Frequently Asked Questions Concerning Forming A European Business
openaeuropeancompany.com offers introductory answers to frequently asked questions about company formations, fees and taxes, registration, and other services that we offer Office. Click on a FAQ Question below to view answers relating to your selection. Links throughout the answers will guide you to further information on our website or from other sources. Should you have any further questions, please consult our Contact Us page.
What makes Open A European Company different from everyone else?
Not many corporations offer to set up a fully inclusive package of European/Worldwide incorporation services. It’s usually a drop-and-run approach. You pay your money, and you don’t get good service. With Open A European Company, you pay your money, and we hold your hand every step of the way during the whole process, even going that extra mile to try and sort out jobs that are possibly not part of the incorporation process but can be handled by our local offices.
How long have you been operating?
Our company, Open A European Company based in the UK, has been established since 2003.
What documents will I need to start the incorporation?
To begin with, we need a completed application form, a certified copy of your ID i.e. an International passport and two proofs of address that are less than three months old plus payment for the course.
Can a USA resident set up a European company?
Of course! Dependent upon the European country in which you are incorporating, we can let you know what you will need to do to register. For example, in France and the Czech Republic, you will need to have a criminal authorisation check. We can let you know where you need to get this from. Most countries allow for USA-beneficial owners. Some countries will require either a local or EU director, but we can assist with this. Call me, and then we can review your individual situation.
Why do I need to provide proof of who I am?
Due to international money laundering regulations, it is extremely important to identify the individual and the companies with whom we are working to ensure that the companies to be incorporated are not put to fraudulent use. This is for both our protection and the clients.
Isn’t setting up outside of the USA difficult?
No, not really. Not if you know what you are doing, and with Open A European Company, you will feel that you have a partner to help you through the ins and outs of company incorporation in Europe and worldwide. We will tell you what is going on at each and every stage of the process. We will coordinate all the necessary requirements to take you smoothly through the whole procedure. Of course, there will be times when the notary or the local chamber of commerce in the country in which you are setting up will change the rules or will ask for additional information. We will advise you of this at the earliest opportunity and will discuss with you the best way of effectively dealing with this and what your options/choices are to make an informed decision.
We don’t need to put a capital deposit in to open a US corporation, so why in Europe?
You are right. You do not need to put a capital deposit in to open a US corporation, but you usually put some money in a corporate bank account to use as working capital. Effectively European formations, apart from UK and Cyprus, where no payment is put in, utilise the concept of share capital. Share capital means that you are depositing a lump sum payment into your corporate bank account to show to the governing bodies and your clients that you are liable for this equivalent sum in case of bankruptcy.
So, for example, in the most extreme of cases, Austria has a share capital deposit of EU35,000, but half of this can be put into the corporate account to register the company. Another example would be France, where you could put a minimum of EU2,000 into the bank account for a capital deposit.
Can clients use the company share capital once they have incorporated the company?
Of course, they can! Effectively, the money that is in the bank account can be used against all company expenses, such as paying invoices for supplies, IT, staff, offices and ongoing company costs. It is only blocked on the account while the company is being incorporated.
Why does company formation take longer in Europe than in the USA?
Except for UK, Cyprus, France and Denmark, most European countries use a notarial system to register companies. This means that they are registered by way of an attorney AND notary. A notary is an extremely qualified individual in Europe, and it can take many years to be accepted by the government bodies in each country. Bearing this in mind, the standard stages of incorporation are as follows: the attorney initiates the first step to organise the articles of association before registration, a corporate bank account is set up, and the client deposits share capital. The share capital is then declared to the notary, the notary registers the company, and then the VAT (the equivalent of US sales tax) is applied. This whole procedure depends upon the availability of the notary. Open A European Company has fantastic contacts in each European country.
So, talking of banks, what banks do you use?
We use the main banks in each country in which we incorporate, and all of these banks have online banking facilities just like we do in the USA.
What is a VAT number?
As I briefly mentioned before, when talking about company formation, a VAT number is the equivalent of US sales tax registration. An EU VAT number is essential if you are looking to trade within the European Union as clients and tax authorities need to see this so that they 1. See that you are fully registered within Europe, and 2. Ensure you do not pay more VAT than you have to within the European Union. For example, if you have a French company and you are dealing with a German client, you put your EU VAT number on your invoice and depending upon the category of the invoice, you do not charge VAT.
Is it a requirement to have an accountant or CPA in Europe?
Yes, most certainly. Regarding dealing with the government tax authorities and specific issues to do with filing accounts and tax returns, it is extremely important that this is done on time through a locally qualified accountant. These individuals are aware of requirements, legislation and deadlines so that your company runs smoothly without having the headache of forgetting about filing your tax return on time.
Will the clients need a registered office in Europe?
A registered office is a legal address where all legal correspondence is mailed regarding the company. A virtual office has mail, telephone and fax forwarding facilities and is used as the minimum requirement to register for EU VAT in some countries. In other European countries, the minimum requirement is a physical office with staff. Basically, when tax authorities come before VAT registration, they can see that the company is trading in the designated country.
How will my company pay its tax?
We can provide local accountants who will undertake this service on your behalf and fulfil all tax requirements for you.
Can I have a branch of my US company?
Yes, provided that you produce full details of your US company and who will be the authorized official.
Why do companies in Europe have such high share capital?
The reason why companies have such high share capital is to show a commitment to the authorities in that country that they are serious about setting up in business.
What documents will I be required to provide?
Certified copy of your passport or similar ID document Two utility bills that are less than three months old, i.e., Gas, electricity, telephone (not cell phone), water.
What banks do you use?
We only deal with major international banks or major banks in the country in which we incorporate your company.
Why do I need to get my documents notarized, as we do not need to do this in the US?
This is also part of the money laundering requirements for banks.
Are there any additional costs?
No, unless you require an additional service over and above the standard incorporation.
Can you provide nominee services?
Yes, we can provide full nominee services for company officials and shareholders.
Do I have to pay renewal fees each year?
It depends upon the jurisdiction in which you form your company. Most countries do not require the renewal of services. Please ask for further information regarding this when you send us your enquiry.
How long have you been operating?
Our sister company based in the UK called Open A European Company.com had been established since 2002. Our company has been established to assist with the US market.
What documents will I be required to sign?
This differs from country to country, but in most cases, you will be required to sign individual countries’ registration documents and bank application forms.
Can you arrange accountancy if I need it?
Yes, we provide accountancy services in all the countries we cover. This applies to legal and office services as well.
Why does company formation take longer in Europe?
This is because companies are not formed online in Europe except in the UK and Denmark.
Why do I need to provide proof of who I am?
This is due to EU money laundering requirements.
Can I have a company that has one person only?
Yes, you can. In most cases, this is acceptable. There are exceptions whereby if you have only one shareholder, then either the amount of share capital to be paid is increased as the liability increases. In some cases, if one director is named on the company, then this has to be declared as part of the main corporate name.
Why do I need to obtain an EU VAT number?
This is required to import goods into the EU and to trade in the EU.
Why do I have to have a virtual office/physical office?
This is to demonstrate to the tax authorities in the country where you are setting up that there is a genuine trading business in their country. Please note that this is also required for an EU VAT number.
Can I use the company share capital once the company has been incorporated?
Yes, in most countries, this can be used once the company has been incorporated. However, please note that the funds are blocked until the company has been incorporated.
Will I be able to set up a European Company as an American citizen?
Yes, all European countries allow none EU residents to expand their business into Europe.
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