Deceived Chinese entrepreneurs in Europe – company incorporation

Our experience of supporting foreign investors in the European Union shows that setting up a business can often be significantly more complicated for Chinese citizens than initially expected. Over the past ten years, Regulated United Europe specialists have observed dozens of situations in which the standard company registration procedure has become a lengthy, expensive and emotionally taxing process for entrepreneurs. The main causes of these problems are a lack of information about the actual requirements of European jurisdictions, choosing unprepared or unreliable service providers, and ignoring the specifics of EU banking and tax compliance.

The European system of corporate administration appears simple at first glance only. In reality, every stage – from choosing the country of registration to obtaining a VAT number and opening a bank account – is linked to regulatory criteria that differ significantly from those in Asia. Consequently, entrepreneurs from China may face refusals from banks, be unable to obtain tax registration, incur repeated state fees, be required to make personal visits and lose several months of working time.

Several key scenarios can be highlighted among the typical situations leading to serious difficulties. One of the most common is attempting to register a company independently, without the involvement of a legal partner, which inevitably results in delays. In one real case, an entrepreneur spent more than three months preparing documents, had to travel to Vilnius three times for notarial certifications and approvals, and incurred total costs of over 5,000 euros for additional trips, document corrections, and repeated procedures. Instead of an effective launch, they ended up with a project freeze lasting several months and a loss of potential clients.

Another frequent issue is choosing ultra-cheap service providers who promise quick and inexpensive company incorporation. In practice, such providers often disappear immediately after receiving payment. Entrepreneurs often find that they can no longer contact the provider by phone or email. Consequently, clients are left with incomplete registrations, unpaid obligations to state authorities and no possibility of opening a bank account because the documents are incorrectly prepared or simply do not exist.

Another category of risk consists of situations in which it is impossible for a Chinese citizen to open an account in the chosen jurisdiction. Banks in the EU apply different risk criteria, so the country of registration and business profile play a decisive role. Entrepreneurs often only learn of the refusal after company registration is complete and funds have been invested in an office or staff. In such a situation, the business legally exists but is unable to operate in practice. This leads to losses and the need to change jurisdiction completely.

A similar problem arises when attempting to obtain a VAT number in countries where the tax authorities require evidence of a physical presence and a detailed justification of the business model. Entrepreneurs from China often find themselves in situations where the tax inspectorate requests documents that are difficult to prepare without the help of a local specialist, such as contracts, proof of activity, supply chain documentation and agreements with European counterparties. Failure to provide the necessary information in a timely manner can result in a refusal to issue a VAT number, which can make it impossible to operate in EU markets, particularly for e-commerce companies.

In such situations, it is crucial to seek professional help promptly. If an entrepreneur has been deceived, registration has taken too long, or the company has ended up in a jurisdiction where it is impossible to open an account or obtain a tax number, Regulated United Europe specialists can help at any stage: they can correct documents, select a new country for registration, repackage the business case for banks, ensure VAT registration, and help the project reach a stable operating mode.

Experience shows that most problems can be resolved within a reasonable timeframe when competent legal support is available. In one case, a client from Shanghai sought help after receiving three refusals from Estonian banks. Analysis showed that the company structure did not meet the requirements of European financial institutions. The Regulated United Europe team reorganised the corporate documents, prepared a complete UBO file and redirected the application to a suitable fintech bank. The account was successfully opened within two weeks.

In another case, an entrepreneur from Guangzhou was refused a VAT number by the Lithuanian tax authority due to a lack of proven activity. Our specialists developed an evidence package, updated supplier agreements and prepared a business justification before resubmitting the application. After an additional review, the VAT number was obtained, enabling the company to continue operating on European marketplaces.

Another example is that of a client who used the services of an unreliable Estonian provider and got stuck in the middle of the process when it emerged that the originally chosen company name was unsuitable. The Regulated United Europe team restored the incorporation files, resubmitted the documents to the registry and opened an account with an alternative EMI provider. The project was successfully launched within a month of contacting the firm.

