The best countries for entrepreneurs in Europe with low taxes & business-friendly

Types of business registration


You can use two options for opening a business:

  • a company with several employees and owners ( usually, the right to have one employee and one owner is also available here). Different business forms are available for opening: limited liability company ( LLC), partnership, joint-stock company, etc.
  • an entrepreneur ( synonymous: self-employed, solo trader). You are here and represent your business independently. You are the one owner of the business, and you can’t share it with others.

General advantages of self-employed for foreigners

  1. Usually, opening a business in the country (self-employment or a company) gives you the legal right to stay and live in the country.
  2. In addition, entrepreneurial activity is easier to start and manage than a company.
  3. You don’t need to have a share capital for self-employment.

So, we will consider in this article what advantages of registering an entrepreneur in different countries and what amount of taxes should be paid in this case.

Notes: You can read here about the best countries for opening a company.

Georgia is one of the best countries for entrepreneurs

Advantages:

  • if the turnover ( revenue, income) of your entrepreneur activity is lower than 500 000 GEL ( ~125 000 €), the income tax is 1% of your turnover;
    And if your turnover is lower than 30 000 GEL (~ 7 500 €) per year, you don’t need to pay the tax at all. The tax rate is 0% in this case;
  • easy to receive a visa. You can be in the country using a tourist visa for one year;
  • low cost of living;
  • minimum documents are needed for an entrepreneur opening.

Montenegro: advantages of self-employed for foreigners

Advantages:

  • the income tax rate is enough low: 9% for entrepreneurs;
  • low cost of living;
  • a lot of beautiful places to live near the seaside.

Bulgaria: advantages of self-employed for foreigners

Advantages:

  • income personal tax for entrepreneurs in Bulgaria is low and equals 10% of income, but 25% of income can be automatically included in expenses, so a real tax rate is 7,5% of your income;
  • low cost of living;
  • beautiful nature with sea and mountains, which are good for summer and winter time spending.

Czech Republic: advantages of self-employed for foreigners

Advantages:

  • Czech Republic gives the possibility to decrease a self-employed income before tax:
    • income tax rate: 15 % for income up to CZK 1,867,728; if the income is higher the rate is 23%;
    • method 60/40 can be used. It means that you can decrease your income by 60% before income tax calculation. No invoices confirming your expenses are necessary in this case ( for income up to CZK 2 000 000);
  • the country is a part of the EU.

Notes:

  • social insurance contribution is 14,6% of the net income stated in the tax return;
  • health insurance contribution is 6,75% of the net income stated in the tax return.

Malta: advantages of self-employed for foreigners

Advantages:

  • the country is a part of the EU.
  • Malta has a progressive income tax rate. So, you don’t need to pay an income tax in case of low earnings ( up to 9100€ per year).
Income range per year, EURIncome tax rate for self-employed
0 – 91000%
9100-1450015%
14501-6000025%
over 6000035%

Notes:

  • social security contributions are 15% of the previous year’s annual income.

Examples of income tax calculation for self-employed by countries

Let’s consider what amounts of income will be received by an entrepreneur in each country in case of earnings for a year of 30 000€.
Let’s suppose that an entrepreneur has no expenses (only income) to simplify the example.

So, you can see a calculation below.

Country Self-employed income, EURIncome tax, EUREarnings after income tax, EURComments
Georgia30000=30000 * 1%=300=30000 – 300=29700
Montenegro30000 30000* 9% =2700= 30000-2700= 27300
Bulgaria 30000=30000 * (100%-25%)* 10%=2250=30000 – 2250=2775025% of income can be included in expenses without any invoices confirmation
Czech Republic30000= 30000* (100%-60%)) * 15% =1800= 30000 – 1800= 2820060% of income can be included in expenses without any invoices confirmation
Malta30000=9100×0% + (14500-9100)15%+( 30000 – 14500)25%=4685=30000-4685=25315progressive tax calculation

As you can notice using the example above, the biggest amount after all taxes you will receive in Georgia and the Czech Republic; following go Bulgaria and Montenegro with similar amounts, and the largest taxes are in Malta in this example.

Conclusions: how to choose the country for entrepreneurs in Europe


A choice of a country for starting an entrepreneurial activity depends on your priorities:

  • If you prefer a country in the EU with low taxes, the Czech Republic is your choice;
  • If you prefer to minimize the taxes and have a company in Europe, it is possible to do in Georgia and Bulgaria;
  • As you see, self-employing in Malta is better to use for low earnings. At the same time, Malta is an EU country;
  • Beautiful nature, good food, mountains, and sea you can find in Georgia, Bulgaria, and Montenegro.

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