Among European SMB founders, the most popular jurisdictions for incorporation in Europe are Poland, Estonia, Cyprus, Romania, and the United Kingdom. In this guide, we compare the pros and cons of each and answer the evergreen question: where should you open a company?
We’ve gathered everything that matters in one guide: jurisdictions, taxes, payment systems, and the most common mistakes entrepreneurs face when entering new markets.
Setting up a company in Poland
The Polish tax system, along with access to the vast EU market, all this makes Poland one of the most favorable environments for business growth. Let’s take a closer look at this jurisdiction.
- Tax environment for companies in Poland
Poland uses a classic corporate income tax system, with several options and reliefs for small businesses. The standard CIT rate is 19%, while a rate of 9% applies to small taxpayers with an annual revenue of not exceeding €2 million. Poland also offers an Estonian-style regime known as Estoński CIT: tax is due only when profits are distributed as dividends. This regime isn’t available to every company and generally requires at least three employees on payroll.
Poland has signed double tax treaties with many countries, including Ukraine, which ensures that shareholders’ dividends are not taxed twice.
- Administrative ease of doing business in Poland
A practical recommendation is to have at least two shareholders. If a company has a single owner, it must make monthly ZUS social-security contributions for that sole shareholder.
Incorporation is straightforward. For EU residents acting as founders, Polish-qualified e-signatures are sufficient; these can be issued via notarized forms or through an in-person visit to a Polish consulate. Company registration in Poland is typically completed online and usually takes 1–2 days. End-to-end, founders’ tax numbers and e-keys, company registration, and bank account, expect up to 2 weeks.
Opening a corporate bank account is relatively easy for companies with EU founders, but the director must visit the bank for identification. A local bank account is effectively mandatory for obtaining a VAT number.
- Regulatory environment in Poland
Poland offers a stable, predictable legal framework. Business law is well structured. Oversight is moderate, with authorities closely monitoring VAT, transfer pricing, and employment relations.
The generally favourable climate also supports raising investment as you scale.
- Ongoing company costs in Poland
Core recurring costs include accounting and a registered/office address. Hiring employees is not mandatory; a founder can act as director. Annual operating expenses are moderate.
- Labour market in Poland
The Polish labour market in 2025 remains strong, characterized by low unemployment, rising wages, and solid overall activity. At the same time, it faces several structural challenges, including demographics, labour shortages, the need for reskilling, and regional imbalances.
Unemployment rates sit around 5.4%. While wages continue to rise (e.g., PLN 9,055 is the average gross monthly pay), unemployment remains very low, at around 5.4% as of mid-2025. ≈For comparison, in April 2025, the average unemployment rate in the EU was 5.9%, and 6.2% in the Eurozone. Average salaries continue to increase: in March 2025, the average gross monthly wage in enterprises reached ≈approximately 9,055 PLN, up 8% year-over-year.
Demand for talent is rising across several sectors, including IT, services, hospitality, and real estate. At the same time, it is becoming increasingly difficult to find qualified professionals.
There is strong demand for specialists in cybersecurity, AI, and data science, and competition for talent remains high. In services, retail, and HoReCa, employers face high turnover and strong seasonality. Another challenge is the shortage of language skills and basic digital competencies among a significant share of the workforce.
For recruiters, this requires a significant shift in terminology and approach: you are not hiring an "employee" — you are entering into a contract with a contractor. The primary trend is speed: JDG enables cooperation to commence within 24–48 hours of accepting an offer, including the JDG registration process itself.
- English and services in Poland
Poland is convenient for Europeans: many government and banking sites have English language interfaces, banks typically support English, and the country has clear logistical advantages (modern highways, major freight hubs, Baltic Sea access, and well-connected airports).
A large resident entrepreneur community makes it easy to find English-speaking accountants, lawyers, and other services.
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Setting up a company in Estonia
Estonia consistently ranks among founders’ top choices. As of October 2025, e-Residents from Spain alone had registered 3,297 companies (per the official e-Residency portal).
The draw? A founder-friendly tax model for reinvestment, best-in-class digital state services, and a pro-EU business stance.
- Administrative ease of doing business in Estonia
Any individual or legal entity can found an Estonian company. Incorporation in Estonia is extremely simple and can be completed either remotely (using e-Residency or via notary) or with an in-person visit.From start to finish, allow up to 2 weeks.
Running the company is a low-touch operation — Estonia is a clear leader in administrative simplicity. Fintech accounts Payoneer, Revolut, Wise are widely usable. Classic bank accounts may require local substance (e.g., office, employees, domestic counterparties).
- Regulatory environment in Estonia
Estonia’s legal system is among the most transparent in the EU. Rules are EU-aligned and stable, and changes are announced in advance. UBOs must be declared in a public register, boosting bank and partner confidence. Accounting is mandatory for all companies; audit thresholds are size-based, so most SMBs avoid audits—keeping admin affordable and straightforward.
