Start a Business in Europe – Full Guide

Start a Business in Europe – Europe is one of the world’s giant business hubs with a sophisticated infrastructure, powerful legal protections, and a skilled workforce. The Europe Union stays the second-largest economy in the world with a $15.6 trillion nominal GDP and the largest trading block. In 2020, nine European countries ranked in the top 20 list of ease of doing business ranking by the World Bank report. Therefore, Europe stays one of the most stunning choices for international investment and starting a business.

In this article, you can gain knowledge about the following areas regarding starting a business in Europe,

Overview of the Europe Market

Overview of the Europe market- According to the United Nations Europe has 50 countries. It includes Europe union countries and others as well. The European Union (EU) is an economic and political association of 27 countries. Europe market is a collaborative economy that ranks as one of the leading three in the world alongside the United States and China. According to the Eurostat on 1 January 2021, the population of the Europe union stood at 447.2 million. It operates as a single market that permits the free movement of economic activities and people between member states.

The European Union (EU) countries included – Austria, Lithuania, Romania, Croatia, Italy, Germany, Denmark, Luxembourg, Finland, France, the Czech Republic, Greece, Hungary, Ireland, the Republic of Cyprus, Latvia, Belgium, Estonia, Malta, Netherlands, Poland, Sweden, Bulgaria, Slovakia, Slovenia, Spain, and Portugal.

The Europe market area includes Europe union countries and also Norway, Iceland, and Liechtenstein. These three countries are also part of the Europe Union market. Switzerland is not an EU or EEA member but they also part of the Europe market. They linked with the Europe union via many bilateral treaties without entering as a member state.

GDP per Capita Analysis to Start Business in Europe

Countries’ GDP per capita is suitable information for deciding to start a business in Europe. Bosnia, Albania, Kosovo, Montenegro, Georgia, North Macedonia, Ukraine and Herzegovina, Belarus Serbia, and Moldova are some nations considered as lower GDP per capita compared to the European Union nations. So it’s more promising that you can consider European Union countries to start your business because high per capita reveals people have much money to consume.

According to the World Bank Reports in 2021, the highest GDP per capita country in European Union is Luxembourg which is approximately 133 590$. The lowest GDP per capita country in European Union is Bulgaria which is approximately 12 221$. In the following, you can identify Europe Union Countries GDP per capita according to the 2021 World Bank report.

Europe Economic Overview for Start Business in Europe

Germany is the largest economy in Europe. It is about $4.03 trillion in value in 2022. Germany followed by the United Kingdom, France, Italy, and Russia. These five jointly hold a 50% share of the European economy. A total of ten European economies now allocate almost 80% share. San Marino’s $1.6 billion is the smallest economy in Europe.

Seven economies of Europe would have a GDP beyond $1 trillion, and 23 countries would have an economy of above $100 billion. In 2021, Ireland will surpass Austria. Four European economies are in the index of the top ten (10) largest economies globally. Nineteen (19) economies are on the list of the top 50 world GDP ranking.

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Europe Countries Ranking in the Ease of Doing Business Index

The ease of doing business index includes several meaningful benchmarks for doing business, such as starting a business, dealing with construction, hiring workers, registering property, acquiring credit, paying taxes, trading across boundaries, implementing contracts, etc.

Denmark is the number 01 Europe country to start a business in Europe according to the statistics of the ease of doing business index 2020. The second third and fourth places are carried by Sweden, Norway, and Finland respectively according to the Ease of doing business index rankings in Europe. The following includes Europe union countries’ rankings on the ease of doing business index in 2020.

Business Environment for Start Business in Europe

Global Competitiveness Report is a good source to recognize the business environment in Europe to start a business. It pinpoints constraints to growth and helps encourage the development of suitable strategies to reach sustained economic progress. Although European countries normally rate high in this report. According to this report, countries need to put a lot more effort to maintain their positions from one year to the next. This report provides a summary of the vital qualities of each country’s economy.

According to the 2022 report, Denmark ranks number 1 on the list. Also, Sweden, Finland, and Denmark ranked among the top 17 countries concerning macroeconomic steadiness with healthy budget surpluses and low levels of public indebtedness. Germany ranked 1st for the quality of its infrastructure, particularly transportation and communications. Also, France was praised for its excellent infrastructure, particularly transportation, communications, and energy.

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Labor Market Overview for Start Business in Europe

The Europe Union has an accommodating labor market, which provides the most efficient functioning and allocation of employees. Compared to the US, Europe has a more steady positive growth in the number of new jobs. It includes more youthful professionals between the ages of 15 to 25. In the EU, each government sets up its own social safety rules but the EU assures that every resident security cover applies in any country of the union.

If you are intending on hiring staff, Europe has a pool of qualified individuals available. Europe Union residents can work all across the EU. Some EU countries offer tax benefits and visa options to import professionals from outside.

Overall Workforces education level is a good indicator to get an idea about countries workforce quality. According to the Eurostat In 2021, 81% of individuals aged 25–54 in the EU had achieved at least an upper secondary level of education which is good compared to the world level. Employees’ English literacy is an important factor most entrepreneurs looking for. Most Europe Union citizens have reasonable English knowledge. But, many government applications in EU countries are still being proposed in the country’s native language only. For that reason, Ireland and the UK have a considerable advantage because their native language is English. English literacy among employe can differ between urban and rural areas in many parts of Europe.

