Global expansion: a practical guide to growth

This guide explores the key considerations for global expansion, helping companies navigate everything from setting up operations to managing financial and legal risks. We'll also provide insights into country-specific regulations and best practices to ensure a smooth and compliant market entry.

Navigating legal and regulatory compliance

One of the first steps in global expansion is to ensure that your business is legally compliant in the target country. Each country has unique corporate structures, tax obligations and industry regulations that businesses must comply with.

Choosing the right business structure

Companies need to decide whether to set up a subsidiary, branch or local partnership. The best choice depends on factors such as taxation, ownership control and operational flexibility.

• In Finland, a limited company (Osakeyhtiö or Oy) is a common structure for foreign companies. While there are no residency requirements for shareholders, at least one director must be EEA resident or a permit must be obtained.
• In Germany, a GmbH (Gesellschaft mit beschränkter Haftung) requires a minimum capital investment of €25,000 and comply with strict corporate governance rules.

Understanding taxation and compliance

Corporate tax rates, VAT/GST registration, and double taxation agreements (DTAs) can affect profitability and legal obligations.

• Denmark has a corporate tax rate of 22%, but companies can take advantage of R&D tax incentives.
• The Netherlands offers a 30% tax ruling for highly skilled expatriates, reducing their taxable income.

What companies need to know about employment law

Hiring internationally means understanding employment contracts, benefits, and worker protections in the new market. It is also worth considering when it is better to recruit internationally and when it is better to transfer employees from one country to another through employee mobility.

Employment contracts and worker rights

Different countries have different requirements for employment contracts, probationary periods and termination rules.

• In Germany, employment contracts must comply with the Working Conditions Act (Arbeitnehmerentsendegesetz) and specify salary, working hours and duties.
• In Finland, written employment contracts are not required by law, but are strongly recommended to avoid disputes.

Mandatory benefits and social security contributions

Employers must pay for mandatory benefits such as pension schemes, parental leave and health care contributions.

• Sweden requires 25 days of paid annual leave for employees.
• Ireland requires employers to contribute to Pay-Related Social Insurance (PRSI), which funds state benefits.

Managing the costs of global expansion

Expanding globally brings financial risks that need to be managed effectively, from corporation tax obligations to VAT registration and international banking.

Understanding corporate tax rates and business taxation

• Ireland offers a corporate tax rate of 12.5%, making it attractive to multinationals.
• The corporate tax rate in Switzerland varies from 14% to 25% depending on the canton.

VAT, GST, and sales tax obligations

Many countries require businesses to register for VAT/GST and comply with sales tax laws.

• Germany's standard VAT rate is 19%, but some goods/services qualify for a reduced rate of 7%.
• In the UK, businesses must register for VAT if their taxable turnover exceeds £90,000 per year.

The key to seamless expansion: global partnerships

Successfully expanding into a new market isn't just about financial and legal preparation - it's also about building strong local partnerships to ensure smooth operations.

Leveraging local expertise

• Greenstep's partnership with MSI Global Alliance provides companies with local expertise in legal, tax and operational compliance.
• Local partners help companies navigate country-specific supply chain logistics, payroll processing, and regulatory hurdles.

Global expansion is a high-risk but rewarding opportunity when approached strategically. Companies must balance regulatory compliance, financial management and operational execution to ensure sustainable growth in a new market.

Greenstep helps companies navigate the complexities of global expansion, from tax and legal compliance to HR and financial strategy. Through our MSI Global Alliance network, we provide trusted expertise to support your expansion journey.