While expanding into Europe may at first appear as an uncertain investment, the financial crisis there could prompt reforms of the European Union’s tax structures and regulations that would be advantageous for international businesses, accountants with Netherlands-based firm Baker Tilly Berk recently told GlobalAtlanta.
Inconsistent tax policies and heated debt crisis talks between European governments have created tremendous uncertainty in the market, although Jan Ruigendijk and Patrick van Rooij, partners with the firm, remain optimistic about Europe’s future.
“All this crisis will also bring opportunities to companies that do the right things,” Mr. Ruigendijk told GlobalAtlanta. “We see a really growing market over there.”
The two partners were in Atlanta to visit the Buckhead offices of Habif, Arogeti & Wynne LLP, a Baker Tilly International affiliate, following the network’s recent regional conferences on operations in the Americas and Asia. Baker Tilly International manages a network of affiliates with 149 member firms in 125 countries worldwide.
Using Europe’s value added tax system (VAT) as a model, which requires each member state’s VAT to comply with uniform provisions across the E.U., policy makers should look to reform Europe’s widely varying corporate income tax structures, he added.
“So the corporate income tax structure is different in each country,” Mr. Ruigendijk said. “In a crisis, people will move their businesses to tax beneficial jurisdictions, and that’s a competition that Europe cannot have that much longer.”
“We will have to have a unified tax system,” he added.
With the notable exceptions of the Czech Republic and the United Kingdom, all E.U. member states signed the European Fiscal Compact in March, which would require E.U. member states to maintain balanced budgets, prompting discussions on a basic framework to unify E.U. tax structures.
The compact would go into effect at the beginning of next year, provided that 12 member states ratify the treaty, paving the road for basic structure of a Spanish bailout.
But beyond Europe’s complicated tax codes, policy makers also need to address regulations that vary from country to country, which can also stymy an ill-informed business’s expansion into the continent, he said.
“There are so many different regulations, even though there are E.U. directives, but they are implemented differently in the different countries,” Mr. Ruigendijk said.
Formerly known as just Berk, Mr. van Rooij said the 99-year-old Netherlands-based accounting and tax advisory firm changed its name to Baker Tilly Berk last year to emphasize the international partners the firm has abroad through Baker Tilly International.
Mr. van Rooij said strong partnerships between the firms provide clients with a consistently informed business exchange across regions.
“It’s something I told a client yesterday when we were discussing their European expansion,” he said. ”The big advantage of our network is that we meet each other on all these conferences, and at the end of all the technical discussions, we have a beer at the bar and we have a nice chat.”
“If you cannot have that relationship, which you can also give each other feedback to assist and help each other grow the business, you cannot have success,” he continued.