Europeans. Also when you want to exit via i.e︂ an IPO also it would be much better to do so their over Estonia imho.︃

Maybe someone else can chime in. There could be specific advantageous schemes in other EU︄ countries.

 

[Don]

I believe it's one of the best structures in terms of value for⁣ money, low tax, low red tape, friendly regulations, etc., for startups.
https://startupgenome.com/article/rankings-2021-top-100-emerging-ecosystemsEstonia's main issue⁢ has been attracting talent, but they have recently implemented some new regulations which help to︀ overcome this issue. It really depends on your activities but in some cases, you could︁ easily outsource a lot of the activities to countries with even cheaper labor.
A lot︂ of the startups end up forming companies in 2-3 jurisdictions eventually, but I believe Estonia︃ is a really great place, to begin with. For example, you could structure the company︄ under a Cyprus holding, and later sell it without any CGT.

 

[JeremyCos]

Yes,

I thought about UK, but I think it complicates︂ a much more the setup (and I'm not so attracted to live there). I don't︃ see so much bigger advandages compared to estonian private limited company OÜ (apart from business︄ and capital ecosystem, but I dont really aim for raising money or exit with IPO).︅

Thanks for your help!

 

[JeremyCos]

This scheme with Cyprus holding seems interesting. I guess I would have to relocate in Cyprus︁ to get personnal residency, and sell the estonian stock to the Cyprus holding?

And what︂ about the reinvested profits ? Can I use it to buy capital of a real︃ estate structure I use to invest in Europe? What's the scope of "reinvested" profits for︄ OÜ?

Thanks

 

[Don]

Yes you can buy properties. Usually it⁣ makes sense to establish an spv for this purpose.

Expenses are related to business if⁢ they have been incurred for the purposes of deriving income from taxable business or are︀ necessary or appropriate for maintaining or developing such business and the relationship of the expenses︁ with business is clearly justified.

In all cases its best to consult with advisers who︂ understand both local and international tax.