The European Economic Area is an extension of the European single market. This internal market enables the free movement and equal treatment of persons, goods, services and capital within this borderless area. As such companies incorporated in the EU gain market access via a single point of entry. Entrepreneurs from outside the EU can therefore establish a legal person in one of the member states to ensure equivalent treatment of the entity in all the member states.
Ensuring the fundamental freedoms as laid down in the Treaty on the Functioning of the European Union (TFEU) is possible when member states respect the principles of equal treatment and non-discrimination. This means that the single market allows for easy access and a identical opportunities for local and foreign companies within the Union. Consumers have freedom of choice for products, services and suppliers. In an open market economy this stimulates competition and affordable pricing.
The freedoms of establishment and to provide services require the removal of restrictions on the right of individuals and companies to maintain a permanent or settled place of business in a member state. Establishment is then defined as the actual pursuit of an economic activity through a fixed establishment in another member state for an indefinite period. There are distinct and enforceable ways to utilize these freedoms in a professional and corporate setting.
Sovereign states have their own domestic law. EU or Union Law safeguards the functioning of the Union and its internal market. As such, Union law controls, maintains and protects the founding principles of the TFEU and therewith has direct effect. Accordingly, equal treatment and non-discrimination is mandatory and should prevail in any local law. European Company formation therewith allows global entrepreneurs with easy and straightforward access to the European Single Market. Something that is beneficial for virtual enterprises, consultants, companies selling physical products, and those enterprises willing to escape the limitations of the emerging market. Competition in emerging markets is restraint by several domestic factors, such as infrastructure, market segmentation, transportation cost, bureaucratic hurdles and entry restrictions.