The appeal of low-tax countries makes them a magnet for people from all over the globe. The ability to save the maximum part of what you earn is something to be happy about; right? 

Add the joy of residing in the beautiful backdrop of European landscapes and the places where you don’t even have to pay for social contributions, and you can hear the zippers of your bags zipping themselves up!

For the globe-trotters, freelancers, digital nomads, and practically anyone looking for countries with low taxes in Europe – here is the list of the top 12 countries.

So, read on, and get ready for your Europe escapade!

Countries With the Lowest Corporate Tax in Europe 

Here is the list of the countries with low corporate tax rates in Europe, which are perfect for people who wish to start their own businesses. 

1. Ireland 🇮🇪

Ireland’s amazing internet and education infrastructure coupled with a low corporate tax profile is making it increasingly popular among the international business community.

Numerous companies have opened their offices in the country and many small business owners are also starting their offices there.

Corporate Tax Profile | 25%

Ireland has two rates of Corporation Tax (CT) – 25% for income from an expected trade and 12.5% for trading income. Income generated from non-trading sources, such as rental and investments also incur a 25% corporate tax rate. 

The corporate tax is applicable on the profits made by a company in an accounting period, which cannot be longer than one calendar year.

Reasons to Choose Ireland

• Extremely competitive corporate tax rates.

• Highly educated and skilled workforce.

• A strong EU member with an English-speaking advantage.

• A unique mix of cultures and lifestyles.

2. Cyprus 🇨🇾

Cyprus is another excellent destination that comes with low corporate tax rates and beautiful landscapes. The community is vibrant and you can enjoy living in a unique cultural mix of people from all over the world.

As compared to other countries in the EU, Cyprus is cheaper in terms of cost of living without compromising the living standards or quality of life experiences.

Corporate Tax Profile | 12.5%

You have to pay 12.5% corporate income tax on the taxable income, and 20% capital gains tax on the gains you made via companies generating more than 50% of their value assets rooted in Cyprus. 

The VAT is 19%, and the Special Defence Contribution is 17% for the Cyprus tax residents, who generated income from dividends, rental income, and interests.

Reasons to Choose Cyprus

• Competitive corporate taxes. 

• Strategic location with cross-roads to Europe, Asia, and Africa.

• One of the safest countries with a decent population and the best private education sectors in Europe.

• Excellent healthcare and highly affordable real estate.

3. Bulgaria 🇧🇬

If you are looking for low-tax countries in Europe that offer a scenic backdrop with rugged mountains, and quality of life, Bulgaria is a solid pick. The country offers amazing Black Sea resorts, natural beauty, and competitive corporate tax rates.

You can enjoy a mix of both the Eastern and Western cultural elements, with great employment opportunities.

Corporate Tax Profile | 10%

You will be taxed on your worldwide income if you are a Bulgarian tax resident. If you are a non-resident, you will be taxed for the income you generate from Bulgarian sources only, through a withholding tax or permanent establishment (PE).

In general, the corporate income tax in Bulgaria is 10%. The tonnage tax rate for the operation of commercial maritime vessels is 10%. The income tax for gambling game organizers is 15%.

Reasons to Choose Bulgaria

• Bulgaria has some of the lowest wages in Europe, which makes it better for business owners trying to reduce labor costs. 

• The country has one of the lowest minimum wages in the EU.

• The social security contributions on salaries are also low.

• The cost of running businesses is low as labor, office rent, and utilities are extremely affordable. 

4. Estonia 🇪🇪

Estonia is another country with low corporate tax rates and is perfect for starting a company as the business culture is open and entrepreneurial. The country offers many funding opportunities and has an excellent digital infrastructure. 

One of the most powerful taxation benefits offered by Estonia is that the companies have to spend significantly lesser amount of time on tax compliance as compared to other countries in the OECD.

Corporate Tax Profile | 20%

Estonia’s standard Corporate Income Tax (CIT) rate is 20%, and if the dividend payments are regular, a reduced CIT rate of 14% is applicable.

Reasons to Choose Estonia

• English-speaking highly skilled workforce in the information technology and professional services sector.

