Frequently asked questions about opening and running a company in Europe
Opening and running a subsidiary in Europe is not one single decision: the market, the legal form, the tax treatment and day-to-day accounting all matter. Across these 48 questions we answer with concrete data —rates, deadlines and market prices— so you can decide with judgement before taking the step.
Choosing the country and legal form
8 questions
Start with the market, not the tax rate. If you sell to Portuguese clients, an LDA in Portugal (21% IRC, 4-8 weeks) keeps you close and covered by a double-taxation treaty. If your client is in Germany, a GmbH (€25,000 capital, 6-14 weeks) adds local credibility. We compare your case by market, cost and obligations before you decide.
A branch has no legal personality of its own: it depends on your Spanish company and does not limit your liability. A subsidiary (LDA, SAS, GmbH, SRL) is an independent company with limited liability, but it needs its own accounting and annual accounts. If you will invoice and hire locally, a subsidiary almost always pays off.
Portugal: LDA or Unipessoal. France: SAS or SASU. Germany: GmbH. Italy: SRL or SRLS. Andorra: SL or SLU. United Kingdom: Ltd. Dubai: Free Zone or Mainland. The legal form drives minimum capital, shareholder liability and the tax regime that applies. We explain which one fits your activity before you decide.
Portugal and France allow incorporation from €1; Italy from €1 with an SRLS; the United Kingdom from one pound. Andorra requires €3,000 and Germany €25,000, of which €12,500 is paid up at incorporation. That capital belongs to the company, not to the agency: it stays your own capital.
In most cases no. Registries accept apostilled documents and signature by proxy or electronic signature, so much of the process is handled remotely. There are exceptions: in Andorra, non-resident shareholders need foreign investment authorisation; and some banks require an in-person account-opening interview.
Market timeframes are indicative: Portugal 4-8 weeks, France 3-6, Germany 6-14, Italy 4-10, Andorra 2-6, and the UK or Dubai 1-3. The bank account and VAT registration stretch the calendar the most. We do not promise 48-hour timelines: they do not exist in these registries.
It can make sense if you invoice the Gulf or Asia: 1-3 weeks, accounting from €350/month and 9% corporate tax only above AED 375,000 (around €94,000). If your market is in the EU, exchange controls and banking make day-to-day operations more expensive. We look at your client base before recommending.
They are different structures. The operating subsidiary invoices and hires in the country; the holding company concentrates shareholdings and distributes dividends under participation exemption (SGPS in Portugal, régime mère-fille in France). With a single subsidiary, adding a holding adds cost with no clear benefit. We decide by looking at your cash flow.
Real costs and annual obligations
8 questions
The annual bill combines the monthly accounting and tax fee with the company own costs. Published references: Portugal from €400/month, Italy €450, Andorra and France €550, the UK €600, Germany €1,450. In Spain, from €149/month. We quote on your real volume and headcount, not on a flat rate.
Official accounting in the country, filing of corporate tax and VAT returns, and tax representation where the country requires it. It does not include official fees, notary costs, legal notices or sworn translations: those are costs of the operation itself. We put them in writing before starting, so they do not appear halfway through the year.
Payroll runs per employee per month: Spain from €5, Portugal, the UK and Dubai €30, France and Italy €45, Germany €55, Andorra €60. That covers payroll processing only: add the employer contribution, around 23.75% in Portugal, 21% in Germany and above 42% in France.
Filing corporate tax and depositing the annual accounts with the country registry. The calendar changes by jurisdiction: in Portugal the IRC return (Modelo 22) is due by 31 May and the simplified business information (IES) by 15 July; in Spain the Modelo 200 is filed in July. We mark every deadline on your tax calendar.
Yes, and they are avoidable. Filing late or failing to deposit the annual accounts triggers registry surcharges and penalties, and in several countries it blocks later procedures (changing a director, financing or closing). A nil VAT return still has to be filed: not filing it is an infringement, not a saving.
It depends on the country and the size. In Spain and Portugal statutory audit kicks in above two of the three legal thresholds (assets, turnover and headcount) for two consecutive years. In Germany a small GmbH is not audited but must still publish its accounts in the Bundesanzeiger. We review your thresholds every year.
