Best Countries to Start a Business in Europe

Europe has always been a place where successful companies are concentrated. Historically, European countries are considered the most reputable and safest.

Is it advantageous to open a business in Europe?

Europe is where trade in its modern form emerged. In our opinion, this brings with it both pros and cons, which we will discuss in this article.

Advantages of opening a business in Europe

First and foremost, Europe provides access to a very large market. Over 740 million people live in Europe, making it one of the largest markets in the world. This provides a great advantage - the larger the market, the more customers you can hypothetically attract.

Secondly, Europe as a union of countries is very generalized. This also affects the political and economic situation in the region. Despite the problems the world has experienced in the last few years, European companies (certainly compared to those in other regions) have withstood these problems quite well.

This stability is mainly due to the strict state policy of the member states, supervisory bodies, and a solid legal framework.

Thirdly, over the last 50 years, Europe has developed a system that helps businesses grow. The policies of EU countries are aimed at a supportive business environment model. For example, Germany launched a crisis response program for small and medium-sized enterprises in early 2020. This included compensation of 9-15 thousand euros for businesses affected by quarantine restrictions. Additionally, a separate budget item was allocated to cover employee salaries, bill payments, etc. In this way, Germany's 2022 general budget was increased by 43 percent by the Bundestag due to the needs of companies.

Some global points. Let's talk about the diversity of cultures: Europe is a multicultural community that can represent a potential audience for different products and services. This can also lead to opportunities for creating new business models and developing innovative ideas.

Reliability and security: Most European countries are characterized by a high level of security and stability, which can be attractive to world entrepreneurs looking for a reliable and stable business environment.

Also, European countries have a highly developed infrastructure. This is not the least relevant for business. There are also very qualified employees in many fields.

However, the advantages of operating in this large and stable market can make it a wise choice for many businesses.

How competitive is the business environment in Europe?

We have previously talked about the pros of opening and doing business in Europe. Therefore, it is now worth moving on to the challenges that may potentially arise for your company.

For example, competition in the market. Since the market for goods and services in the EU is very well developed, there are many businesses already operating in many niches. This creates a kind of problem for small companies. There is a fairly large number of reputable companies and holdings with which it is difficult to compete. At the same time, this problem is not unique to the European region. Business competition exists all over the world, regardless of geography.

Another element that deters small and medium-sized enterprises from the EU idea is taxes. The tax policies of European countries are quite strict and have been tested by time.

For example, Germany is considered a very reputable and stable jurisdiction. But it is also one of the most expensive countries in the European Union in terms of business taxes. For example, scientists from the Center for European Economic Research (Mannheim) concluded that this country taxes businesses 10% more than other EU countries. A very similar situation arises in Spain, Denmark, Italy, the Netherlands, and France. The French government has carried out significant reforms in the tax field in recent years. But it still remains quite expensive. In fact, it is not easy to develop a business in the so-called "old" jurisdictions.

This is also true for bureaucracy. It is quite well known worldwide, and many have personally encountered it. In Europe, countries were not very prepared for the impending quarantine during the coronavirus, and life essentially came to a standstill. Thus, procedures to introduce digitalization into business life began to be developed en masse. Administrative services for businesses can now be provided to some extent over the Internet. It makes life much easier for businesses. For example, it is possible to keep tax records, report structural changes, or appoint new managers online.

Therefore, although there are very strong advantages to doing business in Europe, the entrepreneur must be prepared for strict bureaucratic procedures and great competition in the market.

What is needed to open a company in Europe?

Now consider the question of how to open a company in Europe. First of all, opening a business in Europe is a rather time-consuming and labor-intensive process, so getting legal advice would be a really good step. But in any case, it is very useful to know the basic steps required to open your business in the EU.

First, you need to choose the legal structure of your business. The type of legal structure you choose will depend on your business needs, liability concerns, and tax considerations.

There are various types of legal structures for businesses in Europe. Their names are different, but they actually have the same working principle.

For example, the most popular form of business is the limited liability company. Most likely, you are used to seeing this type of abbreviation – LLP (LLC). National forms are, for example, GmbH in Germany, OÜ in Estonia, or UAB in Lithuania.

This legal structure is the most profitable for the owner in terms of maintenance costs, but it also opens up all possibilities for small and medium-sized enterprises.

Secondly, you need to choose a name for your company and register it with the responsible state agency. This usually involves submitting paperwork, paying a fee, and providing information about your company's directors and shareholders.

Thirdly, if it is necessary for the type of your commercial activity, you need to obtain all necessary licenses and permits. For example, to work with cryptocurrencies.

A very important step is to open a bank account for your company. You will need to open a bank account for your company to handle financial transactions and payments. You can choose both traditional banks and “neobanks” according to your company's needs.

Another important (though not required) step is to register your company's trademarks. We always recommend taking care to protect your company's intellectual property. Especially in the early stages, this can save you money and reputation in the future.

You also need to pay attention to taxes. You will need to comply with the tax requirements in the country where you operate. This may include registering for taxes, filing tax returns, and paying taxes on time.

In which European countries are business taxes low?

Which are the most profitable European countries to start a business in terms of tax policy?

For example, Cyprus. This is a country that offers a corporate tax rate of 12.5%. One of the lowest in the EU. In turn, this attracts small businesses and startups very actively.

Also, Cyprus has a good network of double taxation treaties. Accordingly, if a company does business not only in Cyprus but also in other jurisdictions, there will be no double taxation.

The country is successful in implementing projects to digitize administrative services for businesses. This only makes it easier to start a business in this country.

Estonia is also a very well-known and advantageous European jurisdiction. If you open a company in Estonia, you benefit from a 0% corporate tax. However, at the same time, the rate for companies that distribute dividends to their shareholders at the end of the tax year is 20%.

Lithuania is also very popular for startups and small businesses. Lithuania has a competitive corporate tax rate of 15%, which is well below the EU average. This country also offers reduced tax rates for small businesses - 0% corporate tax in the first year of operation and 5% in subsequent years.

You can read on our website to learn more about jurisdictions for opening a business in Europe.

Where is the best place to open a company in Europe?

There is no definitive answer as to which is the best country to start a business in Europe.

It depends entirely on the needs of your company. Most countries in Europe are suitable for starting a business as the government places emphasis on different points.

As we have learned, some countries offer very favorable tax rates for businesses, while some countries successfully support businesses during force majeure.

At the same time, the most favorable conditions for startups are in Southern and Eastern Europe, the Baltic countries, and Cyprus. They are very suitable for starting a business as they are profitable for their owners.

Thus, we can underline a few key points why it is advantageous to open a business in Europe.

First, Europe offers access to developed infrastructure and high-tech innovations that can help accelerate the development of a startup.

Second, Europe has a high standard of living and a large market with potential customers, which can help startups grow faster.

Third, many European countries offer tax breaks and other incentives for startups that can reduce initial costs.

Overall, Europe is an attractive market for startups due to its developed infrastructure, large market, and tax incentives.