comparison of jurisdictions to establish a company germany, spain, portugal, estonia

Evaluating the ideal jurisdiction to establish a company?

Compare various jurisdictions to make an educated choice.

Choosing the right jurisdiction to establish a company is crucial for businesses aiming to optimize their tax benefits and operational efficiencies. This article provides a comprehensive comparison of the corporate tax structures, benefits, and types of entities available in various countries. Dive in to understand which jurisdiction aligns best with your business goals.

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	🇵🇹 PORTUGAL	🇪🇸 SPAIN	🇪🇪 ESTONIA	🇩🇪 GERMANY	🇺🇸 DELAWARE	🇮🇪 IRELAND
Corporation Tax:	★ 25,5%-31,5% [21% + 1,5% Derrama local tax + 3%-5%-9% Derrama state tax]	★ 25% payable with advance payment system. 24% for companies with turnover >10mln euro	0% (14% or 20% only when profits are distributed)	★ 31%-37% =15,825% (15% Körperschaftsteuer + 5,5% Social tax on Körperschaftsteuer)] + [3,5% Trade Tax (Municipal tax set by the Federal Government for profits >24,500€ of partnerships and self-employed) * Municipal Multiplier %] Municipal Multiplier % *see example calculation below	From 0%	12,5%
Corporation Tax SMEs:	★ 21,5%-27,5% =[17% + 1,5% Derrama local tax + 3%-5%-9% Derrama state tax] Reduced corporate tax rates are provided for investments in the Autonomous Region of Madeira and in the Autonomous Region of the Azores	17%	0% (14% or 20% only when profits are distributed)	31%-37%	From 0%	12,5%
Capital Gains Tax	★ 0% on sales of securities and shares of entities in EU, EEA and DTT countries	★ 5% on sales of securities and shares of resident and non-resident companies	20% (in form of income tax)	5%	From 0%	33%
VAT	★ 23% (22% in the Autonomous Region of Madeira and 16% in the Autonomous Region of the Azores)	★ 21% (exept for the Canary Island where instead Canary Island General Indirect Tax (IGIC) applies; in the enclaves of Ceuta and Melilla sales tax applies)	0 – 22%	19%	none	23%
Types of entities:	★ 9 different ones Individual Entrepreneur, Individual Limited Liability Establishment (E.I.R.L.), Sole proprietorship by shares, General Partnership, Limited partnership (Em Comandita) Private Limited Company (LDA), Cooperative, Association; Not firmatary of Aja Convention on Trusts.	★ 9 different ones Self-employed (Autónomo); Limited Liability Company (Sociedad Limitada SL); Public Company (Sociedad Anónima SA); Partnership (Societad colectiva); Cooperative (Sociedad Cooperativa); Limited Partnership (Sociedad Comanditaria); Non-profit Foundations; Public Utility Associations. Trust despite Spain is a non-firmatary of Aja Convention on Trusts	★ 7 different ones Private limited company (OÜ), Public limited company (AS), Limited partnership (UÜ), General partnership (TÜ), Commercial association, Nonprofit organization (MTÜ), Sole proprietorship (FIE)	★ 9 different ones Private Limited Company (GMBH), Public Limited Company (AG), Entrepreneurial Company at Limited Liability (UG), Sole Proprietors, General Partnership (OHG), Limited Partnership (KG), Charitable LLC (GGMBH), Association (EV), Foundation (Stiftung). Trusts are not recognised in Germany as non-firmatary of Aja Convention on Trusts.	★ 8 different ones Limited Liability Company, Corporation, Limited Liability partnership, Limited partnership, General partnership, Delaware statutory trust, Joint venture, Sole proprietorship	★ 3 different ones Limited liability company, Unlimited company, Investment Fund
Public Registry of Ultimate Beneficiary Owners:	Partially accessible (practitioners)	Transparency Register (Registro de Titularidades Reales) available with restrictions	Yes	Yes	No	Yes
Public Registry of Companies:	Limited access	Limited access through payable service	Yes	Yes	No	Yes
Time of incorporation:	★ Normally 10 days The new “Empresa na hora” (“Company in one hour”) service set up by the Government of Portugal allows to register a business in just one day where the shareholders are EU-residents, but validation of company name can take nonetheless even 15 days. 15 days from company creation in order to enable the new company to access all public services. Shelf company possible.	★ Usually 2 weeks Time taken by the Register may vary from province to province. All company all directors and shareholders of the company need must apply first to a Spanish Tax Identification Number (NIE) which also can take some days. Shelf company possible.	Starting form 15 min.	★ From 3 to 8 weeks + 2-3 weeks for application to Tax, VAT and EORI. Time varies from municipality to municipality. Shelf company possible	Starting from 2 days.	1-3 working days

Main benefits of each jurisdiction to establish a company:

🇵🇹 PORTUGAL

100% participation exemption on dividents and the sale of securities and investments in foreign companies (holding company regime for >10% and 12months shareholding)
Special regime for foreign pensioners moving to Portugal
Access to EU directives
Branch exemption regime option

🇪🇸 SPAIN

95% participation exemption on dividents and the sale of securities and investments in Spanish and foreign companies (holding company regime for >5% and 12months shareholding)
Optional ‘imputation tax’ system for foreign tax for elimination of double taxation
Access to EU directives
Special regimes for dividend and capital gains when the dividends/capital gains exceed 70% of the company’s gross income.

🇪🇪 ESTONIA

Full participation exemption for dividend income for qualifying holdings
No withholding tax on outbound dividends paid to non-residents
No exchange control regulations
No thin capitalization rules
Access to EU directives
Large number of Double Tax Treaties

🇩🇪 GERMANY

95% participation exemption on sale of securities
Large number of Double Tax Treaties signed
Access to EU directives
Exemption with progression system for elimination of double taxation in the majority of Double Tax Treaties ratified by Germany
Flexible and stable tax and legal system

🇺🇸 DELAWARE

Delaware is not considered as offshore jurisdiction
Beneficial tax treatment for business performed outside the state
Low annual fees and simple maintenance of a company
No requirements regarding disclosure of information about the UBO

🇮🇪 IRELAND

Pro-business stable and country
Economy is the fastest growing in the Eurozone
One of the lowest Corporation Tax rates in the world -12,5%
Excellent holding company location

Example calculation for corporation Tax for Germany:

Example calculation for Corporations (Berlin)	Example calculation for Corporations (Hannover)
Trade income (profit): 100,000 Euro	Trade income (profit): 100,000 Euro
Federal corporation tax: 15,825 Euro	Federal corporation tax: 15,825 Euro
Trade Tax calculation:	Trade Tax calculation:
Trade tax amount to 3,500 Euro	Trade tax amount to 3,500 Euro
x multiplier (Berlin) 410%	x multiplier (Hannover) 600%
Trade tax 14,350 Euro	Trade tax 21,000 Euro
Total tax: 30,175 Euro	Total tax: 36,825 Euro

Municipal Multiplier % (Hebesätze):

Berlin 410%, Bremen 460%, Hamburg 470%, Leipzig 460%, Dresden 450%, Hanover 600%, München 490%, Nürnberg 467%, Stuttgart 420%, Frankfurt 400%, Bonn 490%, Köln 475%, Düsseldorf 440%, Essen 380%, Dortmund 485%, Duisburg 520%, Münster 460%, Bielefeld 480 %

In conclusion, each jurisdiction offers its unique set of advantages and challenges when it comes to establishing a company. From varying corporation tax rates to distinct benefits like participation exemptions and access to EU directives, businesses must weigh their priorities before making a decision. It’s essential to consider not just the tax rates but also the ease of incorporation, types of entities available, and disclosure rules.

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