Experience shows that the European regulatory environment requires precise execution of formal procedures and an understanding of the internal criteria of banks, tax authorities and state institutions. Attempting to navigate this environment independently, especially in unstructured or sensitive sectors, can lead to costs, delays, and reputational risks. If you have experienced fraud by service providers, been refused by banks, or been unable to obtain a VAT number, get in touch. Regulated United Europe‘s deep expertise and many years of experience supporting Chinese entrepreneurs in the EU mean they can promptly resolve complex situations and ensure your project enters the European market safely.

What risks are there when incorporating a company independently in the European Union?

Many entrepreneurs, including Chinese citizens, often perceive independent company registration in the European Union as a simple and straightforward procedure. However, the real EU regulatory environment is far more complex, requiring a deep understanding of the corporate, banking, tax and regulatory context of the specific country. In practice, most independent attempts result in delays, additional costs and an incorrect structure that must later be rectified. The key risks that entrepreneurs face without professional support are outlined below.

The first and most common risk is choosing an unsuitable jurisdiction. Despite the unified European market, tax regimes, substance requirements, banks’ approaches to non-residents and document processing times differ between EU countries. Mistakes in choosing the country of incorporation can result in an inability to open a bank account, obtain a VAT number or confirm economic presence. In many cases, the entrepreneur is forced to re-register the company completely.

The second significant risk is the incorrect preparation of incorporation documents and the UBO file. European banks and regulators require full disclosure of the ownership structure, the source of funds, the business activity and the business model. Incomplete or inaccurate documents can lead to banks refusing to open an account, repeated requests for additional evidence, delays and increased project costs.

The third risk factor is banking compliance. EU financial institutions conduct enhanced checks on non-residents, particularly those from third countries. Inconsistencies between the incorporation documents and the actual business model, a lack of operational logic or insufficient substance can result in the denial of services. Repeated refusals can damage a company’s reputation within the banking system and make it more difficult to open accounts in the future.

The fourth risk factor is failing to register for VAT or incorrectly determining the place of taxation. Tax errors can result in fines, the requirement to file corrections, suspension of the VAT number, and claims from tax authorities. Entrepreneurs operating in e-commerce or distance selling across the EU are particularly vulnerable, as VAT rules in this area are highly specific.

The fifth risk relates to contract law. Using universal templates that have not been adapted for a specific EU country can result in invalid clauses, the inability to enforce contracts in court, disputes with partners and marketplaces refusing to accept the company’s documents. European consumer law contains mandatory provisions that cannot be bypassed with standard contracts.

The sixth risk area concerns intellectual property protection. Failure to register a trademark in time, selecting incorrect classes or failing to check for brand conflicts can result in the loss of the trademark, advertising blocks and the need to change the brand name after sales have begun. Such mistakes are costly and slow to fix in the EU.

The seventh risk is a lack of knowledge of environmental responsibility and product certification rules. Depending on the product category, entrepreneurs must comply with Extended Producer Responsibility (EPR), Waste Electrical and Electronic Equipment (WEEE) and Restriction of Hazardous Substances (RoHS) requirements, register packaging, pay environmental fees and submit regular reports. Failure to comply with these obligations can result in customs delays, fines and bans on selling goods in the European market.

Separate risks are tied to the migration status of founders and employees. If an entrepreneur intends to work in Europe personally, they must obtain a residence permit or equivalent; otherwise, they cannot act as a director or manage the company. Misunderstanding migration rules can lead to legal violations and the need to retroactively change the management structure.

Taken together, these risks create a complex situation in which incorporating a company independently without local expertise becomes economically disadvantageous and operationally dangerous. Correcting mistakes can take months and require extra legal fees, document revisions, repeated state fees and adaptation of the business model to real regulatory requirements. Therefore, professional legal support is a crucial tool for foreign entrepreneurs, especially Chinese citizens, seeking a stable and compliant entry into the European market, as it protects investments and ensures a predictable result.

How can scammers be avoided when choosing a legal partner in Europe?

