Top European Nations for Establishing a Thriving Start-Up Business

Top European Nations for Establishing a Thriving Start-Up Business

Starting a business in Europe no longer needs to be a daunting task. Although some nations may have stricter regulations that can make it difficult for non-EU citizens, others are inviting and welcoming to both domestic and foreign investors and entrepreneurs.

In response to COVID-19 and the energy crisis, Europe has been taking steps to support and encourage small and medium-sized enterprises (SMEs). It currently offers various financing and support schemes, such as the Single Market Programme, Connecting Europe Facility (CEF), Horizon Europe, the Your Europe Business Portal, Enterprise Europe Network, and Erasmus for Young Entrepreneurs.

Europe homes to over 24 million SMEs in 2023

As per Statista, there were about 24.4 million SMEs in the European Union in 2023, employing close to 85 million people. These SMEs made up about 99.8% of all active businesses in the continent and played a crucial role in smaller regions and towns.

Ease of conducting business in any country involves considering essential factors. The World Bank's Ease of Doing Business index has broken down these factors into ten parameters, which include:

• Starting a business
• Dealing with construction permits
• Getting electricity
• Registering property
• Getting credit
• Protecting minority investors
• Paying taxes
• Trading across borders
• Enforcing contracts
• Resolving insolvency

Top countries in Europe for starting a business

Although not every country excels in every category mentioned above, here are some of the most business-friendly countries in Europe:

Ireland

Ireland is a popular choice for starting a business in Europe due to its status as a high-income, digitally advanced economy. With smartphone usage reaching 90% and household internet access hitting 92%, the country sets the stage for businesses focused on tech and digital products. Enterprise Ireland invests in around 200 startups every year, indicating a warm welcome for entrepreneurs worldwide.

According to the World Bank's Doing Business in the European Union 2020 study, several Irish cities rank highly on many of the parameters mentioned above. Businesses can quickly enforce contracts and obtain electricity in Cork. Dublin excels at these two aspects, as well as starting businesses and issuing construction permits. Waterford is renowned for its efficiency in issuing construction permits, while Galway stands out for its ability to register property and start a business.

Ireland's membership in the European Union, OECD, and Eurozone, along with using the euro and having English as one of the main languages, offers various benefits to European entrepreneurs, such as increased business ease, a larger market within the EU, and cost savings from avoiding foreign exchange or translation fees.

Entrepreneurs from the UK, Iceland, Norway, Switzerland, and EU members do not require permits or visas to establish a business in Ireland. The country also supports the remote company setup and registration for non-EU citizens. Ireland offers one of the lowest corporate tax rates in the world at 12.5% and has a Double Taxation Treaty with 72 countries.

Bulgaria

Bulgaria is an increasingly popular new business hub in Eastern Europe due to the relatively low bureaucracy involved in setting up a company, which can take only a couple of weeks. Administration costs are also relatively low compared to most of Europe, with a corporate tax of just 10%.

Foreign companies face no legal restrictions when purchasing land in Bulgaria, and only pay operational costs after registration. EU entrepreneurs can also benefit from the cheap labor, highly-skilled and multilingual workforce, low cost of living, and access to the European Single Market since Bulgaria is part of the EU.

Bulgaria's geopolitical location in Southeast Europe offers easy access to other established markets such as Greece and Turkey, while opening opportunities in Serbia and North Macedonia. However, corruption remains an issue in Bulgaria that needs to be taken into account while considering the type of business and location within the country.

Bulgaria allows remote company registration, but corruption remains an issue that should be considered when choosing the type of business and location within the country.

Netherlands

According to the World Economic Forum, the Netherlands is the fifth-largest economy in the European Union, with a gross domestic product of around $990.6 billion (€918.7 billion), representing about 5.96% of the EU economy. Situated conveniently in Western Europe, the Netherlands has a highly cosmopolitan, well-educated, and adaptable workforce. The Dutch government offers a range of business support schemes and tax incentives to fresh businesses. Although the corporate tax rate is slightly higher than some other European options at 25.8%, some business owners may find it worth the investment due to the location and market access.

Incentives include an entrepreneur allowance, as well as a 30% ruling, which allows employers to pay 30% of foreign talent's salaries without tax deductions. The government supports research and development, as well as innovation, by refunding a variety of costs for companies conducting scientific research or developing new innovative products. The Netherlands is especially popular among entrepreneurs with advanced tech companies such as robotics and artificial intelligence, as well as retail.

Sweden

Sweden has been ranked second in the Network Readiness Index 2020, which measures a country's readiness for digital transformation and the propensity of people, businesses, and governments to use available technology. Sweden is another startup and business hub for technology entrepreneurs, with a high number of early adopters of new technology. Notable Swedish companies include Ericsson, Astra Zeneca, Volvo, Sandvik, Klarna, and Spotify. With Sweden being the largest Scandinavian economy and having a thriving construction sector, it also attracts construction entrepreneurs, contributing to the country's robust infrastructure. A stable government and low corruption levels add to Sweden's appeal.

United Kingdom

Approximately 360,000 new businesses are established in the UK every year. Establishing a company in the UK is relatively quick, easy, and inexpensive, with postal applications processed within 8-10 days and online applications within 24 hours. With one of the most diverse economies and workforces in Europe, the United Kingdom also supports businesses during their first few years when profitability is low. It also offers tax relief when selling a business's assets. Moreover, the UK has a strong taxation and legal system with efficient processes and a corporate tax rate of 25% for all limited companies.

Overall, while New Zealand, Singapore, and Hong Kong have historically led the World Bank's Ease of Doing Business Index, recent data highlights Portugal as one of the top 5 most business-friendly countries in Southern Europe, offering generous R&D tax credits, startup grants, marine tech opportunities, and automotive and aerospace integration. Amsterdam, as the logistics and trade hub, stands out due to top-five global competitiveness, proximity to 95% of Europe's major markets, and circular economy leadership, making it a multilingual business support site. Germany and the UK remain strong economically, though ease-of-business specifics are not detailed in this article. Ireland and the Czech Republic are noted for low unemployment and growth, indirectly reflecting business-friendly policies.

1. A significant number of small and medium-sized enterprises (SMEs) in Europe are based in Ireland, a digitally advanced economy with a welcoming perspective towards entrepreneurs.
2. In comparison to many European countries, setting up a business in Bulgaria is relatively straightforward due to less bureaucracy, lower administration costs, and a corporate tax rate of just 10%.
3. The Netherlands, with a gross domestic product of around $990.6 billion, offers a variety of business support schemes, tax incentives, and a highly-educated workforce, making it an attractive destination for entrepreneurs.
4. Sweden, ranked second in the Network Readiness Index 2020, is another technology hub for startups, boasting a thriving construction sector and a stable government with low corruption levels.

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