‘Doing business abroad can seem rather daunting, but with the right support the opportunities are there for the taking.’ Marijn Verhagen, Partner Tax Advisory at Baker Tilly, regularly provides advice on international growth to his clients, who range from smaller entrepreneurs and larger family businesses to multinationals. ‘Whether you’re taking your first steps in another country, expanding your existing foreign operations or deciding how best to set up a large-scale international structure, tax implications play an important role. As an entrepreneur, you need to have a clear picture of these matters, so that you can make the right choices.’
Do things often go wrong then when businesses expand abroad? ‘Many of our clients have been with Baker Tilly for years. We know how they operate and have built up close ties with them. If they have international plans, it’s second nature for them to call us in. Together we discuss how to structure that growth.’
Yet sometimes an entrepreneur simply doesn’t realise that this expansion has tax implications. ‘I regularly talk to new clients who had focused fully on doing business, without considering the tax consequences and obligations. These aspects can sometimes be confusing because so much depends on specific facts and circumstances.’
Marijn explains using an example: a Dutch company is to start selling products in Germany. ‘At first sight you might think: a Dutch company, so Dutch taxation. Business as usual. Yet the German tax authorities may take a different view. Especially if there are business premises in Germany, for example, or personnel working in Germany. There may then be what’s known as a “permanent establishment”.’ If so, Germany will want to levy taxes on the portion of the profits attributable to that permanent establishment. ‘You need to have these kinds of consequences clear in advance.’
The right choices
Establishing the business’ tax position is crucial. The first step is often an in-depth discussion. What plans does the business have? What are the business’ ambitions and how can these be achieved? ‘By mapping the possibilities and obligations beforehand, you can make the right choices and avoid unpleasant surprises,’ Marijn continues. ‘We help businesses put these growth ambitions into practice. What about financing, for example, and the distribution model? Is a foreign legal form desired or perhaps even required? And what is the business’ long-term vision? We discuss the choices, the opportunities and the points of attention. And not just from a personal or corporate income tax perspective. We bring in our Employment Advisory specialists for HR and wage tax issues. Or our VAT & Customs Advisory experts to identify the implications for VAT and customs. We have all the expertise in-house. That’s convenient for our clients: we offer a comprehensive range of services.’
Follow-up and support
Of course, there’s more to it than just discussing plans. Marijn and his colleagues also provide guidance during the roll-out of the growth plans and help businesses to stay in control at all times. They do so by offering pro-active advice on new legislation but also assistance and support for registration processes and tax returns. ‘Businesses want to know where they stand. Right now, not after the event. We make sure they are well aware of their tax position and obligations at each stage. The tax return is really the final step: as a business you don’t want any surprises at that point.’
International network
Doing business abroad requires an advisor with international reach. ‘As part of the Baker Tilly International network, we have short lines of communication with trusted advisors around the globe,’ Marijn says. ‘If a client requires local advice abroad, we make sure they receive it quickly. But we can also rely on our international network for practical support on matters such as payrolling, registration processes and returns or declarations.’
Changing market and legislation
It is crucial to adapt as the company grows and the market, laws and legislation evolve. ‘Things certainly haven’t become any easier,’ says Marijn. ‘International law has changed significantly over the past few years. Businesses face all kinds of new legislation and reporting requirements. For instance, there is the Minimum Tax Rate Act 2024 which comes into effect next year. And transfer pricing plays an increasingly important role in doing business abroad as well.’ An advisor is essential for making sure the company can keep up with all these trends and developments. Marijn: ‘Sound advice up front, our proactive support and the power of our international network ensure that you know where the opportunities lie and what points of attention you need to bear in mind.’
Would you like to find out more about international growth? Our experts outline a number of important aspects you need to consider. Read more here or contact one of our advisors directly.
The legislation and regulations in this area may be subject to change. We recommend that you discuss the potential impact of this with your Baker Tilly advisor.
