Regulations for Startups in the EU

startup idea

At the beginning of a startup, founders tend to concentrate on developing the business, finding the right team and formulating a business plan. As such, they often end up overlooking the legal aspects of business formation, and this can land them in trouble down the line. As much as the operations of a business are crucial to profitability, there is a need for founders to look into what laws apply to them and how best to go about it.

The EU may be a complex system but taking a closer look at it reveals that it is indeed a gift to entrepreneurs concerning simplification of regulations. As such, all entrepreneurs require doing is to read up on the laws and follow through with the process.

How should you go about it?

The beginning

Legal aspects come into the picture from the very beginning, and as such, we will start here. It all begins with an idea. You look at the market, find that something is missing and you decide that you have what it takes to fill that gap. You have everything planned out from your product to the clientele to the kind of rewards you wish to get. What next?

The location

an intellectual property tree

The EU comprises of many countries, and they all operate differently regarding their taxation systems and how the governments run. However, thanks to the EU, you do not have to start your business in your country of birth as there is free movement of people and goods within the union. As such, if your research points to Spain as the country which would best serve the interests of your business yet you reside in Germany, you can set up your enterprise in Spain. All you need to do is look into the regulations of your favored nation and look at ways in which your national laws coordinate with them. Another thing you need to note is that you will be subject to a tax rate of 0% when interacting with a client abroad. As such, you are free to cross the borders.

There are tons of innovative ventures in the EU to help people set up their businesses with minimal hassle. Take an example of the French Tech Ticket. This program works at encouraging international companies to set up their operations in France by providing them with a 12 months incubation program.

It is imperative that you look into the political and economic climate of your country of choice before moving in. These factors will affect how fast you can bring investors on board if any.

The type of business

Legal liabilities vary depending on the kind of business you wish to put up. Where a sole proprietor will find the legal hurdles simple, it will not be the same for a limited liability company which requires lots of documentation before formation. As such, look into the advantages and disadvantages of your chosen venture, taking into account the future requirements of your business, taxation, legal liability and flexibility. Issues such as administration also come in at this point.

Before jumping into recruitment, you should also look into your intellectual property rights and what your options are regarding protecting them from infringement. This move will also protect you from having your competitors create similar products.

It is also vital that you note that the laws applicable to digital services differ from one country to the other. Suppose you are starting a betting company and you wish to offer these services to other nations, you have to look into the laws in your country as well as those in other countries to prevent legal issues.

Raising money

startup funding

This process is subject to some regulations, and it is essential that you follow the law all the way through. The requirements to which you are subject will depend on the funding mechanism you use.


  • Sourcing for talent

    When looking for people to help bring your dream to life, it is crucial that you select the best candidates for the job. Thankfully, the EU enables you to have a vast pool from which you can recruit employees because EU workers don’t require visas. As such, you can look for talent from the neighboring countries as you no longer have to limit yourself to the workforce within your nation. However, if you choose to hire someone from outside the EU, it is up to you to ensure that they have the necessary papers such as a work permit, visa and insurance documents.

  • Employment contract

    Once you find the right people for your job, you need to draw up agreements on the nature of their work and payment terms. You should also include insurance, intellectual property and working hours. IP laws vary from one country to the other, and you should look into what rules apply to your situation. Such contracts enable you to stay out of trouble regarding the labor laws in your country of operation.

With the applicable laws on your side, you can then direct your focus to the operations of your business. Good luck!