The European PLC is based on EU rules that give companies the option of forming a European Company since 2004 – formally known by its Latin name ‘Societas Europeae’ (SE). This type of legal entity provides a lot of corporate and tax planning opportunities in the EU although its use is not very common.
Upon incorporation, the place of management of an SE shall be in the same EU country where the registered office is located. Although later on, it may move to another EU country. The SE can be advantageous for such multinational companies which carry out activities in several EU countries. The establishment of an SE can be a suitable solution because all EU countries shall admit this type of company.
After being established, an SE can move to another EU country without necessarily winding up or re-forming. In addition to that, the same corporate regulations will be applicable. By exploiting this opportunity, the owners can cut the costs of a new company formation and it is not necessary to know the local corporate rules therefore creating predictability.
From a taxation point, the SE may move to a new EU country even if the taxes go higher in that jurisdiction. Further gains can be achieved through payment of dividend, royalty and interest in the direction of a holding SE. This is because the source country may levy tax on the SE even if the recipient is EU tax resident. Some double tax treaties concluded between two EU countries state that taxes are not permitted between the parties. It could be a tax planning solution having the registered office in a country where such tax treaties and no tax is applicable. It must be highlighted that the registered office is not enough criterion because the SE is tax resident in that EU country where the place of management is situated. If the SE is not a holding but a subsidiary, the same solution can take place but the approach is reverse.
In conclusion, it can be laid down that an SE may be an option in the case of change of business situation or tax climate as it is easy to transfer the company to a new EU country where the economic climate is more advantageous.
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