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Tax Policies to Start Business in Europe

Tax policies to start a business in Europe – Tax policies are very typical ground for businesses to pick one country over another. Every government in Europe has its own tax rules. This has assembled an environment where countries are competing with each other. This tendency is best visual on the corporate tax level, the tax on a company’s profits.

In most countries, the corporate revenue tax is a flat tax that applies to every incorporated corporation. In others, the rate is a mix of national and provincial or municipal taxation. A corporation in Berlin finishes up paying less corporate income tax than one in Munich. For example, Germany and Italy, where the national corporate tax is fairly low. Once you add up all corporate taxes, these countries rank among the countries with the highest corporate tax in Europe region.

In most European countries, there are additional taxes for certain types of industries. For example, many governments have a tool in place to tax shipping and oil companies extra. A more recent trend is that governments impose a supplementary corporate tax on banks and financial organizations.

Some governments offer tax cuts to the corporate tax rate for firms that are very small or very innovative. For example, Romania uses a very low corporate tax rate for small business entrepreneurs. The Netherlands charged a decreased corporate tax for highly innovative businesses.

Taxes can differ with international relations among countries. If you are accomplishing trade across boundaries, you want to avoid paying double taxes. To do so, counties set up bilateral agreements named tax treaties. In these agreements, countries try to avoid double taxation as much as possible.

Below you can recognize combined statutory corporate Income tax rates in European OECD Countries in 2022.

Infrastructures to Start a Business in Europe 

Infrastructures to start a business in Europe – Infrastructures are a really important aspect of doing business anywhere in the world. These things are highly important in the European market because of the high tendency of business competitiveness. This infrastructure includes ports, transportation, delivery networks, Digital infrastructure, and many other things.

For example, you need to have efficient transportation and delivery networks to deliver goods to your customers across Europe and the globe. These things are included in the competitiveness index that the World Economic Forum published. 

For firms involved in importing or exporting goods into and throughout Europe, applicable information from the WEF report is the quality of a country’s port infrastructure. Countries are classified based on the quality of their infrastructure, not the quantity or worth of goods that pass through them.

If you are developing or going to sell a new type of digital product or service, you are looking for people that are capable to adopt that latest technology. It means how likely is it that a country, its individuals, administration, and firms make use of the opportunities that technology hands them.

In recent years, e-commerce became a major growth engine in the retail sector. However, the European Commission reports that 75% of Europeans use the internet daily. In comparison, only 15% buy online from another country, and only 7% of Small and medium enterprises sell cross-border.

Europe Digital literacy and skills are on a rising trend. From 2019 to 2020 internet users increased from 87 % to 89%.  In western and Northern Europe uses the internet over 95 % of the population. Eastern Europe use is the lowest usage of the internet on the continent it is near 77%.

Requirements for Initiate a Business in Europe

Requirements for initiating a business in Europe – There are many laws regarding business permits for foreigners in Europe countries. But most European countries do not require a work permit or any other type of visa to initiate a Business in Europe. As an entrepreneur, you only need a residency visa in the country where you intend to establish your business.

Most probably these residency visas are temporary for the first few years. When you achieve success as an entrepreneur you may be able to obtain a long-term residency visa. There are several kinds of business structures that you can set up to qualify for a residency permit. You can initiate your business as a partnership, a sole trader, a branch or company foreign office, or a company registered in your host country.

In addition to other factors to qualify for a residency permit, the country’s national and economic interests are taken into consideration according to your business industry.  If your self-employment or entrepreneurial activity is unlikely to make a substantial contribution to the economy, there is only a small chance that your business proposal or residency permit will be approved.

Some countries require a business plan to be able to obtain a residency permit to start a business in Europe. Your business plan may be examined by labor and immigration authorities to determine if it suits the economic needs of the country. In that case, your business plan needs to show that you will make investments and provide services for which there is a need in the country for your interest.

Some countries require you to demonstrate a particular amount of money available to fund your start-up. To initiate a Business in Europe, you must register your business with the local administration. The jurisdictions and responsible government mechanisms differ from country to country. Most of the time you need to get a business tax identification number and register with the respective social security administration to start a business in Europe.

To initiate a Business in Europe some countries also instruct businessmen to be registered members of a chamber of commerce or other governing institution. Chambers of commerce are not only regulatory organizations but also provide valuable information, business plan guidance, training, support, and resources for business start-ups in many countries.

Conclusion

The European market is a secure, promising, and attractive option for starting a new business as a foreigner. With many countries to choose from and access to a single European market, you cannot go wrong when choosing Europe as your investment option.

In this article, we analyzed the Europe market position compared to the other parts of the world. Then we give you knowledge about Europe’s economic overview, the business environment for starting a business in Europe, labor market insights of Europe, tax policies to start a business in Europe, Infrastructures that you can access by starting a business in Europe, and finally requirements that you need for setting up a business in Europe.

You may be a starter businessman in Europe or trying to start a business in Europe, what else do you need to know about starting a business in Europe? Write and share your thoughts in our comment section. We try to give a lot more information near future regarding starting a business in Europe.