In recent years, the finance industry has seen significant disruption. A good posterchild of this disruption is Robinhood, the commission-free brokerage company that was started in 2012. The company forced other brokerage companies like Schwab and TD Ameritrade to merge. It also forced these brokers to bring their commissions to zero. Another trend that is emerging is when American fintech companies are moving to Europe. In this article, we will look at the best strategy for moving your fintech company to Europe.
Why Move Your Fintech Startup to Europe?
There are several reasons why many fintech companies are expanding to Europe. First, Europe is the second-biggest economy in the world after the United States. The European Union itself has more than 500 million people. These people have a bigger purchasing power than that of other countries. Therefore, it makes sense to move and address the market. Second, Europe has policies that are relatively similar to those of the United States. This is made possible by the fact that the EU and the US are members of several bilateral and multilateral organizations like the World Bank, IMF, and OECD.
Market Survey
The first thing you need to do when you want to expand your company in Europe is to conduct a survey. The goal of this survey is to find whether there’s an appetite for the product you are offering. Another goal is to find whether there are other similar companies. If they are, the goal is to find whether there is anything that you can do better. There are several ways of conducting surveys. For example, you can request the services of market research companies to do the surveys for you. However, this is an expensive process. Alternatively, you can conduct your own surveys using the internet.
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Market survey is not only about the market potential of your business. It is also about the exact country to locate the company. On this, there are several things you need to look at. First, you need to look at the exact countries you are trying to reach. Second, you need to look at the taxes that you will pay. The EU member countries are usually at liberty of setting their own tax systems. This has seen some countries like France have a corporate tax rate of more than 30%. Other countries like Cyprus have a corporate tax rate of about 11%. Therefore, select a country that will charge you the lowest tax rate. Third, look at the cost of doing business in the European country you want to establish in. Countries like Switzerland and France are known for their high cost of doing business. Others like Cyprus and Lithuania are known for the affordable rates of doing business.
Company Registration in Europe
If you believe that your fintech solves real problems and that it has the potential to grow in Europe, the next step is to register the company. This can bee a long and tedious process. However, the reality is that having a company that specializes in this helping you is very important. There are many corporate formations companies that you can use.
Getting the best formation company in Europe is a good thing for several reasons.
First, these companies have been doing this for many years and that they know the process well.
Second, these companies will be there to provide you, counsel, on the best countries to incorporate. For example, they will give you a breakdown of the regulatory issues in the EU and the countries that will save you money by having lower corporate taxes.
Third, the companies will have lawyers, who you will use to register your patents, register the business, and represent you in case of any disputes.
In other words, there are many things that good company formation organizations can help you when you are registering your company in Europe. Other things are business accounts, dealing with immigration, virtual offices, outsourced CFOs, and auditing.
Regulations
The European Union is known for its strict regulations. In the past few years, the region has implemented a number of regulations that target the financial services industry. One of such regulations is the MIFID II (Markets in Financial Instruments Directive), which targeted virtually all companies in the financial sector. Another recent regulation is the GDPRS (General Data Protection Regulations). This is a regulation that targets any company with a website.
As a fintech company, you need to ensure that you have a good understanding of regulations in the region. You also need to stay informed about other regulations that may come up. Therefore, working with lawyers like IFSA Experts can help you avoid the risks associated with deviating from regulations.
Hiring of Employees
A fintech company requires to have employees. If you are already operating in the United States or any other country, you need to tweak your products to suit the European Union. Part of the most unique things about the EU is that of many languages. People in France use French while those in Germany and Spain use German and Spanish respectively. Therefore, you need to ensure that you have an in-house team that understands the local culture and knowledge of these countries. Also, you need a good attorney or law firm to come up with the employee legal documents.
Marketing the Fintech Company
As with most countries, it is important that you market the fintech company well. When launching the company in Europe, you need to ensure that you market it well. There are several ways you can do this. The most basic of all is to send press releases to the main news publications in the region. Another simple way is to embrace social media marketing and search engine optimization. By combining press releases, social media, search engines, and other types of marketing, you will be in a good position to reach these people.
Final Thoughts
Europe is a good place to launch your fintech company. However, it is also a difficult place because of the red tape that is involved. Using a good consultant can help you ease the pain of registering your company in Europe.