Last Updated on January 20, 2022
There are many reasons for which businessmen prefer opening a company in a foreign country.
The advantages for starting a business abroad can vary based on the economic sector in which the company activates.
Thus, manufacturing companies may search for markets where the costs of the labor force are much lower compared to their home countries, and where they can find the materials and supplies needed for the manufacturing of the company’s products, at competitive conditions.
Businesses operating in the financial sector will generally look for international markets where the financial sector is very well developed (such as Luxembourg, the United Kingdom or Singapore) and where they can find suitable investment conditions and rules of law which are very advantageous.
However, regardless of the business sector in which a company develops its activities, investors will generally be interested in aspects such as:
- the corporate tax system and the tax exemptions foreign business can qualify for;
- the types of companies that can be registered in a given country;
- the ownership regulations (numerous investment friendly countries provide an open policy regarding the ownership of companies registered by foreigners);
- the purchasing power of the local consumer market;
- the access the country provides to other important economies;
- the immigration policies available for foreign businessmen;
- the duration of opening a company (certain countries, such as Ireland, provide the possibility of registering a company in a matter of few days);
- the costs associated with employment and the qualifications of the local workforce.
The benefits of opening a business in EU
For example, European businessmen can obtain numerous advantages when starting a company in any of the member states of the European Union (EU); although each member state has the right to create its own legislation on commercial matters, the EU provides a comprehensive legislation that is applicable at the level of the entire structure.
Besides this, EU investors do not have any type of restrictions when investing in the EU region, being able to establish a company in a given EU country just as easily as a local citizen of the respective country.
EU investors also have the legal right of expanding their business activities in countries such as Iceland, Norway and Liechtenstein, if they consider that these European markets provide advantages for the business field in which they operate.
One of the main concerns of any businessman investing in a foreign country is the level of skills of the local workforce.
In Europe, countries such as Ireland, the Czech Republic, Switzerland, Germany or Norway are known for having a workforce with a high degree of skills.
Another European country that offers an educated workforce, ready to face the challenges of a dynamic business environment, is the Netherlands.
Foreign investors who want to start a business in the Netherlands must know that the country offers an immigration visa that was created especially for foreign investors involved in the startup environment.
The visa was created with the purpose of attracting foreign investments in the startup sector, a growing business activity across the world, on the local market; an advantage of this type of visa is that the foreign investor can obtain local support with the purpose of promoting his or her business on the Dutch market.
According to the data provided by the World Bank, the Netherlands represents one of the countries that offers a great business climate as it ranks as one of the leading markets for the ease of doing business (companies can be incorporated in few days, and most of the procedures can be completed on the online platforms of the Dutch institutions).
Another competitive EU country is Luxembourg, a jurisdiction that attracts on a current basis foreign investments in the field of finance, banking or insurance.
It is a great destination for starting an investment fund, as it has one of the most complex legislations on the matter.
The country is also the home of a diversified and highly skilled workforce, which originates from more than 170 countries across the world.
Being a competitive economy, Luxembourg has attracted over the years international talents in a wide range of economic activities.
One of the reasons for starting a business in Luxembourg is that the country provides incentives for investments concluded in the field of research and development or innovation.
Some of the main economic sectors investors can start a company in are the following:
- the aerospace industry;
- the automotive industry;
- the financial sector;
- environmental technologies;
- information and communication technologies;
- health industry.
Besides the EU, foreign investors can benefit from a set of advantages when investing in the Middle East, as numerous countries from this region do not apply a set of taxes that are generally imposed to EU businesses.
For example, the United Arab Emirates provides tax exemptions on the payment of the corporate tax and other relevant tax exemptions and deductions, which are some of the main advantages investors search for when expanding on a foreign market.