It still has obligations even without invoicing: accounting, annual accounts and tax returns. A dormant company keeps accruing fees and filings anyway. If you are not going to trade, an orderly closure is cheaper than dragging three years of fees, surcharges and pending formalities.
An orderly closure requires liquidation, final accounts and deregistration, and the cost depends on whether there are debts, assets or employees. If the company never traded, the process is far simpler. What matters is not to abandon it: penalties arrive anyway and can block future procedures in the same country.
Taxation and double taxation
8 questions
Standard rates: Andorra 10%, Portugal 21% IRC, Italy 24% IRES plus regional IRAP (~3.9%), France 25% (15% for SMEs up to €42,500), Spain 25% (15% for newly created companies), Germany 30-33% including municipal Gewerbesteuer, and Dubai 9% only above AED 375,000. The real decision is the tax base rather than the rate.
Under the Spain-Portugal treaty, withholding at source is capped at 10% if the receiving company holds at least 25% of the capital and 15% otherwise; interest 15%; royalties 5%. Without a certificate of residence, the payer applies full domestic withholding. The certificate is issued by the Agencia Tributaria or the Autoridade Tributária.
Only if the subsidiary genuinely provides the service, with resources and people in the country. Invoicing from Spain on the subsidiary invoice, with no real activity there, is a classic permanent establishment and tax residence conflict that authorities reassess with interest. The structure holds when substance exists.
If you remain tax resident in Spain, you are taxed there on your worldwide income: profits retained in the company are not taxed until you take them, but dividends are. The treaty prevents double taxation, it does not remove Spanish tax. Changing residence requires 183 days and your centre of vital interests in the other country.
It is the presence that gives a country the right to tax your profits: an office, employees, construction sites lasting more than 12 months, or an agent who closes contracts. If you open a subsidiary and also negotiate from Spain, review who signs and from where: the line between subsidiary and parent permanent establishment is operational, not merely registered.
Corporate tax in the country is always paid on the year profit. Deferral comes from not distributing dividends: retained profits stay in the company until you distribute them. In a Portuguese LDA that means 21% IRC and no further personal charge as long as you do not take the money out.
Not with a shell company. The Spanish tax authority applies international transparency rules, transfer pricing and conflict in the application of the tax rule: if the subsidiary lacks substance, profits are attributed back to the parent. What does lower the real cost is choosing the jurisdiction, legal form and order of distribution properly.
On paper yes: Andorra applies 10% corporate tax and 4.5% IGI, and Dubai taxes no personal income and charges 9% corporate tax above roughly €94,000 of profit. Portugal starts at 21% IRC. In practice what matters is your tax residence, the applicable treaty and the cost of operating there. We compare your net amount, not the headline.
Accounting, payroll and running the subsidiary
8 questions
A local accountant who knows the country chart of accounts and filings, coordinated by an adviser who speaks your language. Spanish accounting does not work in a German ledger: each jurisdiction imposes its own format and calendar. You get closings and returns explained in your language, with a single point of contact for the group.
With a contract under local law, registration with the country social security and the obligations of the applicable collective agreement (the CCNL in Italy, the sector agreement in Spain). A Spanish contract for work performed in another country creates surcharges and claims. We prepare the contract and payslip; the company signs the registration.
Employer contributions are calculated on gross pay: Portugal 23.75%, Germany around 21%, Italy close to 30% (INPS), France 42-45% and Andorra 22% (CASS: 15.5% employer and 6.5% employee). Dubai has no social security for expat staff, but there is an end-of-service gratuity. You budget on annual gross, not monthly.
Yes, and it is often the step before building a payroll. Each country has its own status —auto-entrepreneur in France, independent worker in Portugal, Partita IVA in Italy— with local invoicing and its own tax registration. The risk is reclassification: if the contractor works exclusively under your instructions, authorities may treat it as employment.
Yes, either with a temporary posting and an A1 certificate if the employee stays in Spanish social security, or with a local contract if the move is permanent. Postings have duration limits and obligations at home. If the employee stays indefinitely, the right answer is a contract in the destination country: that is where most cases break.
VAT is the most frequent obligation: monthly or quarterly depending on the regime and volume in each country. Corporate tax and annual accounts are yearly, on the registry own calendar. In practice your tax calendar holds between a dozen and two dozen deadlines a year depending on the jurisdiction and headcount.
