## Contents

- 10. Quick Decision Matrix
- "Where should I incorporate in the EU?" — read this first
- Total Employer Cost Example (€100K gross salary)

## 10. Quick Decision Matrix

### "Where should I incorporate in the EU?" — read this first

> **Do NOT pick a jurisdiction off a headline-rate table.** Choosing an entity location is high-stakes structuring. A low statutory rate is routinely neutralized — or made worse — by **permanent establishment (PE)**, **place-of-effective-management**, **CFC**, **Pillar Two (15% floor for groups ≥ €750M)**, **substance/anti-abuse (GAAR, EU Code of Conduct)**, **transfer pricing**, **exit tax**, **investor/treaty constraints**, **VAT registration obligations where customers are**, and **where you actually employ people**. Tax authorities tax where value is created and managed, not where you registered. **A wrong structure can create double taxation, denied treaty benefits, back-tax, penalties and personal-liability exposure. This is a workflow to scope a conversation with a qualified cross-border tax adviser — not a recommendation.**

**Decision workflow — answer these before any jurisdiction is even shortlisted:**
1. **Where is management/board actually located?** (Drives place-of-effective-management → corporate tax residence, regardless of registration.)
2. **Where are the employees / the real activity?** (Creates PE and payroll/social-security obligations there; "letterbox" companies are attacked.)
3. **Where are the customers?** (Drives VAT registration/OSS and, for digital, destination VAT — see §2.)
4. **Who owns the IP, and where was the R&D done?** (Nexus rules cap IP-box benefits to self-performed R&D; misalignment triggers TP adjustments.)
5. **Who are the investors / will you raise VC or list?** (VCs often require Delaware/known holdco forms; treaty access depends on shareholder residence; some reliefs require individual ownership.)
6. **Can you build real substance** (local directors, staff, premises, genuine costs) proportionate to the benefit claimed? If not, the benefit is fragile under GAAR.
7. **Is the group ≥ €750M revenue** (Pillar Two) or are there **CFC** low-tax subsidiaries? If yes, low-rate jurisdictions deliver little net benefit.
8. **PE / exit-tax exposure** from moving an existing business or assets cross-border?
9. **Have you priced full cost of ownership** — payroll burden (§3), filing/audit/e-invoicing compliance (§4, §6, §9), and professional fees — not just the CIT rate?
10. **Get local counsel + a cross-border tax adviser** to validate before incorporating, and re-confirm after any annual finance-law change.

**Factor → jurisdictions commonly *evaluated* (then validated against the workflow, never assumed):**

| If the dominant factor is… | Jurisdictions often evaluated | The catch to test |
|----------------------------|-------------------------------|-------------------|
| Lowest headline CIT | Hungary (9%), Bulgaria (10%), Ireland (12.5%) | Local business taxes (HU HIPA), limited IP/holding fit, Pillar Two for large groups |
| IP-heavy business | Ireland (KDB 10%), Netherlands (Innovation Box 9%), Cyprus/Belgium IP boxes | Nexus rule caps benefit to self-performed R&D; substance + DEMPE analysis required |
| Holding company | Netherlands, Luxembourg, Ireland | Participation-exemption conditions; substance; anti-conduit (PPT/GAAR); directive limits |
| Startup with R&D | France (CIR/CII), Ireland (R&D credit/KEEP), Germany (Forschungszulage), Poland (R&D relief/IP Box) | Cash vs. credit timing; staff-relief vs. CIT-relief; state-aid caps; eligibility windows |
| E-commerce / digital | Ireland, Estonia (0% retained), Cyprus | Destination VAT/OSS regardless of seat; PE where staff sit |
| Lowest payroll cost | Eastern EU (Bulgaria, Romania, Hungary) | Talent availability; employee-side burden; still creates PE where staff work |
| Substance + prestige / English-language | Netherlands, Ireland, Luxembourg | Higher cost base; still must meet substance to keep benefits |

### Total Employer Cost Example (€100K gross salary)

| Country | Employer Social Contributions | Total Employer Cost | Employee Net (approx.) |
|---------|------------------------------|--------------------|-----------------------|
| France | ~€43,000 | ~€143,000 | ~€62,000 |
| Belgium | ~€25,000 | ~€125,000 | ~€58,000 |
| Germany | ~€21,000 | ~€121,000 | ~€60,000 |
| Spain | ~€30,000 | ~€130,000 | ~€65,000 |
| Italy | ~€30,000 | ~€130,000 | ~€60,000 |
| Netherlands | ~€18,000 | ~€118,000 | ~€63,000 |
| Ireland | ~€11,000 | ~€111,000 | ~€67,000 |
| Luxembourg | ~€14,000 | ~€114,000 | ~€72,000 |
| Estonia | ~€34,000 | ~€134,000 | ~€75,000 |
| Denmark | ~€2,000 | ~€102,000 | ~€55,000 (high income tax) |

*Rough order-of-magnitude only, illustrating relative burden — NOT a quote.* A €100K salary sits **above the contribution ceiling in several countries** (Germany, France-capped lines, Luxembourg, Netherlands, Spain), so employer cost does **not** scale linearly: low-salary roles look very different. Recompute with the **current-year ceilings in §3**, the applicable collective agreement, accident-insurance risk class, and family/marital status. Employee-net also depends on local income-tax bands and personal circumstances.

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