For many Chinese entrepreneurs, selecting the right legal partner is a critical step that can determine the future success of their project. The European Union has strict requirements for company registration, banking onboarding, VAT structuring and compliance, so working with an unreliable intermediary can lead to delays, financial losses and refusals from regulators. In practice, the main reason why Chinese business owners face fraud, non-performance of obligations or the disappearance of a provider after receiving payment is the absence of proper due diligence when selecting a legal partner.

To avoid such situations, several key criteria must be taken into account. These criteria help to identify a professional consultant in advance and eliminate interaction with dishonest service providers.

The first warning sign is the absence of an official corporate infrastructure. A reliable legal partner in Europe will always have a registered office, a publicly listed address and verified experience, as well as a staff of employees. Scammers or pseudo-consultants usually have a generic email address with no company domain, no legal address and no ability to provide documentation confirming licensing or corporate registration.

The second factor is an absence of a transparent activity history. Before choosing a partner, it is essential to check how long the company has been in existence, whether it is present in professional publications, whether it participates in international conferences, and whether it is visible in EU regulatory and corporate registries. Companies with real expertise always leave a digital footprint in the form of reports, case studies, legal articles and registration data. A lack of such information is a significant indicator of unreliability.

The third criterion is an unrealistically low service price. In Europe, there are well-established prices for legal, registration and compliance services, so prices significantly below the market rate almost always indicate a lack of expertise or outright fraud. Dishonest providers attract clients with low prices and then either disappear with the payment or deliver documents that cannot be used by banks or government authorities.

The fourth sign is a refusal to explain real risks or provide transparent information. A professional legal partner always informs clients of possible delays, regulatory requirements, non-resident risks and specifics of the business model. Scammers promise ‘fast’, ‘cheap’ and ‘no paperwork’, hiding the fact that such promises are impossible in the EU. A refusal to provide a step-by-step action plan and timelines is a clear reason to avoid cooperation.

The fifth verification element is the actual ability to support banking procedures. A legitimate consultant understands the internal criteria of European banks and fintech providers, can explain AML/KYC requirements, prepare the UBO file and organise the initial compliance package. Fraudulent providers either do not deal with banking at all, or they claim to be able to ‘guarantee’ account opening, which is impossible in the European banking system.

Finally, a crucial criterion is the presence of verified case studies and client feedback. If a company cannot provide a few depersonalised examples of successful projects, this indicates a lack of competence. Real legal consultants always have a portfolio of successful cases, including restoring projects after fraud or mistakes made by previous providers.

For Chinese entrepreneurs entering the European market for the first time, choosing a legal partner is not just a matter of cost; it is also a matter of reducing regulatory risks, ensuring a fast launch and protecting investments. Following basic verification rules, checking the provider’s reputation, analysing its experience and confirming its ability to provide full-cycle support are all essential for safely and successfully entering the European market. Even if an entrepreneur has encountered fraud or an unreliable provider in the past, recovery is possible. A competent legal agent can analyse the documents, correct errors, rebuild the package for banks and tax authorities, adjust the corporate structure and guide the project onto a stable, compliant operational path.

What should you do if you have been scammed?

Even when taking a careful approach to choosing a service provider, Chinese entrepreneurs often find themselves in situations where a contractor disappears after receiving payment, provides incomplete or invalid documents, misses deadlines or delivers services that cannot be used for banking or tax onboarding. Such cases are not uncommon in European legal practice, especially when dealing with ‘cheap’ intermediaries or unlicensed consultants. Despite the unpleasant situation, it can be resolved with the right actions and the involvement of a competent legal partner.

The first step is to collect and analyse all available documents. Even if the provider has disappeared, receipts, correspondence, incorporation document templates, invoices and partially processed applications can help to determine which parts were completed correctly and which must be redone. Often, it transpires that the company was either not registered at all or registered with errors that make it impossible to open a bank account.

The next step is to check the legal entity’s status in the chosen country’s state registry. In many cases, the company exists formally, but the information entered is incorrect: the director has not been properly appointed, mandatory filings are missing, or the address is invalid. This creates a risk of fines and automatic liquidation. Specialists must quickly bring the corporate structure into order by updating the articles of association, director appointment documents, company address and beneficiary information.

