How to start an EU business

A Comprehensive Guide: Why and How to Start a Business in the EU

Starting a business can be an exciting and rewarding venture, especially in the European Union (EU). With over 27 countries to choose from, its vast market provides access to a large customer base presenting significant opportunities for growth and business success.

Whilst there are many positives and many opportunities, planning and navigating the process of starting a business in the EU can be complex and requires careful planning and adherence to legal requirements unique to each of the 27 EU member states. That’s why we’ve curated this helpful blog, a comprehensive step-by-step guide with key considerations to successfully open a business in the EU with as few headaches as possible!

Step 1: Compare the different EU countries where you might consider starting a business

Each of the 27 member states have its own legal requirements, business regulations and tax systems. Conduct thorough research to decide on the country within the EU that best suits your business needs and where you wish to establish your business. When selecting the country, it is important to consider various factors such as:

  • Ease of starting a business
  • Local business regulations
  • Networking options
  • Business banking options
  • Remote management options for your business
  • Economic stability
  • Costs and taxation
  • Potential for growth
  • Ease of business operations

In your research, you’ll soon see there are some real hot spots with thriving start-up ecosystems in Europe. For example, cities such as Barcelona, Lisbon, and Tallinn are all hotbeds for entrepreneurial activity. As well as having excellent structures in place, they also have incredible support networks, networking opportunities, and start-up hubs which will all help you and your business.

Step 2: Determine if you need to relocate or start a remote business?

Starting a business in the EU presents exciting opportunities for entrepreneurs but the process of setting up a business in the EU may vary from country to country.

A big thing to consider is whether you actually need to relocate to a country, or whether you can operate remotely. Estonian online government program, e-Residency, has a dedicated online resource to help you get started on deciding where is the best country in the EU to start your business and how Estonia compares to other markets as a viable option. Click here to discover the unique benefits and opportunities for entrepreneurs in different EU countries.

Why should you consider Estonia as a location to start your business?

As a premium e-residency service provider supporting business startups in Estonia, here at Silva Hunt, we know that Estonia has everything you need to start and grow a successful business. Take a look below at just some of the reasons we have highlighted why Estonia may just be the right choice for your business…

  • 1. Company Formation and Tax

    • Estonia is a member of the EU single market, Eurozone, and Schengen Area.
    • Estonia charges zero corporate tax on reinvested profits and a standard rate of 20% on distributed profits (reducing to 14% after three years of regular dividends). However, starting from 2024 only one flat rate of 24% will come into force. Click here to learn more about corporate taxes in Estonia.
  • 2. Minimum Share Capital

    Thanks to recent legislative changes to the Estonian Commercial Code, the minimum share capital for a private limited company (OÜ) starts at €0.01 per shareholder, and e-residents can start a company fully online in a few hours. Learn more here.

  • 3. Business Bank Account

    In Estonia, e-residents have various options for business banking, including fintech companies like WiseRevolut, or Paysera, and opening a bank account with a bank from another EU or EEA member state. Check out our blog on the best banks in Estonia in 2023 for e-Residents here.

  • 4. Business Environment and Economic Outlook

    Estonia has a favorable tax code and business environment, ranking #1 on the Tax Competitiveness Index for several years.

Estonia’s thriving start-up culture: Often hailed as “Europe’s Silicon Valley,” Estonia has become a magnet for founders from the US, UK, and other European nations. Beyond its solid business infrastructure, the country is rich with entrepreneurial events, conferences, competitions, and support agencies. Add to that an abundance of coworking spaces, incubators, accelerators, and top-notch food, drink, and entertainment options, and it’s no wonder many founders, freelancers, and business owners choose to work nowhere else!

Want to know more about e-Residency or set up a legal entity in Estonia?

Step 3: Do you financial planning and consider the ease of opening a bank account

When choosing the location for your new business adventure, take into consideration the available funding as well as opening a bank account. Here are some things to consider:

  • Funding options

    Explore various funding sources, such as bank loans, venture capital, angel investors (EstBAN), crowdfunding, or EU grants and incentives. Remember, that Estonian companies founded by e-Residents are also eligible for various EU grants. Contact us, to learn more about the opportunities that might be available for you!

