Europe Corporate Tax Rate

ESTONIA

Estonia is a suitable country to establish a company because it is consistently appearing among the most open, competitive, and transparent economies in the world. This success is due to the intensive work on reducing bureaucracy, the rule of law and significant investments in infra-structure and human capital, which creates an environment that facilitates the search, development and supply of solutions and services on a global level. The attractiveness of Estonia is proved by many foreign investors, as well as the dominance of world-famous foreign companies in some sectors of the Estonian economy. The current income tax rate in Estonia is 20%. From the beginning of 2023, the generally applicable tax-free minimum is €654 per month. Registration requires at least one shareholder and one director (individual). 100% foreign ownership is allowed. If the majority of the directors do not reside in Estonia, the company must provide the e-Business Register with the contact details of the local representative who will be responsible for further communication with the public authorities. Annual reporting is submitted online to the e-Business Register. The audit is mandatory only for large firms. The size of the company is determined based on its total assets, income, and number of employees. Estonia’s e-residency is a unique programme of the Estonian government. Entrepreneurs who have received an e-resident card have access to all the country’s electronic services – they can manage the firm completely online, from signing contracts to paying taxes. But an e-resident card is not an analogue of an Estonian passport: it does not give the right to live in Estonia and does not grant tax status.

LITHUANIA

The Republic of Lithuania implements a business-friendly tax policy, and the entire tax system of the Republic of Lithuania is designed in accordance with the EU legislation and adheres to their provisions. Over time, after the restoration of Lithuanian independence, the tax system of the Republic of Lithuania underwent changes, i.e. it was redesigned in such a way that the state could attract as many foreign investments as possible, creating favourable conditions for them; in addition, efforts were made to expand the labour market. The main legislative act that sets out and regulates the principles of taxation in the Republic of Lithuania is the Law on Tax Administration, which not only establishes the rights and obligations of the tax administrator and taxpayers, but also regulates the procedure for calculating taxes.

CZECH REPUBLIC

The Czech Republic has a progressive taxation system that applies to both individuals and companies. In order to do business in the Czech Republic, companies must register with the Czech Trade Register and obtain a business license. Companies must also comply with local labour laws and regulations, as well as file taxes and other appropriate documents. Companies must also abide by the Czech Republic’s anti-money laundering and counter-terrorist financing regulations. The Czech Republic is a member of the European Union (EU) and the Economic and Monetary Union (EMU), which means that it is part of the single market and enjoys the benefits of the EU’s common external tariff and customs union. This means that goods can be imported and exported freely within the EU, and that EU companies can benefit from the free movement of goods and services across the region.

CYPRUS

Cyprus is known as an attractive location to do business due to its low corporate tax rate of 12.5%. This is one of the lowest tax rates in the European Union. Additionally, profits derived from foreign activities are not taxed in Cyprus, providing a great incentive for international businesses to set up shop in the country. Cyprus also has a number of tax incentives available to businesses. These include double taxation treaties with many other countries, which allow companies to pay taxes on their income in the jurisdiction where they operate rather than in the country where they are based. Other incentives include exemptions from withholding taxes, reduced tax rates for certain activities, and restrictions on capital gains tax. Cyprus does not require an employee, however, it requires a nominal director on site.

SPAIN

In Spain, businesses are subject to corporate taxes, which are calculated on their profits. The rate of tax depends on the size and nature of the company, but it is typically 25%. Additionally, companies may be subject to value-added tax (VAT), which is a tax on goods and services that is charged at a rate of 21%. Companies may also be subject to other taxes, such as social security contributions, property taxes, and withholding taxes. The most common complaint of those who want to start a business in Spain is the difficulty of obtaining legal documents for any company. This includes the extra time and money needed to account for when planning a business in that country.

LATVIA

In recent years, in an effort to harmonize its fiscal system with the generally accepted norms of the European area, Latvia has been constantly changing tax legislation. Due to this, the vast majority of the norms and requirements of the tax system are in line with those in other EU countries. One of the important indicators for entrepreneurs, taxes in Latvia remain the lowest in Europe. The reason for this, despite the low level of public debt and the small state budget deficit, is that the economy is not yet fully strengthened. To ensure its consistently high growth, the country introduces tax incentives for entrepreneurs. Concerning the employment in Latvia, when company is established, it is not required, however, it is required after to obtain VAT number. Without an employee, they do not give a VAT number and, in general, the tax board does not allow you to work without employees.

POLAND

Poland is one of the few countries in Europe where there is a constant increase in economic performance and improvement in social standards. In Poland, entrepreneurial activity can be carried out by an individual entrepreneur or in the form of a legal entity. All companies in Poland must be registered with the National Court Register (Krajowy Rejestr Sądowy). Today, doing business in Poland is carried out in the form of individual entrepreneurial activity and in the form of an analogue of a limited liability company – Sp. z o. o. (Spółka z ograniczoną odpowiedzialnością), which is one of the most common forms of doing business in Poland, both among Poles and foreign citizens.

UNITED KINGDOM

The tax system in the United Kingdom cannot be called soft, but from year to year, thousands of foreign entrepreneurs and just wealthy people choose the United Kingdom to start a business and optimize taxes. Such popularity is due to some features of British legislation that allow reducing tax costs for both individuals and companies. It is important that legal methods of reducing fiscal payments in the British Isles have been practised for decades and this is not considered a criminal activity. If you are just planning to move to the UK, you will probably be interested in learning about several ways to reduce your tax burden in England at once. But before telling how a newly minted resident does not have to pay at least part of the taxes without violating strict English laws, let’s understand the basic concepts.

FRANCE

In addition to corporate taxes, employers are subject to both social security contributions and payroll taxes. Social security contributions are paid by employers and employees and are used to fund the state-run social security system. Payroll taxes, such as the income tax, are paid by employees and are used to fund the state’s budget. In France, the limited liability company (LLC) is known as a “société à responsabilité limitée” (SARL). It is a popular form of business entity among entrepreneurs and small business owners, as it offers limited liability protection and flexible ownership and management structures. To form an SARL in France, at least one shareholder and one director are required. The shareholders’ liability is limited to their capital contributions, and the company must have a minimum capital of €1. The directors can be individuals or legal entities, and they are responsible for managing the company’s affairs and making decisions. The SARL is subject to corporate income tax (CIT) on its profits, which is levied at a standard rate of 26.5% for 2022. The company is also required to file an annual financial statement and tax return with the French tax authorities.

GERMANY

Germany has a complex and intricate taxation system. The taxation system is based on the principle of progressive taxation and is composed of a number of taxes including income tax, corporation tax, value added tax, and capital gains tax. Income tax is levied on the income of individuals and corporations, and is determined by the individual’s or corporation’s tax class. Tax classes are determined by the taxpayer’s marital status and employment status. In general, income tax is charged at progressive rates depending on the amount of income earned. Corporation tax is levied on the profits of corporations, and is determined by the type of corporation and the amount of profits earned. Corporation tax rates vary depending on the size and type of corporation.