In a volatile geopolitical landscape, international expansion allows companies to tap into new markets, diversify geographically to reduce risks, boost profitability and increase their competitive advantage. Growing across borders is complex and requires navigating myriad regulatory requirements and overcoming the challenges of expanding into new markets.
Key Compliance Challenges
As global trade routes realign, many companies are rethinking their growth strategies and exploring new markets. They are trying to create more complex, resilient paths to trade, with multiple paths that put them inside different trade blocs to create some redundancy in the event of any path failing.
As companies enter new markets, they face legal, tax and compliance challenges they must overcome to ensure their growth is sustainable and risk resilient. According to TMF Group’s Global Business Complexity Index 2025, only 9% of jurisdictions expect future regulations to become simpler in the coming years. Localized factors, such as language-specific documentation and cross-examinations by different regulatory authorities, constitute significant sources of administrative burden for enterprises. The speed with which regulatory changes are introduced is where the difficulty is greatest, not just the amount or complexity of legislation.
The volatility in today’s global economy also poses a risk. Geopolitical tensions present greater uncertainty, with rules and regulations sometimes seemingly changing from day to day, as illustrated by the ongoing turmoil around tariffs. Businesses have been dealing with regulatory complexities for decades, but what many are now struggling with is the sense of uncertainty and speed of change.
One prominent challenge for many firms is navigating diverse regulatory frameworks and compliance requirements that are unfamiliar to them. For example, a U.S. company will likely be very familiar with how to establish a presence across the wider Americas, but when it comes to other parts of the world, compliance requirements will vary significantly. As supply chain diversification accelerates, enterprises must be prepared to navigate local regulations and adapt their business models to ensure steady growth.
Employment law is another aspect that can be difficult to get a firm grip on across different jurisdictions. Several countries in Western Europe have strict employment codes that companies need to comply with and contracts, mandatory benefits and termination processes can differ widely. Some markets, like France and Belgium, also have extensive legislation in place covering remote working arrangements, while Austria recently enhanced its teleworking legislation with location-independent options, such as cafes and coworking spaces. For a company trying to expand into a new market without local knowledge and expertise, it is easy to miss regional obligations and jeopardize operations.
Another consideration is taxes. Each market will have different tax codes and treatments as well as different standards that underpin corporate governance. Businesses operating internationally must strive to maintain strong corporate governance from headquarters, while ensuring that they meet local requirements. This can be a difficult balance to strike.
Common Mistakes Businesses Make in International Expansion
One of the main mistakes companies can make is underestimating the complexity and diversity of local regulations when they enter a new market. There is a widespread misconception that compliance requirements will be similar across different countries, especially in the same region, but regulations can vary significantly even between neighboring countries and those that share trade agreements.
Too many organizations still adopt a “copy and paste” approach and fail to plan properly or conduct appropriate due diligence for each market. Without a detailed step-by-step plan in place, companies risk facing operational delays, which can be especially costly with mergers and acquisitions (M&A) arena. Delays can result in financial penalties for listed firms and severe reputation damage.
At the start of an M&A deal, firms will often focus on incorporation only and disregard the additional administrative or reporting requirements that will need to be in place as soon as the entity is up and running. Early planning is key, and this is where a local expert on the ground is invaluable in terms of lessening the regulatory burden.
Companies are often unclear about what type of entity will best suit their expansion plans. Entity structures have different characteristics in each market, and some will be more appropriate than others. Some organizations work on assumptions or think they can develop plans as they go, but proper planning at the outset is essential to avoid delays, compliance failures and other problems.
Another common mistake is thinking that setting up a new company is simply about registration and paperwork. The compliance requirements drill much deeper, involving ongoing obligations that will vary by market and that cannot be ignored.
Organizations should be particularly mindful of economic substance and local director obligations, as well as local language requirements. Last year, three out of four jurisdictions required official documents to be submitted in that jurisdiction’s local language.
Many of these obstacles can be overcome through diligent planning and partnering with an expert who can help guide in-house teams through the regulatory maze. Compliance should be seen as an enabler of sustainable growth rather than just a heavy burden.
Tips to Ensure Market Entry Compliance
The following practical tips can help firms expand with greater confidence:
- Plan early and properly to set up a successful market entry. The first and potentially most important step is to thoroughly map out and understand the local business environment and the trends and regulatory forces shaping that market. It is crucial to research and identify the right entity type for the planned business activity and to assess licensing and tax registration timelines early to avoid any costly delays.
- Adopt a proactive, dynamic approach to compliance. Regulations are evolving rapidly in today’s complex global business environment. Horizon scanning and regularly reviewing changes to local rules and regulations helps a business stay in control amid increased uncertainty and new legislation impacting markets around the world. It is essential to have a robust governance framework in place.
- Draw on the knowledge of local experts. Businesses are increasingly leveraging global providers with local expertise to provide better governance and mitigate the risks associated with operating across multiple jurisdictions. The right partner can help a firm keep on top of compliance, from setting up an appropriate entity through to maintaining ongoing legal, reporting and tax requirements.
- Foster a culture of compliance. Encourage a company-wide culture that prioritizes compliance and ethical behavior by providing regular training, like compliance workshops, to keep employees updated on regulations.
- Localize your risk matrix. A global risk framework is essential, but it should be adapted to reflect jurisdiction-specific exposures, such as sudden regulatory shifts, language-based documentation risks or director liability nuances.
- Leverage global complexity benchmarks to guide planning. Comparative data on regulatory environments can help identify where expansion efforts may encounter friction, such as opaque tax regimes, extended incorporation timelines or intensive reporting obligations. Using these insights early on enables better resource allocation and risk mitigation.
By following these best practices, companies can prevent compliance from becoming a daunting burden, making their global expansion a more seamless process.