Business relocation: what it is and why you need it?

Business relocation is most often not a simple process that requires serious decisions to be made, consideration and analysis of all the pros and cons that may be potentially important in the future activities of the company. The reason why most companies decide to move their business to a more comfortable jurisdiction for their activities is the conditions of economic and political instability.

Let’s figure out what business relocation is, why it is needed and why it is so relevant, especially in the last year.

Relocation (in English relocation – movement) is the movement of a business from one jurisdiction to another, more favorable for doing business. Particular attention should be paid to business relocation in its classical sense, namely, moving a business to another jurisdiction.

Reasons for business relocation

The reasons for relocating a business to a new jurisdiction are most often:

• the need to scale the business, namely to expand, by registering a new company or opening a branch of an existing company abroad,
• the need to enter new international markets for doing business,
• the need to find a jurisdiction with a more stable economy and political situation,
• the need to find a jurisdiction with optimal taxation to reduce the company’s costs,
• the need to find and hire cheaper labor and more.

Stages of business relocation

The relocation process itself can be relatively divided into several stages.

1. Choice of jurisdiction for business relocation

In this case, it is important to have clear criteria for choosing the country of relocation and be aware of the reasons for relocation.

An important role is also played by the stage of development of your business.

For start-ups, it is preferable to receive investments, attract investors, receive state support and grants, therefore, the UK is considered suitable jurisdictions for start-ups (since there is a developed system of venture funds for investment), the USA, Estonia, Latvia, Lithuania.

For a larger business, it is important, first of all, to assess the tax and economic stability of the jurisdiction as a whole.

2. Assessment of the tax burden for businesses in another jurisdiction and the possibility of applying tax incentives

This item is of particular importance for large companies for which the amount of taxes plays an important role, since a significant increase in the tax burden in a new jurisdiction can provoke a decrease in the company’s profits or even ruin.

3. Legal business structuring

Changing the structure of an organization or company, taking into account the requirements of the new jurisdiction of relocation and the goals of the company.

4. Registration of a new company abroad (in most cases) or opening of branches of existing companies

This stage includes the preparation and execution of all necessary documents for registering a company abroad, obtaining a registration address for the company, searching for the company’s office, accompanying the procedure for moving the company’s specialists to another jurisdiction, for which it is very important to use the services of lawyers who can competently advise and accompany the stages relocation of personnel or assist in the relocation of the workforce to the jurisdiction of the company’s relocation.

5. Opening a bank account for the company

After registering a company in the chosen jurisdiction, our lawyers will help you with the selection of banks to open a bank account for the company based on the goals of the company, or its alternative – payment systems, in which opening an account is more simplified.

A successful relocation procedure allows the company to solve problems related to the establishment of business processes (including financial, tax, legal aspects) and successfully adapt to the new jurisdiction.

Relevance for ukrainian business

As for Ukrainian business in particular, in the last year the issue of business relocation abroad has become of interest to Ukrainians more and more often. Due to the unstable political and economic situation, military aggression, many business owners have to decide to move their business abroad – temporarily or permanently, partially or completely, registering a new company, creating a representative office or branch.

The areas of Ukrainian business that are most actively moving abroad are consulting, marketing companies, companies in the IT field, and other companies that work in the field of professional services.

Among Ukrainian companies, such jurisdictions as Poland, Cyprus, Montenegro, Slovakia, Bulgaria, Estonia, Belgium, Great Britain, Germany, that is, in particular, registration company in EU countries, have recently been preferred for relocation. An important aspect when choosing a relocation jurisdiction is the cost of the relocation procedure, in particular, paperwork for a company in a new jurisdiction and for specialists who, consequently, move from the declared list to Germany and the UK, move less frequently than to other more budgetary EU countries.

When deciding to relocate a business and the relocation process itself, one should pay attention to the main advantages that the jurisdiction provides, taking into account also the financial affordability of the jurisdiction, economic and tax stability, the availability of the banking system, the benefits for the company’s field of activity, the development of logistics and compatibility with other regions. in the trade and economic aspect, the availability of a workforce whose skill level will satisfy the needs of your company.

The process of business relocation to other jurisdictions has long been an open issue for Ukrainian businesses, which can help solve a number of problems that business owners cannot cope with in the jurisdiction of original registration.

To carry out the relocation process in the most profitable and comfortable way for your business, you need to take into account all the important factors for you, and seek help from specialists who will make the process as quick and easy as possible.