Moving into Europe as an entrepreneur can be lucrative and is often a good course of action if you’re looking to expand into a new market. There are some pitfalls to avoid and decisions to make before you jump across the pond, however.
Dealing With Brexit
The first thing to know about a move into Europe is that it could mean a move into two different markets. With the UK’s departure from the EU, they’ve also removed themselves from the single market, which ensures the free flow of trade between EU members. This could increase tariffs on any goods sold across the strait and could also mean dealing with two completely separate tax laws. While the official exit won’t occur until at least 2019, ramifications are still being felt, especially in the value of the pound, which has dropped since the vote.
Overcoming Language Barriers
Unless deciding on a move into the UK, your business will need to become flexible with its languages. English may be a widely spoken language, especially in Europe, but not everyone can be expected to know it. A way around this could be to send current employees to Europe to start the business, but remember that expats will need work visas. Alternatively, hiring locals can cut down on transportation costs. You may need to hire a translator, however, to translate any necessary documents into the target language.
European Security Compliance
Starting in 2018, the EU will begin enforcing stricter information laws for any organization that collects, stores, or processes data on any member of the EU. This will mean that any information gathered about EU citizens will need that citizen’s explicit consent, and any misuse of information such as from unbranded traffic will result in a hefty fine. Any person can revoke access to their personal information at any time. These laws apply to any organization in the world that holds personal information about EU citizens, not just the ones within the EU’s jurisdiction.
Considering Payroll
Regardless of whether you hire expats or locals, you will need a solid payroll system. For smaller businesses, a local-to-local payroll system can work, as single offices will be able to take care of payroll themselves. Many businesses today, including many in Europe, outsource payroll to a single vendor, streamlining the payment process by consolidating it in one place. It’s important when going this route to make sure that your payroll vendor is fluent in any languages your employees speak.
Filing Taxes
One important distinction to know is the difference between the U.S. sales tax and the VAT in the EU. In the United States, tax is paid only on the final product as it’s sold, while in the EU, tax is applied to every step of production and taken out at the end of the year. Like in the United States, every company has to pay a corporation tax, but it’s paid to the country and not to the EU, so remember to look into the local tax laws of any country into which you expand.
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