European Business Investment in 2017 and Beyond

Oct 25, 2017 by

When a company gets to a certain point in its success, having broadened through perhaps local and national growth and development first, there then comes the time when the next step lends itself to thought of international expansion. However, expanding abroad can be a veritable minefield of rules and regulations. Your executives and stakeholders might be excited at the prospect, but opening regional offices or even relocating headquarters to a foreign country takes careful planning and consideration. It is temporally draining to make sure such a move doesn’t become financially draining, too. Expanding internationally might open your brand up to new markets and greater future possibilities, but you need to ensure you’re prepared to face the serious risks involved, as well, including external company appropriation.

A Question of Location

Emerging markets might seem attractive at first, but in reality pose too much danger as regards infrastructure when it comes to the novice brand seeking opportunity abroad. Instead, “established” and “thriving” are important words. The three largest economies in Europe are Germany, the UK, and France and connected to all three of these are the Netherlands. Many brands have decided to tap into that central link to over 500 million consumers for obvious reasons, but transport and interconnectedness also play an important part, too.

A key consideration is how a company gets its product or services to customers. Ranked #4 in the world for Global Logistics Performance, the Netherlands work on a 100% digital telecommunications network, proving it a wholly reliable country in which to branch out abroad. Indeed, Holland is “hot” right now, its inward investments having increased 10% this year alone.

However, one size does not fit all. Some might select Canada, for its 15% corporate income tax, but in general Europe offers plenty of choice and its corporate income tax rates start at 20%, rising only to 25% (in comparison to 35% here; one of the highest rates in the world), and that’s seriously attractive. The past decade was the most difficult for the economy in the post-war era in Europe, but the horizon is brightening, despite ongoing tensions between mainland Europe and the UK post the Brexit vote. Nonetheless, Sweden is set to benefit greatly from 2018, while Poland might a deceleration for a time.

Property and Taxation

Of course, once you’ve decided on the best country for expanding into, the next consideration is of address and tangible property. This is where a savvy company invests in property that can be sold wisely at a later date (for example, if its foreign endeavors don’t pay off), or opts to utilize Section 1031 of the Inland Revenue Code Sections (simplified by firms like 1031 Gateway for those not fluently versed in tax law) and swap domestic property for foreign, often directly. This can then lead to the contested subject of inversion and renounced US Citizenship of the company, thereby no longer being culpable for US corporate income tax. A win-win in theory, but vastly complicated in practice.

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