Special attention must be paid to banking procedures. If the initial provider promised a ‘guaranteed account opening’ or submitted incomplete compliance documents, it is likely that a negative mark has already been registered in the banking system. In this situation, it is crucial to properly repackage the case: gather proof of the source of funds, prepare an expanded UBO file, align the business model with banking requirements and select financial institutions willing to work with the current structure. This requires specialised legal expertise and direct communication with banking compliance departments.

If the issue concerns a refusal to issue a VAT number or tax authority requests, a proper audit of business processes is required, including updating contracts, providing evidence of economic activity, confirming the supply chain and demonstrating compliance with place-of-taxation rules. EU tax authorities process repeated submissions significantly faster than initial ones if they are well-prepared.

In some cases, the entrepreneur needs to change jurisdiction completely because the chosen country is objectively unsuitable for the business model, or because its banking sector does not work with Chinese citizens. In such situations, migrating the project is the optimal solution, involving closing or freezing the incorrect company and establishing a new structure in a more suitable country with more appropriate banking options and tax rules.

The final step is to build the correct operational framework, which involves creating real substance, establishing a legally compliant contract base, structuring VAT correctly, registering a trademark and complying with e-commerce and consumer protection standards. This eliminates regulatory risks and ensures stable operation in the European market.

It is important to understand in such situations that an initial mistake is not fatal. Most problems caused by unreliable providers can be resolved. The Regulated United Europe team regularly takes over projects following fraud or poor work by previous contractors. They restore documents, prepare compliance packages and get companies up and running again as quickly as possible.

If you have been scammed, a provider has disappeared or you are facing refusals from banks or tax authorities, do not try to resolve the issues yourself – this will lead to further delays and financial losses. The most effective solution is to contact a professional legal team that will take full responsibility for restoring the project and ensuring your business’s safe, legal and swift entry into the European Union market.

How has Regulated United Europe helped Chinese citizens to resolve problems during company incorporation in the EU?

Regulated United Europe‘s practical experience shows that most difficulties faced by Chinese entrepreneurs in Europe arise at the intersection of corporate law, banking compliance, and the tax requirements of the specific jurisdiction. When a client seeks help following bank refusals, errors made by providers, or documents that have been prepared incorrectly, the experts’ task is not only to resolve the situation, but also to create a stable operational model that is transparent and acceptable to European regulators. The following real cases demonstrate how the RUE team helps Chinese entrepreneurs to restore their projects and successfully enter the EU market.

Case 1. Lithuania: Company formally incorporated but unable to operate

A client from Guangzhou incorporated a company in Lithuania independently, assuming that completion of the registration process would automatically allow the business to start trading. However, at the onboarding stage, every local bank and EMI refused to open a corporate account. Analysis revealed that the structure did not meet Lithuanian compliance expectations: the company had no demonstrable presence in the country; the UBO file was incomplete; and the declared line of business did not align with the risk profile and internal policies of local financial institutions.

Regulated United Europe began with a full audit of the corporate setup, including the shareholder structure, business model, and existing documentation. The team then prepared an expanded UBO dossier with detailed evidence of the source of funds and the ownership chain. They also reformulated the business description so that it accurately reflected the client’s planned activity while remaining acceptable to local compliance teams. A coherent documentation package was assembled that met the expectations of European banks and EMIs, and a suitable EMI with a compatible risk appetite was selected.

In parallel, RUE organised VAT registration in Lithuania and introduced a tax calendar with clear filing and payment deadlines. Consequently, the client obtained a working bank account and completed tax registration, enabling them to fully resume sales on European marketplaces using a compliant and sustainable operational structure.

Case 2: Estonia: fraudulent provider and missing legal infrastructure

A client from Shenzhen approached Regulated United Europe after engaging a low-cost service provider in Estonia who disappeared immediately after receiving payment. Although the company had been technically incorporated, this was only on paper: a nominee director had been appointed, no real legal address was maintained, and the client never received a full set of statutory documents. In this state, the company could not open a bank or EMI account, file mandatory reports, or apply for a VAT number.