In your language, with the country official forms explained and management data in CSV or Excel for your ERP. The statutory ledger is filed in the local regulatory format: SAF-T in Portugal, FEC in France, e-Bilanz in Germany. Your finance team sees one reporting view, even though each country has its own formal obligation.
Yes. Every country requires a registered address where the company receives official notices. It can be your own office, a business centre or the premises of a qualified professional, and it appears in the public registry. Registered-office service is a recurring item, with alerts for official notifications.
Banking, intra-EU VAT and operations
8 questions
Certificate of incorporation, articles of association, ID and proof of address for shareholders and directors, a description of the planned activity and source of funds. Banks apply KYC and ultimate beneficial owner (UBO) checks. The bank opens the account; our job is to prepare a complete file so there are no back-and-forth requests.
Between two and six weeks with international banks, and it is the phase that delays the start the most. A clear description of the activity, identified clients and apostilled shareholder documents all help. Some banks require an in-person interview; others complete it by video call with the company director.
It works for collecting and paying, but it does not always count as the company account for registry purposes: some countries require a local account to pay in capital or direct-debit taxes. The usual setup is a local account for capital and taxes plus a fintech for international, multi-currency operations.
It is the country-prefixed number that identifies your company as an intra-EU operator and lets you invoice without VAT inside the EU under the reverse charge. It is validated in VIES, the official system of the European Commission. If your client number is not in VIES, an invoice without VAT becomes a problem in an audit.
Services between EU companies: invoice without VAT under the reverse charge, quoting both VAT numbers, plus the corresponding information return (Modelo 349 in Spain). For goods, the intra-EU supply is exempt at origin. Missing or wrong mentions on the invoice are the first cause of tax-authority queries.
When you have no establishment or premises in the country, some states require a tax representative liable for compliance, common in e-commerce and in the United Kingdom. With a subsidiary you do not need one: the company itself answers for its obligations. It is a recurring service for those operating without a local company.
Yes. Exporting services outside the EU is usually VAT-free, provided you can evidence the client location. Watch out for withholding in the client country: depending on its rules and treaty it may retain a percentage. We review the invoice and its tax treatment before you issue it, not after.
Registering the ultimate beneficial owner is mandatory in EU member states (anti-money-laundering rules) and in the UAE since 2023. Depending on the activity there is also compulsory liability insurance and, with employees, accident cover. These are the company obligations: they are planned at the start, not when the notice arrives.
Common mistakes and how to avoid them
8 questions
Choosing the country for the tax rate instead of the market. A 21% corporate rate does little good if your client is in Germany and you have no operational presence there. The second expensive mistake: starting without the bank account and VAT in place, and spending months unable to invoice through a company that is already registered.
No. A company can only invoice once it legally exists and has a tax number. If you invoice earlier, the income lands in your Spanish company with its VAT and its tax treatment. If you need to start now, consider a branch or invoicing from Spain until the subsidiary is operational with a bank account.
Yes, and it is the most common first-year mistake. The return is filed even when the result is zero: not filing it triggers surcharges and can leave the company non-compliant with the tax authority. It is avoided with a clear tax calendar and reminders for every deadline.
That it cannot pay in the required capital, direct-debit taxes or collect from clients with a local invoice. The company exists in the registry but does not operate. And while that is being resolved, the bank may ask for extra information nobody prepared: that is why the account is planned in parallel with registration, not afterwards.
You should not. A Spanish contract for work performed in another country breaches local labour law and social security obligations, and opens the door to surcharges, employee claims and uncertainty over which court has jurisdiction. The contract is signed under the law of the country where the employee actually works.
A prepared closure is settled with liquidation, final accounts and deregistration. An improvised one drags monthly fees, undeposited accounts and penalties, and can block shareholders in later procedures in the same country. If you plan to test two markets, define from the start how you would close the one that does not work.
It is one of the most common reasons to switch. Migrating the accounting mid-year is feasible with an orderly handover: opening balances, bank reconciliation and a calendar of pending returns. The handover happens with the books closed at the exact point, without missing deadlines or paying tax twice.
No. Without substance, the structure risks reclassification on grounds of conflict in the application of the tax rule and tax residence, with interest and penalties. If the goal is wealth protection, the route is a lawful structure with real assets and documented tax advice, not an empty company.
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