smallbusiness.co.uk: Helping your business think big

Before setting up business in any country one of the first things to investigate is the tax and VAT situation as you do not want to find yourself paying over large chunks of your profits in exorbitant taxes.

Over recent years, rates of tax in the EU and indeed throughout the rest of the world, have become more aligned thanks to the upsurge in global travel that has created ‘porous borders, meaning countries have to appear more competitive with tax rates to encourage business start-ups’, believes Ian Young from the Institute of Chartered Accountants in England and Wales Tax Faculty.

However, he goes on to warn that there is a tendency around the world to balance low rates of income and corporation tax with higher rates on taxes such as VAT so taxpayers end up paying more throughout the year every time they make a transaction rather than in a lump sum once a year. Therefore, it is wise to look beyond the headline tax figures when researching.

‘The best piece of advice I can offer is to find an accountant in the country, recommended by a trusted source, and ask them to explain the intricacies of the tax system for a new business,’ says Young. ‘Once you start delving into a tax system it can get very complicated.’