Starting a Business in Europe?

Why Europe for Digital Business?

The reality is simple: business doesn't have borders anymore. With high-speed internet, cloud computing, and digital collaboration tools, you can run a company from anywhere. Europe offers the perfect intersection of competitive tax rates, solid legal frameworks, and quality infrastructure that remote entrepreneurs need.

The days of being a true "location-independent" digital nomad are largely over. As recently as 25 years ago, very few people left their countries to live elsewhere and, for the few who did, the general rule was that as long as you didn't visit a place too often or stay too long, most governments would accept your presence. Travelling and relocating have gotten much more complicated since then. Nowadays, with so many international businesses and so many global travellers, governments have made the process of establishing or reneging your tax residence far more complex.

The famous 183-day rule states that if you spend more than 183 days in a country during a twelve-month period, you become a tax resident of that country. However, this is just one test among many.

Most people think they are safe if they don't trigger the 183-day test, but they forget that in most Western high-tax countries, like those in the EU, a whole different set of rules apply.

European countries consider the 'closer connection test' - where your family is, where your primary bank is, where you go to the doctor and where your home is located. Anything that signifies a closer connection could be looked at.

For example, if someone spends four months in Spain yearly but has a home, family and bank account there, Spain might consider them a tax resident. The individual has only spent around 120 days there but, according to Spanish regulations and its connection criteria, they could be deemed a tax resident.

Many countries now actively court digital nomads and remote business owners through dedicated visa programmes, but these often come with their own tax implications. Whether you're freelancing, running an online agency, or building a SaaS company, the EU provides multiple pathways to establish legally compliant operations while enjoying excellent quality of life.

The key is understanding which countries offer the most practical advantages for your specific situation - and planning your residency carefully to avoid unwanted tax obligations.

European Union countries continue to attract entrepreneurs seeking favorable business conditions, competitive tax environments, and new market opportunities. Below are five leading destinations ranked by their corporate tax rates, from most to least favorable.

1. Montenegro - 9% Corporate Tax Rate

Montenegro leads with the EU's lowest corporate income tax at just 9%. The business registration process costs only €20+ and is straightforward for foreign entrepreneurs. Operating costs are attractive: one-bedroom apartments rent for approximately €300 monthly, while office space costs €12 per square meter. The Slavic culture creates a welcoming environment for certain immigrant groups, with locals valuing family and maintaining a relaxed lifestyle.

Ireland - 12.5% Corporate Tax Rate

Ireland maintains one of Europe's most competitive corporate tax rates at 12.5% for most businesses. For companies involved in Research and Development, there's an even lower rate of 6.25%. However, non-trading income and certain business activities are taxed at 25% Ireland.

As part of the OECD's Pillar II reforms, Ireland now applies a 15% minimum tax rate for large multinational corporations with global revenues exceeding €750 million. This change is expected to increase Ireland's corporation tax receipts significantly without deterring smaller businesses.

Ireland's business environment offers several advantages beyond tax rates. The country boasts the fourth fastest broadband speed in Europe according to the Global State of Internet Index Ireland for digital nomads, making it ideal for digital businesses. There are around 242 digital hubs throughout the Republic of Ireland that provide workspace solutions for remote workers and entrepreneurs.

It's incredibly easy to start a company in Ireland too - and you don't have to be resident there.

Poland - 19% Corporate Tax Rate

Poland offers competitive conditions with a 19% corporate income tax rate. The country's strategic location and rapidly growing economy (developing three times faster than the EU average) create excellent business opportunities. Operational costs remain low: studio apartments rent for €360 monthly, and commercial real estate ranges from €8-16 per square meter depending on location. The excellent education system ensures access to qualified professionals.

Czech Republic - 21% Corporate Tax Rate

The Czech Republic imposes a 21% corporate income tax, complemented by straightforward company registration procedures and ongoing business operations. Key advantages include economic stability, cultural familiarity for certain groups, and significantly lower costs than most EU countries. The government provides robust social support, maintains low corruption levels, and offers free education even to foreigners.

Malta - 35% Corporate Tax Rate

Despite a higher 35% corporate income tax rate, Malta attracts investors through its citizenship-by-investment program (requiring €750,000+ investment for one-year residency). The tax system remains simple and transparent. Real estate costs are notably low: office space rents for €8 per square meter (70% below EU average), and one-bedroom apartments cost €400 monthly. Lower average salaries also reduce labor costs.