- Labour market in Estonia
In 2025, Estonia is undergoing structural adjustment. Unemployment reached 8.6% in Q1 2025 (a 12-year high), disproportionately affecting industrial roles.
Average gross salaries are approximately €2,100, with slower growth compared to 2022–23. Demand remains for skilled workers—especially tech, healthcare, education, and construction. IT hiring has cooled, but stays active.
Estonia remains the gold standard for remote-first operations, with e-Residency and the FIE (sole-trader) model supporting distributed teams and digital contracting.
- Digitalisation and languages
Estonia is the EU leader in digital public services. Incorporation, filings, and signatures are all online via the e-Business Register and e-Residency. The jurisdiction enjoys strong reputational trust among EU partners and banks.
Communicating with tax authorities in English is feasible. If you’re asking, “Where should I open a company?”, Estonia is a standout.
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Setting up a company in Romania
Romania is increasingly popular due to its balanced mix of tax, administrative, and practical benefits, as well as its geography that suits goods-based businesses. A growing base of resident entrepreneurs means access to English-speaking accountants, lawyers, and translators.
- Administrative ease of doing business in Romania
Incorporation in Romania is fast and straightforward. Any individual (including non-residents) can be a shareholder. Romania is in the EU and SEPA, simplifying European payments. Local banks are relatively open to non-resident entrepreneurs who hold residence permits, temporary protection, or a D visa.
If the director has no local ties, opening a traditional bank account may be more challenging—but a founder can often obtain a temporary residence permit as an entrepreneur, which is helpful for brick-and-mortar operations.
- Regulatory environment in Romania
Reporting is light and enforcement relatively soft compared to some EU peers—popular with IT, consulting, e-commerce, and services. Micro-enterprises enjoy simplified filings and standardized e-submissions. Authorities may require local accountants, which increases service costs.
- Labour market in Romania
Unlike its northern neighbours, Romania — despite the rapid growth of its IT and manufacturing sectors — maintains a more traditional approach to labour regulations. The classic employment contract (Contract de muncă) remains the dominant model. This creates a sense of stability and long-term commitment, which local specialists highly value.
Romania’s unemployment rate remains low, at around 5.5% as of March 2025. However, there are significant regional disparities that should be taken into account when choosing a location for business relocation: some regions have noticeably lower employment levels and weaker economic activity.
Even so, the ability to hire talent on competitive terms is still higher in Romania compared to Western Europe.
B2B and freelance models are developing but have not yet become a broadly accepted standard, unlike in Poland. Romanian legislation imposes strict requirements for official employment, social contributions, and employee protection. For recruiters, this means less flexibility but greater legal predictability in long-term hiring. In some industries, this is offset by the ability to attract foreign specialists. Demand is growing for professionals in software development, cybersecurity, and artificial intelligence—with salaries in these fields among the highest in the country. The services sector is expanding rapidly, while HoReCa faces a severe talent shortage of 20–25% or more.
- Other practical factors
Romania’s location supports EU exports; infrastructure in transport and digital services is improving quickly. Office, services, and staffing costs are lower than in Western Europe, making local teams cost-effective. English is used daily among younger professionals, and the ecosystem is adapting to foreign investors, thereby easing communication with authorities.
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Setting up a company in Cyprus
Thanks to its convenient tax system and lack of an “offshore” designation, Cyprus remains a favorite among European founders. As an EU and EEA member, it facilitates trade with Europe and access to international services, with a generally pro-investment climate.
- Tax environment in Cyprus
This jurisdiction is advantageous for large businesses according to lowest corporate tax rates in the EU — 12.5%. Dividends paid to non-residents are not subject to Cypriot withholding tax.
A standout feature is the non-domiciled (non-dom) status—a special regime for Cypriot tax residents who are not domiciled in Cyprus. Non-doms are exempt from tax on passive income (e.g., dividends, interest).
Cyprus is one of the few EU countries where you can be a tax resident yet pay low or zero tax on passive income while enjoying EU living benefits.
- Administrative ease of doing business in Cyprus
Cyprus is not the fastest in admin. Any individual or legal entity can found a company, and the process can be fully remote. Company name pre-approval is mandatory. Budget up to 1 month for full incorporation. UBO data must be filed after the registration is complete.
To be taxed under standard rules, a company must be a Cyprus tax resident—meaning that management and control occur in Cyprus. Practically, the director and secretary should be residents of Cyprus. Owners can act in these roles if they themselves are residents; otherwise, you’ll engage local officers (added cost).
Cyprus accounting is relatively straightforward, but an annual audit is mandatory, which adds time and expense—although audit fees are typically moderate.
- Regulatory environment in Cyprus
Cyprus follows English common law, offering investors predictability. As an EU member, it applies a wide set of EU directives and standards. Financial services face high regulatory standards; if your activity is regulated (such as funds, investment firms, or crypto), be prepared for strict compliance. Not every business line is regulated; however, correct classification is crucial to prevent breaches.
