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May 18, 2022 · 5 min read

How to choose a jurisdiction to incorporate your company

Entrepreneurs carefully choose jurisdictions for company registration, focusing on tax benefits and smooth processes. We've compared top options in 2022 for SMEs.

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Now entrepreneurs select jurisdictions to register a company as thoughtful as they select a business activity or pick staff. In fact, you look for favorable tax residence and environment to grow your business. In addition, you expect to get a smooth company incorporation process as you enter a foreign country.

You also expect to manage a company online. The offer of jurisdictions is large enough. Countries compete for lucrative businesses. Therefore, we have compared the most splashy options in 2022 and prepared a note for SME business owners.

Reputation of the jurisdiction

The easiest way to review a reputation is to take a look at a nation’s place in the ranking. Ease of Doing Business and Potential Available B2B Market Size by World Bank appear to be good points to start.

The first index reflects dozens of indicators from costs to obtain a permanent electricity connection to a number of documents to export. Given all together, it usually exceeds the needs of a single entrepreneur who’d like to register a company there.

In particular, as you do business online, you are probably not interested in constructing warehouses. Nevertheless, The Doing Business Index covers starting a business procedure in detail as time, costs, min share capital, etc.

The second index worth attention is the B2B Market which is measured by the number of new businesses registered (2006-2022). That we see in a sample.
Sources: Global Ranking by World Bank 2019, World Bank 2020.
Singapore has been consistently placed at top-2 best locations for doing business. It has a large B2B market for city-state with 12 unicorns. Germany has a large, wealthy business market, although this recognized good jurisdiction might be a bit more rigid toward abrupt company formation.

Close to the top countries that attract foreign entrepreneurs in both rankings is Estonia. With its digital infrastructure, this small country has already given birth to 10 unicorns - a European leader in the number of unicorns per capita.

Entry investments

Forming a corporate entity in another country requires money and time. There are three cost items: share capital, incorporation providers’ fee, and days until the opening. Incorporation providers’ fee consists of a government fee and a fee of a medium service provider.
Sources: Enty’s calculations according to data on 2022, World Bank 2019.
Minimum share capital is usually designed not to be burdensome for newcoming entrepreneurs. While UAE in general has higher ‘entry ticket’ prices, Germany provides you an opportunity to divide share capital. In Estonia, you can postpone a contribution to share capital for up to 10 years.

Ireland and Estonia seem to have the most affordable prices for services of company formation. Besides, there is a broad network of service providers with an open and clear offer in Estonia.

GR and taxes

Countries that attract entrepreneurs from the globe to do business usually maintain an evolved digital infrastructure. According to UN Survey, e-gov services development is regarded as very high in Cyprus, UAE, Singapore, and Estonia; as high in Ireland; as middle in Germany.

But even in electronic format, it’s a complex thing. Reporting, accounting, and so on stay boring and consuming enough back-office routines. Therefore we went beyond in Estonia and gather all the essential services for business under one roof - Enty Control Panel.
Taxes are a base of the contractual relationship between your company and the government of the country of its residence. Therefore, it’s worth checking corporate taxation and making sure that tax rates match your expectations and the financial activities planned.

Special needs

Sometimes there are situations when one factor outweighs all the others. It may further have negative consequences, but basically, you make a decision on the basis of a single factor. For those who have such special needs, we’ve prepared the following memo.
Choosing a country to start your company is a big decision. Done properly, it will help you to avoid unnecessary complexities and grow your business easier. You might want to use the above-mentioned criteria and make sure the country is fit for your purpose.

In the meantime, Enty can incorporate a company in Estonia with ease. We will also help you manage it using a wide range of tools offered in our Control Panel, so your efforts are reduced to the minimum. Learn more about Estonia and start you way to a smarter company management with Enty.
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