RUE’s experts first verified the status of the entity in the Estonian commercial register and identified deficiencies in the corporate profile. They then restored the statutory documentation, properly appointed a real director and arranged a compliant legal address for the company. Once the corporate foundation had been regularised, RUE prepared a complete corporate file and legalised the core documents for use in banking and tax procedures.

An experienced European EMI working with non-EU, specifically Chinese, beneficiaries was identified and approached with a properly structured compliance package. Following successful onboarding, the client obtained a payment account suitable for operations and could therefore proceed with VAT registration and reporting. The project, which had effectively been frozen, was returned to normal operating mode within approximately one month.

Case 3: Czech Republic: repeated VAT number refusals

A Chinese manufacturer of electronic equipment had correctly incorporated a company in the Czech Republic, but encountered an additional obstacle: the tax authority repeatedly postponed, and then refused, to issue a VAT number despite several applications being made. This was due to a lack of documented evidence of real economic activity in the country. Without a VAT number, major EU marketplaces blocked the client’s listings and logistics partners suspended deliveries.

Regulated United Europe conducted a substantive review of the client’s operations and existing contracts. Together with the client, the team compiled a comprehensive package of evidence: draft and signed sales agreements with European distributors, purchase orders, logistics and warehousing arrangements, and internal business plans illustrating how and where value was created. These documents were aligned with Czech VAT rules and clearly demonstrated the link between the company’s activities and the jurisdiction.

RUE also updated key contracts to reflect compliant terms and better support the substance narrative. The firm then supported the client through the resubmission process, communicating with the tax authority in a structured and consistent manner. Following this targeted intervention, the VAT number was issued and the client’s sales on EU marketplaces were restored within roughly two weeks.

Case 4: Poland: misaligned jurisdiction and banking dead end

A client from Shanghai selected Poland as the place of incorporation based solely on the low cost of registration services and state fees. After forming the company, the client applied to several Polish banks, only to be refused by all of them. The root cause was structural: local banks expected a resident director and demonstrable economic presence in Poland, neither of which had been considered initially. Consequently, while the company legally existed, it was practically unable to conduct business.

Regulated United Europe first assessed the commercial model, target markets and transaction flows. Based on this analysis, the team concluded that the Polish jurisdiction did not match the client’s profile, particularly with regard to banking expectations of non-EU founders from China. RUE therefore proposed a controlled migration of the project to a jurisdiction with more suitable banking practices and clearer pathways for substance and compliance.

The Polish company was then wound down in an orderly manner, avoiding additional penalties, and a new entity was incorporated in a more suitable EU country. RUE managed the entire process, including registering the new structure, aligning the corporate documents with banking requirements, providing support during the account opening process, registering for VAT, and preparing a contract base under the applicable local law. The business was relaunched under a coherent framework and has continued to operate without any further banking issues.

Case 5: EUIPO: Brand protection and conflict with a competing trademark

A Chinese e-commerce company entered the EU market and began active sales and advertising without filing a trademark application. Once the brand had gained some traction, a competitor submitted a similar sign to EUIPO. One of the major marketplaces then blocked the client’s advertising campaigns due to the pending rights conflict.

Regulated United Europe first carried out an in-depth collision analysis, reviewing the similarity of the marks, the relevant classes, and the likelihood of confusion. Based on this assessment, the team prepared and filed a formal opposition against the competitor’s application. In parallel, RUE drafted and submitted the client’s own accelerated EU trademark application, carefully selecting and broadening the list of classes to adequately protect the business’s current and planned activities.

Once the client’s rights position had been clearly documented and communicated, RUE assisted with correspondence to the marketplace, demonstrating the brand’s legitimacy and the steps taken at the EUIPO. This resulted in the restoration of the advertising accounts. The company retained control of its brand and was able to continue expanding in the European market with a much stronger IP position.

Case 6. Multiple bank refusals: rebuilding the compliance case

In another situation, a client approached Regulated United Europe after receiving three consecutive refusals from different banks in various EU countries. All institutions cited concerns about the transparency of the ownership structure, as well as the lack of sufficient information regarding the origin of the funds and the business’s economic rationale.