- Labour market in Cyprus
The recruitment market in Cyprus is dual-layered: it is split between local specialists with Greek language skills and international talent (remote expats from the EU and Ukraine). The unemployment rate in Cyprus dropped to approximately 4.3% in 2025.
Companies in Cyprus often prefer contracting with individuals operating through their own business entities, especially for remote roles. There is consistently strong demand for professionals in Compliance, finance, and international sales with relevant experience.
Recruitment here often has an informal, network-driven nature, where referrals and personal connections are valued more highly than in traditional jurisdictions. Official employment (employee status) largely remains the prerogative of senior leadership and critical resident staff.
- Other practical factors
Cyprus offers a transparent, English-friendly legal environment integrated with the EU. Paths to tax residency, and even citizenship via investment, are clearly defined (e.g., real estate, bank deposits, government bonds). Strategically located between Europe, the Middle East, and North Africa, it serves as an advantageous hub for international trade and exports. Its reputation as a reliable base for holdings, IT, and finance keeps it near the top of many founders’ lists.
Strategically located between Europe, the Middle East, and North Africa, it serves as an advantageous hub for international trade and exports.
Its reputation as a reliable base for holdings, IT, and finance keeps it near the top of many founders’ lists.
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Setting up a company in the United Kingdom
The UK attracts founders with a stable legal system, a top-tier investment climate, a deep financial infrastructure, and a strong global reputation. Corporate tax residency is based on the place of management, allowing non-residents to optimise taxation with the right control structure.
Although the UK is no longer in the EU, its advantages remain compelling.
- Administrative ease of doing business in the UK
Company formation is highly streamlined. Registration in the UK via Companies House can be completed entirely online and typically takes around a week.
Reporting is moderately complex due to strict transparency standards. All companies must maintain up-to-date director/shareholder information, file an annual Confirmation Statement (about £13), and submit annual accounts (typically within 9 months of the financial year-end). Your financial year may differ from the calendar year.
Government services are efficient and digital-first. The main friction point is strict KYC/AML and beneficial ownership rules—especially when opening bank accounts.
- Regulatory environment in the UK
The UK framework is stable, rule-of-law-based, and highly respected. Comp.House, HM Revenue & Customs (HMRC) and Financial Conduct Authority (FCA)are effective and digitalized. Companies must maintain a PSC register, meet AML/KYC obligations, and file financial and tax returns on time.
Following Brexit, the UK has maintained high regulatory standards while gaining flexibility, particularly in finance, digital, and innovation sectors. Startups and fintech benefit from targeted incentives and pragmatic regimes.
- Ongoing company costs in the UK
Maintaining a company in the United Kingdom is considered moderately costly, but fully justified given its prestige and access to advanced financial infrastructure. Each year, a company must submit a Confirmation Statement to Comp. House (the administrative fee is around £13) as well as annual financial statements and a tax return to HMRC.
Banking services involve strict KYC checks, which may lead to additional expenses for a UK-resident administrator. However, a company can often operate using fintech solutions such as Revolut, Wise, or Payoneer.
- Labour market in the UK
The UK labour market is highly regulated yet very accustomed to flexible engagements. A critical factor is IR35, which determines the distinction between contractor and employee status. Unemployment remains relatively low, though hiring has cooled.
Engineering roles are growing; construction and infrastructure are strong; manufacturing is steady. Services have fewer openings, but wages are up. Demand for technology continues for automation, green technology, and specialized skills.
Recruiters must navigate IR35 precisely, as misclassification can result in penalties. Many professionals work through umbrella companies or as self-employed individuals. Process automation, robust ATS, and document checks via official portals are the norm.
- Other practical factors
London is a leading global financial centre with broad access to investment and elite professional services. World-class infrastructure, strong IP protection, a stable currency, and an innovation-friendly environment round out the picture.
The English language and a reliable court system simplify cross-border operations. While maintenance costs and transparency requirements may be higher than in some EU jurisdictions, the UK remains one of Europe’s most prestigious and stable choices for internationally oriented businesses.
Our top recommendation for the question: Where is the best place to open a company in Europe?
World-class digital state, simple admin, and e-Residency. Ideal for remote-first teams.
Geographic proximity, small-business tax relief, and straightforward admin.
Low SMB taxes, fast setup, and moderate running costs.
Low corporate tax, non-dom benefits, and a strong base for international trade.
Stable regulation, strong legal protection, deep finance/investment market—though with higher upkeep and strict compliance.
Thus, for small and medium-sized businesses, the most suitable options are Poland, Estonia, or Romania. For holding structures, international trade, or strategic expansion into global markets, Cyprus and the United Kingdom are generally a better fit. It is important to consider both tax and administrative factors, as well as the labour market and infrastructure conditions of each country, before making a final decision.
Our team will be happy to provide qualified assistance in choosing the right country for company formation and help with tax matters, accounting support, international recruitment, and business expansion.
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