  • Business Bank Account

    Open a business bank account in your chosen EU country to handle finances and transactions related to your business. Here’s an overview of Estonian banking options: READ MORE

  • Business Accounting

    Consider hiring a local accountant to manage your financial records, taxation, and reporting requirements.

Step 4: Network and search for local support

Building a strong network and seeking local support is crucial for the success of your start-up business. Embrace the EU’s vibrant startup ecosystem within your chosen EU country and seek support from various resources:

  • Business Networking

    Attend industry events, trade fairs, conferences, and seminars to meet and connect with potential partners, clients, investors, and mentors. Join local business networks and chambers of commerce to expand your contacts. As we mentioned earlier, there are some real hotbeds in Europe where there are tons of networking opportunities and some fantastic start-up conferences, such as Latitude59 in Tallinn for example.

  • Coworking, Incubators, and Accelerators

    Estonia is home to multiple startup incubators and accelerators like Ajujaht, Prototron, Lift99, offering mentoring, coworking spaces, and an engaged startup community. Estonia boasts a range of coworking options, from the luxurious to the affordable. Most of these places offer free tours, ensuring you can select one that fits your needs, offers a nurturing community, and serves the best coffee!

  • Government support

    Estonia is recognized for its supportive government initiatives aimed at promoting entrepreneurship. Familiarize yourself with Estonia’s grants, programs, and services tailored for budding entrepreneurs, and leverage them to give your business a head start.

Step 5: Consider language, culture, and business environment

While the language and culture of your target audience are undeniably important factors, it’s also essential to acknowledge that you don’t necessarily have to establish your business in the same country as your target audience. Instead, consider establishing a business in EU country with a reputable business culture, a robust business ecosystem, and an openness towards international entrepreneurs.

  • Business Culture

    Look for a nation with a culture that nurtures entrepreneurship and supports startups. For example, with its commendable transparency, minimal corruption, and streamlined bureaucracy, Estonia stands out as an ideal location for businesses. Moreover, if you value digital advancement and innovation, Estonia’s business culture, which played a pivotal role in birthing companies like Skype, aligns perfectly.

  • Business Ecosystem

    A strong business ecosystem is key to your startup’s success. Estonia offers a vibrant business ecosystem that’s crucial for the flourishing of startups. From its renowned innovation hubs to extensive business networks, Estonia ensures startups have ample funding opportunities and robust policy supports. The success stories emerging from Estonia are a testament to its effectual startup ecosystem.

  • Openness to International Entrepreneurs

    Find a nation that warmly welcomes international businesspeople. Estonia’s e-Residency program is a shining example of the nation’s forward-thinking approach towards global entrepreneurs. Estonia, with its welcoming policies and a genuine appreciation for international business minds, ensures a smoother transition and brighter business prospects for newcomers.

  • Language Proficiency

    Don’t underestimate the importance of the dominant language spoken in the business community of your chosen country. As an English-speaking entrepreneur, you might find it easier to establish and operate your business in a country where English is widely used in business transactions. That is the case in Estonia. While Estonian is the official language, you’ll be pleasantly surprised by the widespread proficiency in English, especially within the business community. For English-speaking entrepreneurs, Estonia ensures ease of communication, enabling efficient business transactions and operations.

E-Residency Program in Estonia:

Estonia offers e-residency, allowing foreign nationals to get digital access to Estonia’s business environment for easy remote management and gain access to the EU single market. If you need any more convincing then take a look at our latest blog which reveals the top 5 reasons why you should consider setting up an Estonian business with e-residency.

If relocating to EU isn’t for you, Estonia’s e-residency program and tax advantages make it an attractive option for entrepreneurs seeking to start a business in EU. However, each location has its unique advantages and considerations, and entrepreneurs should carefully evaluate their specific needs and preferences before making a decision.

Whichever country you decide to embark on your new business venture, by following these guidelines and putting in the work, you can establish a strong foundation for your EU business and flourish!

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