• Corporate income taxes are only applicable to the profits that are distributed.

• No income tax on the profits reinvested or retained by the company.

5. Hungary 🇭🇺

Hungary is another low tax country in Europe that has a personal tax rate of 15% and a corporate income tax rate of 9%. You have to spend 183 or more days in the country in a calendar year or have a permanent residence there to become a tax resident.

Your center of interest should be Hungary if you have multiple homes in various countries. 

Corporate Tax Profile | 15%

When it comes to social contributions, the maximum annual amount is €2,000. The capital gains, dividends, and interest come with a fixed tax rate of 15%. Non-residents have to pay corporate tax only for the business activities of their Hungarian company.

They have the choice to pay the corporate income tax liabilities in either US dollars or euros. 

Reasons to Choose Hungary

• Convenient geographical location with a rich cultural heritage and low cost of living.

• Company formation is extremely easy and can be done completely online.

• Hungary is an EU member allowing you access to greater business support services and funding opportunities.

• The government offers multiple support programs and incentives to encourage business growth and foreign investment.

6. Czech Republic 🇨🇿

The Czech Republic boasts of a highly skilled workforce and is a reputed provider of outsourcing services. The country has a scenic landscape famous for its medieval architecture and has attractive tax rates.

The Czech Republic has a reliable legal and court system, transparent regulations, and a well-developed infrastructure, which foster a supportive business environment.

Corporate Tax Profile | 19%

The corporate tax rate is flat 19%, and the personal income tax rate is 15% for working employees earning an annual income of  €80,648. People earning more than this amount have to pay 23% tax.

Employees have to contribute 6.5% toward social security and 4.5% toward health insurance. 

Reasons to Choose the Czech Republic

• Exciting nightlife and world-famous party culture. Prague is often called the party capital of Europe. 

• The Czech Republic has an advantageous location in Central Europe with access to both well-developed Western markets and developing Eastern markets. 

• The country has a stable business environment with efficient industries, such as automobiles, mechanical engineering, etc. 

• Competent workforce and effective educational system.

7. Gibraltar 🇬🇮

Located at the southern tip of the Iberian Peninsula, Gibraltar is a British Overseas Territory with highly favorable tax laws. You can become a Gibraltar resident by starting a company or by demonstrating a high net worth.

To become a tax resident you have to spend 183 days or more or more than 300 days in three consecutive years. 

Corporate Tax Profile | 12.5%

The standard company taxation rate is 12.5%, and the companies are generally taxed on a territorial basis. Individual taxpayers can be either taxed under a Gross Income Based System (GIBS) or an Allowance Based System (ABS).

Employee contributions toward social security vary for income slabs and start from 10%.

Reasons to Choose Gibraltar

• Gibraltar offers a nice beach lifestyle with good nightlife and a cultural mix. 

• You don’t have to pay any VAT, estate duty, wealth tax, capital gains tax, or inheritance tax.

• If you prefer a rich and luxurious lifestyle then Gibraltar is not going to disappoint you.

8. Luxembourg 🇱🇺

Luxembourg is famous as one of the major financial centers of Europe with a favorable tax policy and international orientation. It is also one of the countries where the majority of firms are owned by foreign investors.

The country is known for its economic and political stability, favorable legal and tax environment, and a multilingual workforce. 

Corporate Tax Profile | 15%

Resident companies have to pay taxes on their worldwide income and non-resident companies and non-resident companies have to pay taxes only on their local income in Luxembourg.

The tax rates for both the non-resident and resident companies have been fixed as follows: 

• 15% for companies with a net taxable income not exceeding EUR 175,000;

• 17% for companies with a net taxable income exceeding EUR 200,000.

An additional 7% tax is levied as a contribution toward the employment fund. In some cases, businesses also pay the minimum tax. Its amount is set based on the closing balance in the last annual account. 

Reasons to Choose Luxembourg

• The country has good connectivity to all the major European cities, which facilitates easier trade and logistics. 

• Luxembourg has a business-friendly environment, political stability, a supportive regulatory framework, and efficient bureaucracy.

