The most important advantage of establishing a business in Europe is the opportunity to enter the largest international market of the EU, operating according to agreed rules and using a single currency. In addition, citizens of the participating countries enjoy the right of free movement between states, which is convenient for those entrepreneurs who plan to operate in several European countries at once.

Each European country has its own specific rules regarding registration and business permits. To open a company in the EU, a foreigner must register a legal entity with the local authorities (jurisdictions and responsible government bodies depend on the state), obtain a tax identification number and register with the relevant social security office. In addition, it may be necessary for entrepreneurs to be members of a chamber of commerce or other managing business organization. Unlike foreigners, it is much easier for EU citizenship holders to start their own business in Europe, because there are simpler business conditions for them.

Is it profitable to open a business in Europe?

The policy of the EU states is aimed at creating optimal conditions for foreign entrepreneurs, who not only earn money themselves, but also activate the growth of the economy of the chosen country. The benefits that a businessman receives in the EU are described in more detail below:

• Reduction of the tax burden. The fiscal system is usually seen as the most important factor when looking for a country to open a company. Small and medium-sized businesses benefit from lower tax rates and various benefits from the state. For example, in Bulgaria, the corporate income tax is only 10%, so many people consider it for business immigration.
• Government support. The EU provides financing in the form of loans and grants to a wide range of projects and programs in areas such as education, health, consumer protection, humanitarian aid and others. Beneficiaries (recipients of support) may differ depending on the key areas of each project and the priorities set by a particular member country. The purpose of the financing is to motivate job creation, develop business competitiveness, stimulate economic growth and improve the quality of life of citizens.
• Profitability. The European Union makes a significant contribution to the world economy, being the largest market and leading trading partner for 80 countries. For comparison, a little more than 20 countries work with the United States. Thanks to this, registering a business in the EU contributes to revenue growth, given that a company can be founded in one country, and from there expand its influence throughout the EU.

But there are certain difficulties that should be taken into account when deciding to open a company in Europe, and they will be discussed below:

• Availability of start-up capital. Some European countries require a foreigner to prove that they have enough money to develop their own business in the EU. Some EU countries put forward a condition for the payment of the authorized capital in full when registering a European company.
• Tax codes and compliance issues. Setting up a legal entity abroad involves studying the specifics of taxation, European and regional business rules. For example, in some countries, opening an office for a period of more than 6 months may require the entrepreneur to file an income tax return before the specified period, and otherwise there is a penalty.
• Business Licenses and Business Permits. To be able to start your own business in Europe, you should familiarize yourself with the requirements for foreigners carrying out business activities. There are the most common licenses and permits that all businesses need. Without their registration, a businessman risks incurring administrative or criminal liability.

Popular Areas of Entrepreneurship

Some people start a business knowing from the beginning what industry they want to work in and develop. However, there are also those among aspiring entrepreneurs who may find it difficult to choose a type of activity and draw up a business plan for it. Below is a list of the most profitable activities for small businesses in Europe for 2023. Each of these areas is developing rapidly and can become a source of permanent income for a foreigner:

• biotechnical activities – business in the field of research;
• fast food;
• cargo transportation, taxi;
• food production;
• car rental;
• Internet marketing and advertising services;
• household services;
• financial services: accounting, auditing;
• car repair, car wash, sale of spare parts;
• cleaning companies;
• hotel commerce;
• tourism industry;
• consulting.

Auto repair

Most Europeans use their own or rented vehicles to get around the city comfortably. As of 2022, 11777885 cars are registered in the EU countries and the UK. At the same time, the number of car services has decreased by 16% over the past 10 years, to 52,000 across Europe. In the capitals and large cities of Western Europe (Germany, France) there is the greatest competition in the field of machine maintenance. In rural areas, there is a shortage of car repair shops.

Car Coffee

According to the latest official business data from Statista, the total number of catering and restaurant businesses in the European Union has exceeded 836,000. As rents rise in major cities across Europe, it is becoming increasingly difficult for aspiring culinary professionals to maintain the premises of restaurants, cafes, bars and other catering establishments.

A drive-in café is an excellent solution for a catering business. A foreigner can change the location by parking where there are potential buyers: at local events, farmers' markets, a town square. Lower overhead costs and expansion of the geography of activities allow the author of at least one unique recipe to create a prosperous business in the format of a car café.

Electronics Repair

Mobile phones, tablets, netbooks, laptops and computers are just a few of the devices that are used by a large part of the population of the European Union, especially young people. According to Eurostat data, in 2022, 94% of young people in EU countries connected to the internet on a daily basis. Therefore, it is not surprising that mobile device repair services are popular in Europe.

A business project in the field of information and communication technologies can be profitable for a foreigner. In addition, owners of electronics stores have recently been criticized by consumers due to the long wait for repairs. This can play into the hands of novice entrepreneurs who are able to provide high-quality and fast device repairs.

Renting out real estate

Real estate operations are a good business idea, the implementation of which can bring a stable high income to entrepreneurs all over the world. Renting out your own home or part of it can be done as your additional or main activity.

There are quite a few places in Europe where it is possible to buy real estate at a relatively low price. For example, the average price of standard-type apartments in the capital in Riga in 2022 is 936 euros per square meter, for comparison in Paris - 13135.50 EUR. In cities such as Valencia in Spain and Porto in Portugal, the price starts at 2748.64 EUR per square meter. As for Central Europe, for example, in Bratislava (Slovakia) and Krakow (Poland), the average cost per square meter is 3,287 and 2,915 EUR, respectively.

