Best European Countries to Start a Business

The global expansion opens your business to international markets, talent, and multiple growth opportunities. In short, this strategic move can take your business to new heights. But let’s not forget the most important fact here: While the idea of going global is exciting, it comes with its fair share of challenges. 

Opening up a business in a foreign country requires in-depth research and planning. One of the most crucial steps of that planning process is deciding which country to expand to. In this blog post, we have listed the six best European countries to start a business and explained what makes them a feasible choice for global expansion.

Selecting a Country for Global Expansion

Choosing a country for global expansion requires considering several critical factors. Every country has its own blend of cultural, legislative, and commercial rules and values surrounding business. Although opening up a business in most foreign countries is now possible, some countries are more flexible and inviting than others. 

The following factors can help you choose a foreign country for expansion: demand for your product and services, competition, tax laws and exemptions, unemployment rates, and the country’s GDP. Moreover, you should look at the estimated costs and the ease of business in a particular country. 

These factors indicate the health of a country’s economy, the prospects it holds for your company, and the cultural values you will have to operate within. 

Starting a Business in Europe

European countries are lucrative choices for foreign investment and business formation. With a $15.6 trillion nominal GDP, this continent is the world’s second-largest economy and one of the biggest business hubs. In 2020, nine European countries made it to the top 20 in the ‘Ease of Doing Business Ranking’ by the World Bank. It features suitable infrastructure, a skilled workforce, tax reliefs, and numerous other advantages for foreign investors.

Each European nation offers different incentives to foreign investors and entrepreneurs. Here is a brief overview of the six best European countries to start a business.

Germany

Germany is the largest economy in Europe and the fourth largest economy globally. A population of 82.3 million people and a high spending power make it a huge consumer market for all businesses. Its central location in Europe also helps businesses get a foothold on the continent. 

This country is currently leading the race of many fast-growing industries like automotive, technology, financial services, and pharmaceuticals. Another major plus point of opening up a business here is the availability of skilled labour. The good education and training system prevalent in the country has made its workforce highly productive. 

Infrastructure is a crucial prerequisite for every business, and Germany excels in this regard. It encompasses 830,000 kilometres of roads, 38,000 kilometres of railways, and an advanced telecommunications network.

Moreover, Germany’s political and economic environment is stable enough to protect your business ideas legally. Also, every German state has a certified information centre that offers free help to entrepreneurs in various business matters, like networking and funding. You can also benefit from government assistance programs to get the needed funding.

Spain

Spain is currently one of the fastest booming economies in the world. Its economy is ranked 4th within the European Union (EU) and 14th within the Organization for Economic Cooperation and Development. 

With a population of around 46.6 million people and an influx of more than 82 million tourists annually, this country has a huge potential as a consumer market. Tourism is an important sector that contributes a minimum of 16% of the country’s GDP. 

Spain also has an excellent trade position. Being a member of the European Union, it can benefit from the free movement of goods, people, capital, and services. 

It is also a part of the World Trade Organization (WTO) and the General Agreement on Tariffs and Trade (GATT). The country has also established numerous Free Trade Agreements to enhance its trade position significantly. 

One of the greatest advantages of starting a business in Spain is that the country’s tax system is highly favourable for foreign investment. The Spanish Tax Agency (STA) has a fully computerized system that allows you to handle most procedures online. Also, the tax burden is surprisingly minimal as it remains under the average burden of the EuroZone and EU-28.

Portugal

Portugal is another attractive European destination for startups. Although Bureaucracy is not its forte, opening up a business has made it easy for foreign investors. The startup campuses in Lisbon and Porto are home to many innovative businesses supported by generous investment and tech visas, research and development funding, and a skilled workforce. 

In 2021, Portugal held the 36th position in the IMD ranking for being economically competitive. It also comes in the top 10 countries that easily register a company. The Portuguese System of Quick Registration on the Spot Firm enables you to establish a company by filling out one form. 

The Portugal Golden Visa Program provides residential permits through eight investment alternatives, including starting up a business. The cost of hiring a skilled workforce in Portugal is also less than in other EU countries. Plus, this country also ranks high on the Human Development Index, an average measure of happiness and living standards. It is known to provide a safe and friendly environment to ex-pats. 

Other benefits to starting a business in Portugal include a strategic location within Europe, a competitive corporate tax rate, access to European Union markets, and a thriving tourism industry.

France

Being Europe’s third-largest economy and the most visited country, France also makes it to the list of the best European countries to start a business. It’s a viable destination for all types of businesses, especially the epicentre of tech startups.

Setting up a business is a quick and affordable deed. Entrepreneurs can incorporate a Limited French Liability within two weeks with just one director and a shareholder of any nationality. The minimum requirement for paid-up share capital is just €1.

The French government offers numerous financial incentives to encourage foreign businesses to set up in France. 

For example, The Public Investment Bank provides low-interest rates to support innovation projects for firms that have been operational for three years with less than 250 employees and less than €50 million in revenue. Such firms can also avail of a public guarantee scheme on bank loan financing, developing new products and services, and investing in research and development.

The government also provides an investment of around €15 million to unlisted resident firms with an annual turnover of at least €20 million and just one profitable year in the last three years. 

Other factors that make it easy to start a business in France include a network of tech hub cities, generous visa programs, and thriving startup campuses.

Italy

Business expansion in Italy entails numerous benefits for entrepreneurs. This country is well-known for its investor-friendly culture. A special committee in its Ministry of Economic Development focuses solely on attracting foreign businesses. The Italian Trade Agency also supports foreign investors throughout their expansion into Italy.

One of the largest contributors to Italy’s GDP is its manufacturing industry. Like Germany, Italy is also well-known for manufacturing high-quality products with cutting-edge designs. This means it’s a good place to source metals, paper, textiles, ceramics, and plastics for your business. 

Another major benefit of starting a business in Italy is its strategic location along the Mediterranean Sea. This position makes it a perfect trade hub for firms who want central access to North Africa and the Middle East. Approximately 20% of global maritime traffic goes along its Mediterranean port.

Since Italy is a member of the European Union, expanding into this country also gives you access to tens of millions of customers across the economic region. Plus, the government has put several policies and incentives in place to enhance the competitiveness among the firms, like tax credits and deductions.

The Netherlands

Starting a business in the Netherlands can also be a highly lucrative decision for entrepreneurs. 

Firstly, the Netherlands is strategically located between key European economies: Germany in the east, Belgium in the South, and the UK, France, and Luxembourg within a day’s reach. Holland’s direct access to the North Sea makes it a great point for major global seaports. 

Investors looking to start a business in the Netherlands can benefit from the ‘ondernemersaftrek’ or the entrepreneur allowance; it allows them to pay less income tax if they meet certain criteria. In addition, foreign firms can also benefit from the Netherlands’ bilateral treaties with numerous nations, like the USA, Australia, Luxembourg, and Singapore. Such treaties enable them to avoid double taxation.

The Dutch Government’s support for research and development projects makes the Netherlands one of the best European countries to start a business. Some examples of the Dutch government’s support include the WBSO scheme or the R&D credit to compensate a firm for its wage and other costs. 

Expand Into Europe With Start Company Formations

Expanding into Europe comes with a lot of benefits. However, it requires deep research, planning, and due diligence. This is where Start Company Formations can help! Get in touch with us if you need help with the tasks involved in setting up a business in any country – filling up the documents, establishing an office, taking care of accounts, dealing with tax rules, ensuring compliance, etc.