Comment by gyulai
2 years ago
The loophole I've successfully used in the past in Austria was to incorporate a Ltd in the UK and operate it in Austria (similarly to how, in the U.S. The free movement provision, which is one of the central pilhars of the E.U., extends to free movement of legal persons, and does not end with free movement of natural persons. The UK is no longer in the EU, but you could go with the Republic of Ireland or Malta.
>The loophole I've successfully used in the past in Austria was to incorporate a Ltd in the UK and operate it in Austria
Do you have any more details on the benefits of this operation? AFAIk, operating any business in Austria subjects you to Austrian labor and tax laws, negating any advantage.
I was thinking about opening a LTH in a cheap Eastern RU country instead of the UK, and operate it in Austria but that last part seems to throw a wrench in my idea.
> Do you have any more details on the benefits of this operation?
You'd mostly do this if you're Austrian and want to stay in Austria. The benefits are relative to starting a GmbH under Austrian law.
* You won't need to put up the €35k in capital.
* You'd have freely transferable shares. In that sense a Ltd is more comparable to an AG under Austrian law than to a GmbH, but much lighter in overhead. You'll need to play by the rules of the country you're incorporated in, where share transfers are concerned, though.
* I've read of companies in Germany using related constructs to try to get around provisions mandating employee co-determination ("Betriebsrat") for larger companies. Air Berlin used to be a Plc & Co KG for that reason, but I may be mistaken.
Couldn't Austria come after you and say you're running an Austrian company, given you're an Austrian business with no ties to the UK? I'd recommend talking to an accountant.
In Italy or Spain this wouldn't fly 100%, it would even be a criminal charge (foreign dressed companies).
> Couldn't Austria come after you and say you're running an Austrian company
They would, and you would indeed have to do accounting according to Austrian rules and pay taxes in Austria, etc. ...so you wouldn't do it for that reason.
You could go with Ireland and Malta, but US investors would probably not be too happy to invest in you then (https://news.ycombinator.com/item?id=31620700).
Just noticed that I didn't finish my sentence there: Should read: "...incorporate a Ltd in the UK and operate it in Austria (similarly to how, in the U.S. you might incorporate in Delaware and do business in California) ..."
Don’t you need to operate branches in each country if you do that?
You do, you don't need a local legal entity but having one makes a lot of things easier. E.g. employment and profit allocation. The latter has serious tax implications.
Sure, but now you spend a nontrivial amount of time and attention on logistics. Costs can be a couple k Euro per branch per year, depending on what deals you can strike with accountants. You also need to make sure you always respond to mail from authorities in both countries, in time.
1 reply →