The demand for rental real estate in Europe is constantly growing, so housing purchased relatively cheaply quickly brings the business to the point of self-sufficiency. In addition, the purchase of real estate in the EU for a certain amount can provide a foreigner with a residence permit under a simplified procedure, which also gives its advantages, including the right to free movement within the Schengen countries.

Best European Countries to Do Business

According to the Doing Business Ease of Doing Business rating, Denmark, Sweden, Lithuania, Estonia and Latvia are the top 5 EU countries where it is profitable to start a business.

Denmark

The country is the second most competitive economy in the world. Registering a company in Denmark has 3 main advantages: a favorable geographical location for trade in Northern Europe, developed infrastructure and highly qualified specialists who speak two languages (Danish and English). Setting up a business in Denmark can be done in a matter of hours and at very low cost, and once registered, the companies find themselves in a corporate center with quick access to other developed countries. With R&D practices generally accepted, especially in the energy sector, Denmark is also an ideal place to develop new products and spur innovation, but without the right legal assistance, getting the most out of a commercial venture can be challenging.

Sweden

According to the World Bank's Doing Business Report, the country ranks 10th out of 190 in the ease of doing business ranking. Sweden is known for its favorable business climate, global competitiveness, multilingual workforce, and commitment to innovation. This is due to a developed market economy and an efficient education system. The state provides several methods to facilitate the creation and operation of a business, including online platforms for registering a company. Doing business as a foreigner in Sweden can be complicated by complex labour laws that require in-depth study and high prices, and consequently the initial investment.

Lithuania

The government of the state pays great attention to the creation of new jobs, therefore it supports foreign entrepreneurs who plan to develop business with the involvement of local specialists. Lithuanian companies are engaged in trade, manufacturing, international transportation, information technology, financial services and many other activities. Lithuania is chosen for starting a business in Europe because of the affordable prices for accounting services (about 150 EUR per month) and the favorable geographical location of the country. Along with the advantages of doing business in Lithuania, there are also some disadvantages.

Estonia

The state attracts entrepreneurs with the possibilities of remote registration and remote management of the company. Estonia is well-suited for tech startups, offering new businesses an efficient and flexible infrastructure, as well as support for start-up companies through the government's Startup Estonia program. The biggest difficulty for the owners of an Estonian company is the correct submission of tax returns, if they carry it out on their own. Failure to comply with regulations can cause serious damage to a business.

Latvia

Among the country's advantages for the development of entrepreneurship are access to the EU single market, ease of registration and doing business, and a relatively low tax burden for companies (15% against the European average of 21.9%). The disadvantages include high labor costs for opening and maintaining a company and the need to maintain documentation in Latvian. The top ten countries for doing business also include Finland, Germany, Ireland, Austria and Spain.

How to start a business in Europe

In order to start a business in one of the EU countries, a foreigner will need:

• familiarize yourself with the current rules for doing business and the requirements for business immigrants, visit the webpage of the relevant national contact point for setting up a company in a particular European country;
• choose a country for starting a business and its organizational and legal form;
• prepare and submit to the embassy/consulate at the place of residence documentation for obtaining a business visa to the EU;
• Comply with the requirements for the registration of a European company.

Choosing a form of entrepreneurship

A foreigner should choose a legal form of doing business that meets its strategic and operational goals. In Europe, the most popular are sole proprietorships, partnerships and limited liability companies.

Individual Entrepreneur (IE)

This is the easiest way to start a business in the EU. Registration is not complicated, and a foreigner only needs to keep basic financial records. The individual entrepreneur receives all profits minus taxes, but is personally responsible for all debts. Each EU member state has developed its own laws, regulations and administration rules for individual entrepreneurs.

Partnership

This form of entrepreneurship is established by signing a formal agreement between two or more parties (legal entities and individuals) planning to do business together. The partnership agreement clearly indicates the scope of powers, the principles of distribution of profits and obligations between the participants. There are 2 types of partnerships: general (full), where all partners assume responsibility for possible losses, debts and other obligations of the company, and limited (limited), where some of the participants are exclusively investors without the right of control and liability.

Limited Liability Company (LLC)

This form of entrepreneurship can be chosen by different types of business entities, such as trusts, corporations, individuals. LLCs do not put the property of their shareholders at risk by separating personal liabilities from those created by the company. To establish a limited liability company in Europe, it is often necessary to prepare constituent documents, pay a minimum share capital, and register in the Commercial Register. The management of an LLC is usually entrusted to the members (directors and shareholders), but in some cases, the decision-making power in the company can be delegated from the founders of the business to hired managers.

There are many advantages to opening an LLC, the most attractive of which is the limited liability of the owners. This means that in the event that something goes wrong, the owner will be liable for the company's debts up to the amount of money invested. Another important advantage of choosing a limited liability company is the capital that is required when registering. Many European countries have lowered the share capital requirements for this type of company. One of the best examples in this case is the Netherlands: those who want to open a Dutch limited liability company only need 1 euro as share capital. Of course, the overall costs will be higher, but the Netherlands remains one of the cheapest European countries to start a company.

It is also useful to know that the requirements for registering such a company are almost the same in all European countries and relate to the number of shareholders, the management of the company and the residency of the directors. The minimum number of shareholders is usually 1 or 2, as directors do not have to be residents of the country in which the company is registered.

Which form an entrepreneur chooses will depend on their business goals. Liability, taxation, control and capital increase are just some of the issues that a foreigner needs to study before deciding to open a European company. The assistance of a professional lawyer is necessary to assess all the factors on which the choice of business organization is based.