Expanding Your Business in Europe: Key Steps and Strategies

Geographic expansion is a common business growth strategy. For many US business owners, Europe—with its high levels of English proficiency, diverse markets, and promises of free movement of goods between countries—is an ideal target. 

European expansion is a specific type of international commerce, focused on reaching customers in one or more of the 44 countries on the European continent. Among US business owners, the term often describes efforts to establish a presence in the European Union (EU), an economic union consisting of 27 member states. Together, the block makes up the world’s largest single market economy.

Here’s an overview of the pros and cons of European expansion, including key regulatory considerations and a five-step guide to building your business in European markets.

Strategies for expanding your business in Europe

• Exporting to European customers
• Strategic alliances
• Licensing or franchising
• Multidomestic

European expansion strategies vary widely in cost and scale, and could include any of the following: 

Exporting to European customers

Exporting is a method of global expansion in which you maintain centralized business operations in your home market but target markets in other countries. The simplest version of exporting is simply offering shipping to customers in Europe. More complex versions entail translating and localizing your website for European customers and creating dedicated multilingual marketing campaigns targeted to them.

Strategic alliances

Forming a strategic alliance with a major retailer, a similar business, or other international partner is another option. Alliances can provide access to the infrastructure, intelligence, and legal standing you need to enter an overseas market. 

Licensing or franchising

This option grants another entity authority to earn money using your intellectual property—such as your brand name or service model—in exchange for royalties or license or franchise fees.

Multidomestic

A multidomestic strategy decentralizes operations, replicating all or part of your domestic strategy for a new market. It can involve legally forming your business in another country.

This approach is most popular with businesses that already serve a significant volume of customers in the country (or can demonstrate demand there). Before expanding, they’ve calculated that the potential benefits outweigh the risks.

Business owners can tailor their expansion efforts to meet their needs. If you’ve demonstrated success in your home markets and have evidence of European market demand—for example, through organic search traffic—you might be ready to build your business in Europe.

Advantages and disadvantages of European expansion

EU expansion can help you boost sales and earn more customers, but it’s not without risk. Here’s an overview of the pros and cons of doing business in Europe.

Advantages of expanding your business in Europe

• Access to more customers. Nearly 750 million people live in Europe, and over half of them are in the EU. Selling products or services in Europe can provide access to a wider audience and help you boost sales.

• Diverse markets. European countries are economically and culturally diverse. You can focus your expansion efforts on the best fit for your products or services and your business culture. 

• Simplified international trade. The EU allows free movement of goods within member states, which means that establishing your business in an EU country makes it easier to sell products in multiple European countries.

• Reduced costs. If you’re already shipping products to customers in Europe, formally expanding business operations in Europe could reduce costs. Depending on your business model, you might consider manufacturing or warehousing products in Europe.

Disadvantages of expanding your business in Europe

• Language and cultural diversity. There are 24 official languages in the EU, and there’s significant cultural diversity within language groups. This can lead to a significant translation and localization burden for international sales, even for businesses with the legal right to free movement of goods between countries.

• Complex regulatory environment. Businesses must comply with the laws of relevant multinational organizations (such as the EU) and all local laws to which they are subject. Local tax regulations, employment laws, ecommerce laws, and product regulations vary by country.

• Trade agreements. Establishing a business in Europe can simplify cross-border trade, but specific import and export requirements depend on each country’s status in a system of overlapping organizations. These organizations include:

• The European Economic Area (EEA)

• The European Free Trade Association (EFTA)

• The EU Customs Union

• The Eurozone

• The Schengen Area

Key regulatory considerations for European expansion

Selling in European countries can require businesses to comply with the laws of the country in which they are headquartered and the countries to which they’re shipping products. Here’s an overview of key areas of legislation:

• General Data Protection Regulation (GDPR). The GDPR is a law that dictates how businesses operating in the EEA manage consumers’ personal information, and it applies to all businesses with customers in EEA countries. 

