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Setting up your revenue collection hub in Europe

Cost-efficient cross-border revenue collections

Despite its complexity, expansion into international markets is often a sound business growth strategy. However, businesses need to consider transaction fees and other cross-border costs that can significantly impact their yield. Bank transaction fees are just the tip of the iceberg.

International revenue collection costs could go up to 7 percent depending on the currency, payment service provider, and payment method.

Success requires proper planning and investing in the right sales process.

First European Hub
Setting up a regional entity in Europe as a revenue collecting hub
could allow:

  • Cost reduction on the so-called cross-border interchange fees
  • Savings on currency conversion
  • Increase in client conversions by providing alternative payment methods and local presence

How to get started with your revenue collection hub in Europe
  • Step 1. Obtain initial high-level tax/and legal advice on structure

    Procedure
    Dutch advisor should comment on tax/and legal requirements of intended set-up.

    Timing
    10 business days

    Executer
    Dutch (tax) advisory firm

  • Step 2. Incorporate DutchCo

    Procedure
    Engage with Dutch notary, who will draft PoA for incorporating person or body and draft the articles of the to be incorporated company.

    Timing
    5 to 10 business days

    Executer
    Dutch notary

  • Step 3. Provide local director

    Procedure
    Provide local director(s) to enable to local company to comply with local substance requirements (at least 50% of board should consist of resident directors).

    Timing
    5 to 10 business days

    Executer
    First European Gateway Services

  • Step 4. Draft and/or negotiate local merchant agreements with PSP

    Procedure
    Current merchant agreements with US PSP’s may need to be amended or appendices need to be added to ensure the local entity will be collecting local revenue at regional interchange rates.

    Timing
    10 to 30 business days

    Executer
    US payments team and First European Gateway Services can assist

  • Step 5. Open bank accounts

    Procedure
    Bank account(s) in the name of the DutchCo should be opened. Can be a bank in any jurisdiction as long as local board is managing the bank account.

    Timing
    10 to 90 business days

    Executer
    Finance or Treasury team or First European Gateway Services can assist

  • Step 6. Register DutchCo with local authorities

    Procedure
    Upon incorporation DutchCo will be registered with the local Chamber of Commerce and a tax identification number will be issued. In case applicable specific VAT and wage tax numbers can be applied for and DutchCo will be registered with the Dutch Central Bank.

    Timing
    2 to 5 business days

    Executer
    Dutch notary and/or First European Gateway Services

  • Step 7. Set up local accounting

    Procedure
    DutchCo will have to arrange for local bookkeeping and file annual financial statements

    Timing
    1 business day

    Executer
    First European Gateway Services

  • Step 8. Determining VAT position

    Procedure
    DutchCo will most likely have to register for (European) VAT reporting. If MOSS registration is necessary this can be arranged with Dutch tax authorities.

    Timing
    year-round

    Executer
    First European VAT Services and/or Dutch tax advisory firm

  • Step 9. Bookkeeping, reporting, VAT filing

    Procedure
    DutchCo will have keep books, in case desired monthly reporting can be provided. Monthly or quartly VAT returns will have to be filed and annually financial statements will have to be filed.

    Timing
    year-round

    Executer
    First European VAT Services and/or Dutch tax advisory firm

  • Step 10. Process and initiate payment of invoices/local treasury work

    Procedure
    Our accounting team can process and initiate payments of local invoices or other payments in collaboration with the client’s Finance or Treasury team.

    Timing
    year-round

    Executer
    First European Gateway Services

  • Step 11. Reviewing and signing corporate documents

    Procedure
    In case First European provides for a local director we will review all corporate documents and sign these off after approval.

    Timing
    year-round

    Executer
    First European Gateway Services

  • Step 12. Handling incoming mail

    Procedure
    In case First European will provide for a business address we will review and process all incoming mail.

    Timing
    year-round

    Executer
    First European Gateway Services

  • Step 13. Perform transfer-pricing analysis

    Procedure
    Between group companies arm’s length pricing needs to be determined and documented.

    Timing
    10 to 20 business days

    Executer
    tax advisory firm

  • Step 14. Draft inter-company agreement(s)

    Procedure
    The DutchCo may perform services (sales/BD/collecting) on behalf of the group so rights, obligations and liabilities and a remuneration will have to be agreed upon.

    Timing
    5 to 10 business days

    Executer
    tax advisory and law firm

  • Step 15. Assistance with data protection matters

    Procedure
    In case data of EU citizens will be processed and/or controlled then the GDPR is applicable. Some minimum requirements should have been met by 25 May 2018.

    Timing
    within one year aiming for full compliance and year-round maintenance.

    Executer
    First European Data Rep, in-house counsel and privacy lawyer

  • Step 16. Filing the annual corporate income tax return

    Procedure
    DutchCo will have to file an annual corporate income tax return with the Dutch tax authorites. This tax return is based on the approved financial statements.

    Timing
    annually

    Executer
    Dutch tax advisory firm

  • Step 17. Sanity & compliance check agreements with suppliers and external communications (e.g. web pages)

    Procedure
    DutchCo’s website and other external documents may need to be checked for compliance with local laws and regulations. Same for any contracts DutchCo and suppliers would enter into.

    Timing
    year-round

    Executer
    First European Gateway Services, in collaboration with Dutch law firm where appropriate

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    Bootstrapping:

    [buːtˌstræpɪŋ] noun
    the process of starting and developing a business by using a lot of effort and no investment by outside owners