When it comes to starting a business today, the world is yours. This article covers the benefits of starting a business in Denmark, Romania, Estonia, Sweden and Lithuania.
Globalization and the rise of digital technologies have made it easier than ever to start a business in a new country. So how do you choose what suits your business? With a new report revealing the best European countries, we are exploring the advantages of the first five countries, from the lowest tax rate to high-growth markets, government incentives and access to skilled workers.
1 – Denmark :
Denmark is one of the fastest growing countries in the world. “The government simplifies the construction process in simple steps and at minimal cost.
According to the World Bank Doing Business report, published in 2019, the country has also benefited from reforms that specifically aim to reduce the cost of corporate taxes by lowering the corporate income tax rate and lowering the minimum required capital.
Thanks to the ease of cross-border trade, the potential European report ranks Denmark first, which the World Bank attributes to the importance attached to online procedures for efficient business management. In Denmark, almost all the transactions examined can be done online, and the introduction of an online platform allows simultaneous commercial and tax registration.
The flexible labor market, known as “resilience” where companies can easily hire and fire workers, while unemployed people get unemployment benefits, is also a key component of the favorable business climate in this country. The Danish workforce is one of the most productive in Europe and there are no restrictions on overtime, allowing companies to work 24 hours a day, 365 days a year.
2 – Romania:
Business in Romania thrives thanks to the booming economy. The economy grew 5.7% year-on-year in the second quarter of 2017, the fastest rate in the European Union, with an average growth rate of 2.4%. This explains a 4.8% increase in GDP in 2016 and an increase of 3.9% in 2015. During the same period, the British economy experienced quieter growth of 1.8% and 2.2%.
Romania is a particularly attractive destination for tech startups. The Communist heritage that focuses on science, mathematics and technical education prefers a large group of skilled workers. The country also has one of the world’s fastest broadband internet speeds (behind Singapore, Hong Kong, South Korea and Iceland), which has contributed to the rapid growth of this industry, whose share is expected to double GDP to 12% by 2025.
Operating and overhead costs are also low. Commercial real estate, energy and utilities are three to five times cheaper than Western Europe. There are also tax advantages, including foreign tax exemptions and tax exemption on reinvested profits in equipment.
Romanian businessman Marin Lachimov, the founder of 3D human development, said that the government support program was particularly effective in promoting entrepreneurship. “The government is providing a grant of 40,000 euros to the Romans who live abroad to start a business in the country,” he said. “It was a good start for entrepreneurs and helped Romania to develop.”
He adds that the growth of companies such as Ford and Dacia in the country has also created more small companies to support their activities.
3 – Estonia:
Since Estonia declared access to the Internet a fundamental right in 2000, it is not surprising that the country was dubbed “E-stonia”. Free public Wi-Fi is widespread in cities, including the capital, Tallinn, which also includes a science and technology park called Tehnopol, which helps support about 180 companies.
The e-residence program makes it very easy to start a business in Estonia. At the age of 15, Estonian citizens obtain an electronic identity that gives them access to about 4,000 online services, including banking, contracts, commercial registry, and tax services. Last October, the government took steps to allow non-citizens to access electronic identities as well.
Taxes are also a breeze in Estonia. According to the International Tax Competitiveness Index of 2014 of the Tax Studies Association, Estonia has the most competitive tax system in developed countries. The state does not impose corporate tax in the traditional sense. Instead, it distributed corporate earnings at a capital gain rate of 21%. If the company reinvested its profits in the company, they would not have any tax burden to pay. Estonia also provides full exemption from all income earned abroad in what is known as the “regional” tax system.
4 – Sweden:
Sweden offers favorable taxes. Currently, the country not only introduces a corporate tax rate of 22%, but also seeks to reduce it to 20.6% by 2021, with the aim of stimulating business.
The country’s progressive stance towards social security means that businessmen feel more free to take greater risks, knowing that there is a reliable safety net if things go wrong. Generous parental leave allowances allow businessmen to run businesses while comforting their families. Research shows that allowances encourage entrepreneurship.
Another reason to start a business is the transparency of Sweden in terms of information and data. For decades it was possible to verify anyone’s salary.
Businessman Lars Hammersholt Petersen believes that this openness to sharing information is especially beneficial to startups. “Since the data is available and free, it is easy to target your product or service, especially if it is specialized,” explains CEO and director of Benchmark IT.
5 – Lithuania:
Lithuania, like its neighbor Estonia, has been at the forefront of technology startups. According to Startup Lithuania, there were at least 320 tech startups active in the country at the end of 2016. From 2006 to 2015, startup Lithuanian companies raised a total of 165.3 million euros, compared to 103.3 million in Latvia and 280.6 million In Estonia.
Not surprisingly, the country is an ideal place for the technology sector. Startups in Lithuania can reach an impressive array of qualified young graduates. The country, which is the first in EEC in terms of graduates in mathematics, science and technology for the individual, is able to offer a group of highly qualified professionals in the field of information technology. According to Statista, 97% of Lithuanians of working age (25-64) know at least one foreign language. The country also has the fastest public Wi-Fi network in the world. According to Rotten WiFi, a beta service that evaluates public Wi-Fi networks based on customer speed and satisfaction, Lithuania tops the competition when it comes to average download speeds on public Wi-Fi networks.
Startups and small businesses also benefit from massive support, with many entrepreneurial events organized each year, including Silicon Valley coming to the Baltic with over 1500 participants, and Jam Jams and hackathons mainly organized by Startup Lithuania.
Finally, Lithuania benefits from its location at the crossroads of four profitable markets (Western Europe, Scandinavia, Russia, and the Commonwealth of Independent States), which is the largest market for all Baltic countries.