Setting up a crypto company in the EU: which jurisdiction is right for you?

The EU has become a hub for cryptocurrency businesses, offering a variety of jurisdictions with different regulatory environments and incentives. When choosing where to establish a cryptocurrency company in the EU, factors such as regulatory clarity, tax implications and general business conditions should be carefully evaluated.

Key considerations when choosing a jurisdiction

Legal and regulatory framework:

• Clarity and stability: A clear and stable regulatory framework is crucial for a cryptocurrency business to operate with confidence. Some jurisdictions already have comprehensive regulations in place, while others are still developing their approaches.
• Licensing Requirements: Understand the specific licensing requirements and procedures for your type of crypto business. Some jurisdictions may require licenses for different activities, such as cryptocurrency exchanges, wallet services, or mining.
• Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) regulations: Enforce strict AML and CTF regulations to mitigate risks and maintain a positive reputation.

Tax implications:

• Corporate tax rates: Compare corporate tax rates in different EU jurisdictions to determine the most cost-effective option for your business.
• Tax incentives: Some jurisdictions offer special tax incentives or exemptions for cryptocurrency businesses, such as reduced capital gains tax or research and development tax credits.
• Value Added Tax (VAT): Understand the VAT rules and any potential exemptions or reduced rates that may apply to your cryptocurrency business.

Business Environment:

• Talent Pool: Assess the availability of qualified crypto industry professionals in your chosen jurisdiction. A strong talent pool can go a long way in attracting and retaining top talent.
• Infrastructure: Assess the availability of necessary infrastructure such as reliable internet connectivity, data centers, and financial services.
• Cost of Living: Evaluate the cost of living and operating costs in different jurisdictions to determine the overall economic viability of your business.

Malta:

Comprehensive regulatory framework: Malta has established itself as a cryptocurrency-friendly jurisdiction with clear regulation and a favorable ecosystem.
Malta Digital Innovation Authority (MDIA): MDIA provides guidance and support to cryptocurrency companies, fostering innovation and compliance.
Tax incentives: Malta offers attractive tax rates and incentives for cryptocurrency businesses, making it a popular choice.

Gibraltar:

Financial Services Commission (FSC): The FSC provides a robust regulatory framework for cryptocurrency businesses, ensuring compliance with international standards.
Tax benefits: Gibraltar offers competitive tax rates and incentives for businesses operating in the financial services sector.
Strategic Location: Gibraltar’s strategic location provides easy access to European and African markets.

Luxembourg:

Financial Services Authority (FSA): The FSA has a well-established regulatory regime for financial services, including cryptocurrencies.
Supportive ecosystem: Luxembourg has a strong financial services industry and a growing fintech ecosystem.
Tax incentives: Luxembourg offers competitive tax rates and incentives for certain types of businesses.

UK:

Reputation as a financial center: London has traditionally been one of the largest financial centers in the world. This provides a high level of confidence in companies incorporated in the UK.
Attractive tax regime: There are certain tax breaks and incentives for cryptocurrency companies.
Active regulation: The UK is actively developing and improving the regulatory framework for the cryptocurrency market, which creates a more predictable business environment.

Estonia:

E-Residency Program: Estonia’s e-residency program allows non-residents to set up and run a company remotely, making it a convenient option.
Regulatory clarity: Estonia has a relatively clear regulatory framework for cryptocurrency businesses with a focus on transparency and innovation.
Supportive ecosystem: Estonia boasts a strong technology ecosystem and a reputation for digital innovation.