• The country offers an exceptional quality of life for both the residents and digital nomads, as well as employed professionals.

• The country offers ample opportunities for growth and development in all areas, such as academia, technology, and industry.

9. Bosnia and Herzegovina 🇧🇦

Bosnia and Herzegovina is another perfect country for digital nomads as well as people who are looking to start a business in a low-tax country in Europe. The country has highly affordable food, transportation, and accommodation options, and offers scenic backdrops of the Adriatic Sea and lovely mountains. 

Corporate Tax Profile | 10%

The corporate tax rate in Bosnia and Herzegovina is 10%, which is highly competitive. The standard VAT rate is 17%, and export has a zero rate. The taxes on income generated from capital, copyright, and any other such sources are paid at a rate of 13%.

Reasons to Choose Bosnia and Herzegovina

• One of the key advantages is the ability to cater to both the regional market as well as the European market. 

• The cost of doing business is competitive as operations are not expensive as compared to the other European countries.

• The government actively promotes foreign investments via attractive incentives, such as grants, tax benefits, and support tailored to various industries. 

• The country has cultural diversity and a vibrant lifestyle that make it perfect for young professionals as well as expats. 

10. Montenegro 🇲🇪

Montenegro is one of the lesser heard countries in Europe that offers a low tax profile and is more affordable than most countries in North America and Western Europe.

The crime rate is extremely low and the country is safe for residents as well as foreigners. The country offers scenic landscapes and is perfect for people looking for a relaxed lifestyle and connecting with nature. 

Corporate Tax Profile | 15%

The corporate income tax rate ranges from 9% to 15% and varies as per the income made by the business. For a profit of EUR 100,000, the tax rate is 9%, and for EUR 100,000.01 to EUR 1,500,000, there is a fixed tax amount of EUR 9000 and 12% on the amount above EUR 100,000.01. 

For business profits above EUR 1,500,000.01, the fixed tax amount is EUR 177,000 plus 15% on the amount above EUR 1,500,000.01.

While there are no local income taxes, the non-residents are liable to pay withholding taxes as well. 

Reasons to Choose Montenegro

• The corporate taxes are low and the tax system is not complicated. 

• The business or company maintenance costs are very low compared to other countries in Europe. 

• The government has a clear tax approach with a flat 15% tax on capital gains and rental income.

• Any new companies established in underdeveloped areas are exempted from tax for the first eight years, covering the first EUR 200,000 in taxes.

11. Georgia 🇬🇪

Loaded with natural beauty and a perfect mix of modern city life and old-world charm, Georgia is one of the best places in Europe for digital nomads as well as people looking for European countries with low taxes.

While you can become a tax resident after spending 183 days or more in a period of 12 months, the country basically attracts high-net-worth individuals.

Corporate Tax Profile | 20%

The country has a flat personal tax rate of 20%, which might look high at first. However, the country has a territorial tax regime, which means you have to pay tax only on your Georgian income and not the worldwide income. 

For entrepreneurs, the country charges absolutely no tax till the income hits €11.000 mark as its turnover. For companies with an annual turnover of €180.000, the tax rate is 1% of the turnover/revenue (and not profit).

There are no social security contributions but you have to contribute toward a pension scheme for your employees (not applicable to self-employed people).

Reasons to Choose Georgia

• Taxes for business people are really low.

• The country has multiple different micro-climate zones that offer exotic adventures, ranging from mountains to beaches and wine districts to old castles. 

• The cost of living is low, which means you can enjoy a good lifestyle and activities even if you are a freelancer or digital nomad.

• The immigration laws are smooth and the country allows dual citizenship.

Say Goodbye to All Your Tax Concerns With doola 

Earning money is hard but saving your hard-earned money is harder!

This is why we, at doola, help businesses, founders, and professionals from all over the world manage their taxes, choose the right business structure for their companies, and much more. 

doola also helps professionals and entrepreneurs manage their business documentation and tax filings while ensuring regulatory compliance for businesses in the US.

For more information or to find out more about doola’s services, grab a free consultation with our tax experts today!