Business Activities in the European Union
This article is aimed to inform executives interested in doing business in Eastern and Central Europe about crucial moments associated with European legal and tax environment. Through providing a simple description of demands on the market of European Union and member states, tax and specific legal conditions hopefully will help to create a complex picture of what it means to run a business in the climate successfully.
As the European Union accepted new countries in 2004 and 2007; we are witnessing a global corporate movement to the eastern parts of Europe. Costs-cutting while utilizing cheap labour resources may reinforce the first impression as the core reason for this phenomenon, but there are much more aspects involved turning corporations to east, such as an undeveloped market, a simpler invasion to it and very friendly tax conditions.
A result of think-tank Bruegel research shows corporate strategy changing and is presently focused on using subcontractors and/or production transformation. The European Union (understanding competition pressure in market economy as one of the essential mechanisms in order to adopt an effective working market), has accepted new countries into community, preventing investors from migrating to China. This competition policy is one of the tools that inspire attractive surroundings for investors and so it may ensure the sustainable increase and ability to compete of the economy in the long term during global economic recession.
Soon, the mortgage capacity of European Investment Bank will be doubled to simplify mortgage access for small and/or mid-size businesses, whereby demonstrating Europe’s active participation in challenging the current financial turmoil. The bulk of the analysis confirmed Europe’s simplification of money access and a flexible legal and tax environment is a prospective economic stimulus. Recent economic statistics show during these bearish times that countries with the average corporate tax of 23.6 % are suffering while countries such as the Slovak republic, Bulgaria and Cyprus represent the low end of the spectrum see rapid economic development.
In regards to legal matters, the reformation process of harmonization of the law continues in Europe. Supranational law plays a very important role as it is a theory driven process, where European law operates abeam the member states’ laws and influences their economic, political and social policy.
For the economic, social benefit of the member states the European law is superior to national laws. The principle of supremacy is applied in cases of conflict in between European Community (EC) law and member states’ law. Every member state has its own legal system and according to its history the law has been influenced. At the same time their legal system cannot be in conflict with the EC law. Throughout Europe the continental system of law is spread with its own judiciary, except for Great Britain which operates under principles of common law.
During this time of global economic problems the EUs competitive environment is open for investors more than any time before. The EU extended with new countries in recent years. By applying stimulation tools in various areas are created very attractive conditions for business opportunities.