RUE’s team reconstructed the case from a compliance perspective. They created a detailed, logically structured UBO dossier that fully documented the shareholder chain, control rights, and decision-making mechanisms. The client’s financial background and source of funds were formalised through supporting documents, explanations, and legalised evidence. The business model was refined and presented in a way that clearly explained the nature of transactions, expected turnover, counterparties, and geographic focus.

Based on this information, Regulated United Europe selected an EMI whose risk profile and internal policies were compatible with the client’s sector and country of origin. With a complete and coherent compliance package in place, the onboarding process proceeded without further obstacles and the corporate account was opened successfully within approximately 14 days.

How does Regulated United Europe resolve complex cases for Chinese entrepreneurs so effectively?

Successful company formation in the European Union requires a combination of legal precision, in-depth knowledge of banking compliance and jurisdiction-specific tax rules, and the ability to adapt a business model to the expectations of European regulators. Chinese entrepreneurs not only face the objective features of the EU regulatory environment, but also challenges arising from limited local experience, language differences, distinct legal traditions and stricter scrutiny from banks and government authorities. Regulated United Europe‘s effectiveness lies not in individual services, but in an integrated support framework covering the entire business launch lifecycle.

The first foundational element is the professional selection of the jurisdiction. The RUE team considers the business’s objectives, banking requirements, tax model, logistics, the need for VAT registration, substance requirements and potential product certification obligations. This multi-factor assessment helps to avoid the common mistake of choosing a country based on a single parameter, such as low taxes or quick registration, without considering banking risk models or regulatory requirements.

Equally important is the correct preparation of incorporation documents. Each EU country has its own rules governing company structure, director responsibilities, share capital, public disclosure obligations for beneficiaries and the procedure for amending the commercial register. Errors at this stage can lead to banking refusals, the need for repeated incorporation or complete halting of the account-opening process. RUE ensures that all documents are drafted precisely according to the specific jurisdiction’s requirements, preventing avoidable delays.

A third critical element is the formation of an expanded UBO package. European banks perform extensive checks on the source of funds, the ownership structure, the beneficiaries’ reputation, and the economic logic of the project. RUE specialists compile a thorough evidence file containing proof of capital origin, details of financial transactions, a clear business model description, and projected turnover figures. This significantly increases the likelihood of successfully passing AML/KYC procedures on the first attempt.

The next stage involves supporting the opening of bank and EMI accounts. Due to the strict oversight of non-resident clients, especially Chinese nationals, EU banks rely on internal risk models that are only understood by professionals who regularly interact with compliance departments. RUE identifies financial institutions with an appropriate risk profile, prepares all the necessary documentation and manages communication until the account is successfully opened.

The tax component of the work includes VAT registration, OSS onboarding, creation of a tax calendar and assessment of permanent establishment risks. Errors in determining the place of taxation or late filings result in penalties and claims from the tax authority. RUE ensures that all tax obligations are met from day one, thereby reducing the risks associated with audits and compliance checks.

Contractual documentation is another essential element. European contract law, consumer protection rules, e-commerce regulations, return policy requirements and personal data protection standards all necessitate the preparation of robust legal documents. RUE drafts contracts, commercial agreements, public offers, user agreements and privacy policies that are fully aligned with mandatory EU standards.

Protecting brands and trademarks before the EUIPO is critical for Chinese companies promoting products or digital services in Europe. RUE conducts collision checks, handles trademark registration, prepares oppositions and provides dispute support, thereby preventing marketing blockages and safeguarding advertising accounts.

Another area of expertise is restoring projects that have encountered problems, such as bank refusals, document errors, fraud by previous providers, or an inability to obtain a VAT number. In such cases, RUE conducts a structural audit, corrects the corporate setup, repackages the case for banks and tax authorities, rebuilds compliance and restores operational capability.

Regulated United Europe‘s effectiveness is rooted in its systemic approach: every stage, from incorporation to tax compliance and banking onboarding, is interconnected. This integrated approach enables Chinese entrepreneurs to avoid common pitfalls, minimise regulatory risks and ensure a safe and predictable entry into the European market.