In today’s global business environment, entrepreneurs often travel far from home to set up shop. Many countries have simple and fast company registration procedures, but there are other aspects to consider when choosing the best location for your business. Does the government offer incentives? What are the advantages for foreign investors?
Europe remains a top investment destination because of its high development potential. For example, Malta attracted US$4 billion in foreign direct investments (FDI) in 2018; here, the limited liability company model suits all types of activities and is the easiest to register. Well-positioned between Europe and Africa, Malta supports many high-growth industries including manufacturing, services and information technologies.
Here are three more factors to consider for that all-important location, location, location:
Flexible laws and economic stability
Entrepreneurs naturally prioritise flexibility, as it reflects a country’s openness to foreign investments. Together with economic stability, an indicator of a foreseeable medium-term future, these two attributes can tip the scales for investors. Luxembourg benefits from both and, like Malta, creating a limited liability company is the easiest step to start a profitable business here. A top destination for businesses in the financial industry, Luxembourg’s government also offers fiscal benefits to attract investors in other key economic sectors including logistics, healthcare and clean energy. Luxembourg’s total FDI stock in 2018 was US$164 billion.
Outside Europe, the UAE meets the same criteria – flexible legislation alongside economic stability – making it an appealing investment destination, especially in Dubai. The UAE received US$10.5 billion in FDI capital flows in 2018, placing the country in 11th position on the World Bank’s 2019 ease of doing business list. Popular industries include trading, real estate and manufacturing.
A country’s taxation system remains one of the most important aspects foreign businesses should consider when choosing where to locate. One country that provides special tax incentives for foreign investors is the Netherlands. As a bonus, registering a company in the Netherlands is also easy, taking just a few days to complete. The Netherlands is one of the highest-ranking countries by FDI inflows (sixth in the world and first in Europe according to the UNCTAD 2018 World Investment Report), with a total FDI stock of US$974.7 billion in 2018.
Among the best industries in the Netherlands for foreign investors are financial and insurance services and manufacturing.
When the choices seem too overwhelming, it’s worth going back to the reason most people set up a business in the first place: profit. How developed is your particular industry in the country you’re considering? What kind of market is there? What resources are there? Will you turn a profit?
No matter which country you choose as your base, the reasons behind the decision should be discussed with professionals and lawyers to make sure you’re doing everything correctly. Foreign businesses deciding to locate in the UK, for example, often consult a lawyer to help navigate its complex legislation, and British businesses should do the same when locating abroad.