• Income tax. Corporate income tax rates vary by country. As of 2025, corporate income tax rates range from 9% in Hungary to 35% in Malta. If you spend 183 days or more in a European country, you could be subject to that country’s personal income tax as well.

• Import fees. Whether you owe import fees like customs and excise duties depends on the specific product sold, its country of origin, and its destination. Certain products like alcohol and fish products are subject to excise duties or customs duties even within the EEA.

• Labor laws. EU employment law establishes minimum standards for working and employment conditions, but allows member countries to adopt stricter provisions at will. If your European expansion plan includes hiring employees, your business is required to comply with the minimum standards set forth by the EU and any applicable local labor laws.

• Value-added tax (VAT). European countries charge VAT, which is similar to sales tax and applies every time a product changes hands. VAT is due to the country of import, and rates vary by country and product or service type. It’s also due at time of sale for products manufactured and sold in European countries. 

• Product requirements. Both the EU and individual European countries maintain product requirements designed to ensure the health and safety of consumer goods. Businesses must comply with requirements relevant to the countries in which they sell products.

How to expand your business to Europe 

1. Select your destination countries
2. Register your business
3. Coordinate manufacturing, shipping, and warehousing
4. Staff your business
5. Ensure compliance
6. Develop your marketing strategies
7. Configure your ecommerce software

Here’s how to develop an international expansion strategy for European markets:

1. Select your destination countries

If you plan to legally form a business in Europe, research potential countries for your European headquarters. Needs vary by company, but some destinations offer low corporate tax rates, access to a highly skilled workforce, and a well-developed infrastructure relevant to your business. 

You can use World Bank Business Ready data for an overview of European economies and regulatory environments.

2. Register your business

Pursue registrations relevant to your approach. EU-based businesses and importers must register for an economic operators registration and identification number (EORI), for example, and most businesses must register for VAT. 

If you want to form your business in the EU, you’re also required to obtain a residence permit, which allows you to live, work, or study in the granting country. Several EU countries allow business owners to obtain residence permits through investment. 

3. Coordinate manufacturing, shipping, and warehousing

Consider supply chain impacts, comparing the upfront and long-term costs of establishing warehousing and manufacturing facilities in or near European markets. If you plan to export a significant volume of products, acquiring warehouse space in Europe can be cost-effective, even if you don’t establish a European base of operations.

4. Staff your business

If you plan to hire European staff, you’re required to form a legal entity in Europe, work through a professional employment organization (PEO), or hire independent contractors. If you choose the third option, research worker classification laws in both countries to avoid penalties for misclassification.

5. Ensure compliance

Use EU resources and country-specific guides to research applicable laws and regulations. Many countries provide English-language guides to starting a business. 

Business France, for example, maintains a resource center with guidance on taxation, employment laws, and residence permits to help foreign businesses get started. Then audit your US operations to figure out where you stand with respect to regulations like the GDPR and the EU’s minimum employment standards. 

6. Develop your marketing strategies

Your European marketing strategies will vary in scale and scope depending on your method of expansion and target markets. You might do as little as run an existing ad campaign in the UK. Or you may choose to build out full multilingual SEO content marketing strategies targeting English, French, German, and Spanish-speaking European countries.

Most businesses also adapt marketing materials for new markets, a process known as ecommerce localization. A basic localization strategy includes website localization at a bare minimum and can include extensive content localization as well. 

7. Configure your ecommerce software

The right ecommerce software can simplify European market entry. Choose a software provider with robust international ecommerce support and set up your online store to start making sales in Europe.

For example, Ridge Wallets uses Shopify to localize language, product catalogs, and payment systems.

“We give them localized inventory experiences tailored to what’s in line to that specific market, and we help them check on their own currency,” says CEO Sean Frank on an episode of the Shopify Masters podcast, stressing the value of ecommerce software that enables a customized experience by market. “It’s the fastest-growing part of our business.”

Shopify Markets makes it easy to accept payments in international currencies and localize content for multiple countries or regions. Shopify can also automate international tax and duty collection and support compliance with EU regulations like the GDPR.