Reasons Startups Need International Tax Advisers in the EU

Introduction

Expanding into the European Union (EU) Startups often find that each country has its own rules, and EU-wide regulations add another layer of complexity.  In fact, 70% of startups that expand internationally face at least one unexpected tax hit within their first three years. These surprises aren’t due to wrongdoing, but rather the speed of expansion and the complexity of multi-jurisdictional operations.

A recent EU survey also confirms that tax and regulatory issues are top barriers to growing across borders  nearly 30% of businesses cite taxation and VAT rules as major hurdles to expansion. This landscape makes it clear that professional guidance is not just helpful but often crucial. In the present article we will discuss the Reasons Startups Need International Tax Advisers in the EU.

In brief the principal advantages of engaging international tax advisers include:

1. Ensuring full compliance with national and EU tax rules, avoiding audits, penalties, and operational disruption.

2. Identifying and mitigating risks arising from frameworks such as the Anti-Tax Avoidance Directive.

3. Securing tax efficiency through proper use of incentives, deductions, and favourable regimes.

4. Designing long-term cross-border structures that allocate profits fairly and defensibly.•

5. Balancing global opportunities such as extensive treaty networks with strict adherence to local regulations.

Staying fully compliant with strict regulations in each jurisdiction.

Tax laws in the Benelux region (Belgium, the Netherlands, and Luxembourg), as in all EU countries, can be intricate and ever-changing. Compliance missteps can lead to audits, fines, or costly legal disputes. For example, a startup might unknowingly create a taxable presence (permanent establishment) in another country by hiring remote staff or warehousing products there, triggering corporate tax and filing duties abroad. International tax advisers help businesses establish robust compliance processes, ensuring all filings, registrations, and documentation are handled properly in each country. This not only avoids penalties but also prevents disruptions  allowing startups to focus on growth rather than untangling regulatory problems.

Identifying potential risks:

Startups venturing into the EU must also navigate a landscape of increasing regulatory scrutiny, particularly under frameworks such as the EU’s Anti-Tax Avoidance Directive (ATAD). This directive imposes strict rules to prevent tax base erosion and profit shifting, including interest deduction limitations, controlled foreign company (CFC) rules, and exit taxation. Even small missteps in applying these provisions can lead to significant tax liabilities or disqualifications from favorable regimes. An international tax adviser helps startups interpret and implement ATAD provisions correctly from the outset, ensuring that financing structures, intra-group transactions, and business presence in other jurisdictions comply with EU standards. This foresight reduces the risk of audits or disputes and ensures that the startup remains in good standing across all tax jurisdictions in which it operates.

Tax Efficiency

Beyond avoiding problems, international tax advisers add value by minimizing tax burdens through legitimate planning. Tax efficiency is vital for both startups and wealthy individuals. The right structures and elections can save substantial money, which can be reinvested into the business or portfolio.

In practice, EU tax codes offer many opportunities for those who know how to use them. For example, Belgium’s tax system provides a suite of incentives and deductions for businesses and individuals  from the Innovation Income Deduction (which can drop the effective tax rate on IP income to as low as 3.75%) to personal reliefs like pension savings deductions. However, each incentive comes with detailed conditions and application processes, often at both federal and regional levels. An international tax adviser will identify which incentives or rulings apply to a client’s situation (such as R&D tax credits for a tech startup or expatriate tax breaks for an executive) and ensure they are claimed properly. This expertise can mean the difference between paying the headline tax rate and benefiting from significantly reduced rates that governments intentionally make available to spur investment.

Long Term Strategic Planning

Perhaps the greatest value international tax advisers provide is strategic foresight. They help clients plan cross-border operations and transactions with a long-term view, anticipating challenges before they arise. Without such guidance, even well-intentioned entrepreneurs can run into costly roadblocks.  For startups, strategic planning by an adviser might include deciding which EU country to establish a hub in and how to allocate functions across borders. Each choice has tax implications. For instance, hiring a sales team in Belgium or a development team in the Netherlands could inadvertently shift where profits are taxed if not planned correctly. Tax professionals help model these outcomes and set up transfer pricing policies so that profits are allocated fairly and efficiently among countries.

Play locally, think globally

The Netherlands is widely recognized for its extensive network of tax treaties, which strengthens its role as a strategic platform for international business. However, relying solely on treaty benefits is insufficient. Foreign investors and expanding companies must also adhere strictly to the domestic tax framework, which contains detailed rules governing controlled foreign companies, interest deductibility, and other anti-avoidance provisions. Although the Dutch system offers advantages through its territorial approach and exemptions for foreign dividends and capital gains, these benefits operate within a regulatory environment that requires careful local compliance. At the same time, while corporate taxation remains moderate, the highest personal income tax rate approaches fifty percent, further underscoring the need for thorough attention to local obligations. International tax advisors play a crucial role in navigating these complexities. They assist in aligning cross-border structures with both treaty opportunities and domestic requirements, ensuring proper implementation, risk mitigation, and long-term tax efficiency.

Conclusion

The expansion of startups into the European Union requires navigating multiple layers of national and supranational regulation. The complexity of this environment makes professional guidance indispensable. International tax advisers provide the structure, foresight, and precision necessary to ensure that businesses grow sustainably while remaining compliant across all jurisdictions. Their support allows startups to avoid unnecessary risks, benefit from available incentives, and build long-term strategies that align with both operational goals and tax efficiency.

Want to know more?

MCORE LAW can support startups by offering tailored international tax guidance that adapts to the realities of rapid expansion. Its team combines technical expertise with practical experience across EU jurisdictions, ensuring that businesses remain compliant while pursuing growth. MCORE assists in identifying tax exposures early, structuring operations efficiently, and securing access to the incentives and regimes available within the EU. By integrating legal, tax, and strategic considerations, MCORE provides startups with a reliable framework for cross-border operations, allowing founders to focus on scaling their business while maintaining full confidence in their regulatory positioning.