Guide

Choosing the right structure for doing business in Europe

Expanding into the European Union with an existing company

If you already have an existing company and want to expand into the European Union (EU) you do not have to set up a new business. There are a number of ways you can expand your current company into the EU.

Subsidiary offices

You could expand your existing business into the EU by setting up a subsidiary office. Your main options are:

  • A local office in the member state - run by one or more of your employees who would be located in that country.
  • A registered subsidiary company - this would be a new business, subject to that country's company, employment and tax rules, and involve hiring some local staff.
  • A joint venture - you could work with a business based in your target country to expand your own business. The venture would be managed by the company in your target country but you would still have input into the business decisions, and the profits made.

Mergers

As with other corporate structures, mergers and takeovers are controlled by the individual country's statutes, but various EU directives apply. These set out:

  • rules for company mergers within a single member state
  • rules for 'divisions' of companies within a single member state - where company assets are transferred from a company being wound up (without going into liquidation) or where two companies transfer all of their assets into a third, jointly-owned company, and wind up the two original companies
  • minimum standards for the conduct of takeover bids
  • an easier method for cross-border mergers of companies within the EU
  • a common system of taxation for cross-border restructurings

Mergers are strongly regulated by the EU to prevent monopolies.

If merging companies' annual turnover exceeds a certain amount, the European Commission must be told. The Commission then reviews how the merger may affect competition. Mergers with smaller annual turnovers are dealt with by the national competition authorities.

The merger rules apply to all companies doing business in the EU, whether they are based inside or outside the EU.

Acquisitions

You can expand your business in the EU by acquiring another company. You can do this by:

  • making a takeover bid for an EU company
  • acquiring the majority or a controlling percentage of shares of a company
  • buying the shares of a company after an agreement with the owners
  • merging with another company

The EU has set out rules to allow internal and cross-border mergers of companies.

Buying an enterprise, with an already established structure, can prove advantageous for expanding a business.

Acquisitions and mergers can also be achieved using new types of European business structures. SeeĀ common business structures in the European Union.

Franchises

You should also consider expanding into the EU with a franchise. If you want to run a business from the UK, you could invest in a franchise or set up your own business as a franchise.

Before you decide to set up a franchise, think about whether you have enough knowledge and understanding of the local business environment and customers to make the franchise work.

Read more about how to turn your business into a franchise.