Last Updated: December 7th, 2023

How to Start a Business in Europe? 5 Must Know Things

How To Start A Business In Europe? 5 Must Know Things

Europe is quite a popular destination for investment as the region is rich in business infrastructure, legal protection, and a skilled workforce. Moreover, Europe is the largest trading bloc in the world and collectively the second-largest economy in the world. Therefore, starting a business in Europe can open vast vistas of opportunities for you.

A large number of businesses are already investing in Europe and reaping the benefits. But before you jump on the bandwagon, there are some crucial factors that you need to consider. It is predicted that post-pandemic, the US economy is about to shrink, whereas the economy of Europe is about to expand. So, if you are planning on starting a business in Europe, it is the most suitable time.

However, it is easier said than done. You must learn about different factors before starting your new venture. You need to consider the suitable country to start your business, the laws of business for that particular country, popular European payment methods, taxation for your business, etc. To simplify your task, we have compiled the five significant factors you must consider before starting your business in Europe.

Which Countries Are Best to Start a Business in Europe

World Bank and other international organizations determine the business-friendliness of countries through research. There are some contributing factors involved in the results. The economic environment for a new business is affected by these factors.

Some of them are construction management, property registration, employing workers, getting credit, taxes, trading across borders, etc. When such things can be easily managed, those countries are considered easy to start a business.

In Europe, there are several countries where it is easy to start a business compared to the rest of the world. Here are the countries in Europe where it is easy to start a new business, starting from the best. Firstly, there is Greece, then Estonia, Ireland, Netherlands, Finland, Sweden, and Latvia.

Apart from these, other countries like Austria, Belgium, Norway, Denmark, France, and Lithuania are some good options for starting a new business too. Some of the countries with the lowest ranking for new business in Europe are Czechia, Hungary, Poland, Germany, Italy, and so on.

Residency Permit for Starting a Business

In order to start some kinds of businesses in Europe, you will need a residency permit from the country you intend to start your business in.

Whether you are a sole trader, in a partnership, or have a branch office in a European country, you will need a residency permit to run your business if it falls under certain sensitive areas.

In order to get a residency permit, you might need to submit some information regarding your country or business.

Your country’s economic condition might be considered before approving a residency permit. Moreover, your business plan, whether your business will have a strong positive impact on the European economy, culture, or science, will also be taken into account.

The immigration authority in the country where you want to conduct your business will determine your approval of residency based on these factors. Moreover, you might need to prove your start-up’s solvency.

Requirements for Setting up A Business

Every country has different laws that new business owners need to follow. Some countries might require you to show your available funds for your business and your family, especially if you intend to settle.

Furthermore, some countries might ask for information about how many job opportunities you will create through your business, while others don’t.

Business regulations for foreigners can be different in many European countries. You must know about them and abide by them. The regulations regarding business permits, registration, tax, etc., can vary depending on the country. You must learn the legal terms for starting a business in the respective country.

The governing body for your business can also vary from country to country. They will help you register your business and get business identification for taxation and social security administration.

Some countries might need you to be a member of a trade association or some other collective body.

Additionally, in some countries, the regulatory authority does not just regulate the legal aspects. They also provide training, helpful advice, business plans, and support so that your start-up can maximize its revenue.

Tax Rates for Different Countries

As we mentioned earlier, the tax rate differs from country to country in Europe. The countries with the lowest tax rates might be more suitable for your new business. However, you also need to consider other factors too.

Three possible taxes are involved when you are planning to start a business. They are corporate taxes, income taxes, and value-added taxes. Bulgaria, Cyprus, Hungary, Ireland, and Lithuania are countries with the lowest corporate tax rates in Europe.

The Negative Factors in Business

If you start a business in a new location, you will definitely need to do market research to understand the suitability of your business in that area. If your business plan does not work in that country, your business might fail even if you get a business permit.

Apart from the generic business strategies, when you run a business in a new country, you need to consider that country’s social and cultural scenarios. Some things that can hurt your business are corruption, crime, or other illegal activities.

Corruption is widespread in some European countries, like Portugal, Spain, Cyprus, Malta, and Italy. On the other hand, countries like Denmark, Finland, Sweden, Netherlands, etc., have low corruption.


You can be certain that starting a business in Europe will definitely take a toll on you. You need to be prepared for that. You need to carefully assess and think about myriad business aspects, such as Europe’s economic and legal environment.

Although the responsibility doubles when you expand your business to a new continent, you can reap additional benefits in greater revenue and profits. So, if you do things right, the risk can become worthwhile.

Related ⁄