The Bank of England’s latest decision to cut interest rates may mark the last reduction for a while, as new forecasts suggest inflation could climb following recent Budget measures. The Bank cut its interest rate from 5% to 4.75%, a widely anticipated move, but it signaled caution over future cuts due to expected inflationary pressures from the Budget’s spending increases.

Governor Andrew Bailey indicated that while rates are set to decline gradually, any additional cuts would be approached conservatively. “We must be careful not to reduce rates too quickly or by too much,” Bailey said, hinting that the Bank is likely to keep rates steady during its December meeting. Investors, in turn, now anticipate no further reductions this year.

Despite falling below the Bank’s 2% target in September, inflation is expected to tick up in the near term, partly driven by higher gas and electricity prices last month. The Bank previously forecast inflation would stabilize at 2% by 2026, but this target has now been pushed back to 2027.

The Monetary Policy Committee (MPC) voted 8-1 in favor of the recent rate cut, with member Catherine Mann dissenting. Mann argued that the Budget’s provisions, such as VAT on private school fees and a national bus fare cap, are likely to spur higher inflation and suggested caution in lowering rates further.

Sarah Coles, head of personal finance at Hargreaves Lansdown, noted that the new Budget introduces additional borrowing, a higher national living wage, and employer National Insurance contribution increases, all of which could drive inflation. “The Bank of England has delivered one more cut, but we don’t expect any further reductions soon. With these budgetary changes, the Bank remains wary of pushing rates down too much,” Coles said.

The slower pace of rate reductions means mixed news for consumers. Savers could see slightly higher returns, but mortgage borrowers may face continued challenges, as average mortgage rates remain high. Moneyfacts, a financial data company, reported that the current average two-year fixed mortgage rate is 5.4%, while a five-year fixed rate is 5.11%.

Over a million mortgage borrowers on tracker or variable-rate deals will see a decrease in their payments due to the recent cut. However, mortgage rates are still high compared to much of the past decade, putting added pressure on household budgets.

The rate cut also impacts savers, as returns on accounts may drop. Current easy-access accounts are averaging around 3% interest annually, and some consumers are concerned about declining returns. Claire Hopwood and Gavin Laking, who are saving for a house purchase, said recent cuts have already affected their savings. “We enjoyed a 4.5% rate, but now it’s dropped to 3.9%,” Laking noted.

Last week’s Budget included £28 billion in additional annual borrowing and £40 billion in tax-raising measures, with the largest being a rise in employer National Insurance contributions. Economists say that companies might pass these costs on to consumers, potentially slowing wage growth.

The Bank also adjusted its growth forecast for 2025 and projected that unemployment could fall from 4.7% to 4.1%, reflecting a cautiously optimistic outlook on the economic impact of the Budget’s increased spending. Chancellor Rachel Reeves welcomed the rate cut, acknowledging it as a relief for families but stressing the significant challenges many still face following previous fiscal policies.

Paris, France – French and Dutch authorities conducted raids on Netflix offices in Paris and Amsterdam as part of a collaborative investigation into alleged tax fraud, according to French judicial sources. The investigation, which began in November 2022, focuses on potential tax evasion and unreported earnings by the global streaming giant.

Netflix, headquartered in Los Gatos, California, has yet to comment on the raids directly, but the company reiterated its commitment to adhering to tax laws in every region it operates. The office in Amsterdam, Netflix’s European headquarters, oversees operations across Europe, the Middle East, and Africa.

The investigation in France is being led by the National Financial Prosecutor’s Office (PNF), a specialized unit responsible for handling high-profile financial crimes. Officials from the PNF are reportedly scrutinizing Netflix for allegedly “covering up serious tax fraud and off-the-books work.” The inquiry includes examining Netflix’s tax filings for 2019, 2020, and 2021, years during which the company is suspected of minimizing reported profits to reduce its tax burden in France.

Authorities in the Netherlands conducted simultaneous searches at Netflix’s Amsterdam office, working closely with French investigators. Officials from both countries have been coordinating efforts for months, according to French judicial sources.

The investigation was initially prompted by concerns that Netflix may have shifted revenue from France to the Netherlands, allowing it to benefit from more favorable tax arrangements. French media outlet La Lettre reported last year that until 2021, Netflix declared its French-generated revenue in the Netherlands, effectively lowering its tax payments in France. After changing this practice, Netflix reported a sharp increase in revenue in France, jumping from €47.1 million ($51.3 million) in 2020 to €1.2 billion in 2021.

However, the authorities are now investigating whether Netflix continued efforts to limit reported profits after 2021. If confirmed, such actions could indicate an ongoing strategy to minimize tax obligations.

Netflix launched its streaming service in France over a decade ago, opening a dedicated Paris office in 2020. Since then, the company has garnered around 10 million subscribers in the country, according to AFP news agency, making it one of the largest streaming platforms in the region.

The outcome of the investigation could have significant implications, as European governments have been increasing pressure on tech giants to ensure fair tax practices. The European Union has previously taken steps to address tax loopholes and boost transparency, particularly concerning companies with multinational operations that generate significant revenue from European consumers.

This investigation marks one of the latest moves by European authorities to address concerns about tax evasion by large technology firms. Depending on the findings, Netflix may face financial penalties or be required to alter its financial reporting practices in the region. The developments also come amid a broader push by European governments to standardize corporate taxation and prevent revenue shifting across borders.

Estonia has become a top destination for entrepreneurs and digital nomads, thanks to its advanced digital infrastructure and business-friendly regulations. Setting up a business in Estonia is efficient and flexible, with options to suit various needs, from e-residency to traditional registration methods. This guide will walk you through the main pathways to register a company in Estonia, highlighting the steps, benefits, and considerations for each.

1. E-Residency Program: A Digital Pathway to Business

Estonia’s e-residency program is revolutionary, enabling foreign entrepreneurs to set up and manage a fully digital company within Estonia’s legal framework. After applying for e-residency and obtaining a digital ID, you gain access to Estonian government portals and digital business services. This pathway is popular among remote workers, freelancers, and startups, as it allows complete management of the business online without physical presence.

• Pros: No physical presence required, full access to Estonia’s digital ecosystem, and easy integration with EU banking systems.
• Cons: Limited to certain business models and requires understanding of online compliance.

2. Traditional On-Site Registration

For those who prefer or require a more traditional approach, on-site company registration in Estonia provides a straightforward process. This method is often chosen by entrepreneurs who plan to live in Estonia or have a local representative. The process involves filing the necessary documents with Estonia’s Commercial Register and can be completed in a few days if all paperwork is in order.

• Pros: Suitable for businesses requiring a physical presence, can access additional support services within Estonia.
• Cons: Requires in-person visits to Estonia or use of local representation.

3. Company Registration via Power of Attorney

For those who cannot be physically present in Estonia, company registration via a power of attorney is an efficient and secure solution. By granting a trusted representative or legal expert the authority to handle the registration process on your behalf, you can establish your business remotely. This method is particularly useful for international entrepreneurs who prefer expert assistance in navigating legal and administrative procedures.

• Pros: Complete registration without traveling to Estonia, saves time and simplifies the process.
• Cons: Requires choosing a reliable representative, and additional legal fees may apply.

Why Choose Eesti Firma for Company Registration?

Eesti Firma specializes in guiding clients through each step of the Estonian company registration process. Our expertise includes assistance with e-residency applications, on-site registrations, and registrations via power of attorney. With tailored support, local knowledge, and a focus on efficient service, we ensure that your path to establishing a business in Estonia is smooth and fully compliant. Let Eesti Firma help you set up an enterprise in Estonia and unlock the potential of the EU’s digital gateway.