European business landscape
Europe is a hotbed of small and medium-sized enterprises. According to Statista, in 2024 the European Union had approximately 26.1 million small and medium-sized enterprises. Of these, the vast majority were micro-enterprises employing fewer than nine people, 1.38 million were small enterprises with between 10 and 49 employees, and the rest, some 210,170, were medium-sized enterprises with between 50 and 249 employees.
These small and medium-sized enterprises are the backbone of the European economy, representing around 99.8% of all active companies in Europe and generating almost 52% of the EU's total added value.
But starting a business isn't easy. It takes commitment, determination, and a good business idea, no matter where you are in the world. However, it's not an impossible task, as many people might think. The reality lies somewhere between these two extremes, and there are several factors that tip the difficulty indicator one way or the other, two of the most important being the economic area in which you want to start a business and the country in which you want to do so. Below, we will focus on the latter factor to try to identify the best countries in the EU to start a company.
Best countries for starting and doing business
The ease with which business can be conducted in a given country depends on several factors, and a good frame of reference is the World Bank's classification, which establishes 10 main categories:
- Starting a business
- Dealing with construction permits
- Getting electricity
- Registering property
- Getting credit
- Protecting minority investors
- Paying taxes
- Cross-border trade
- Enforcing contracts
- Resolving insolvency
A good starting point for analyzing the best countries for doing business in Europe is the Ease of Doing Business ranking 2020 created by the World Bank and based on an analysis of the 10 categories above. Although there is a more recent version of this study called Business Ready 2024, this new study currently only includes 50 countries and leaves out most European countries. The goal of the new study is to achieve global coverage of up to 180 economies by 2026, but as the selection is limited at this time, the best countries according to the 2020 ranking have been chosen for this article.
So, according to the Ease of Doing Business 2020 ranking, the three best countries in the European Union for doing business are Denmark, Sweden, and Lithuania. These countries are presented in more detail below to highlight their particularities and benefits, along with two others that, although not among the top countries on this list, are very good countries to start a business and stand out for certain characteristics.
This top list excludes certain countries that, although they offer exceptional characteristics and are very well placed in the ranking, are not members of the European Union, such as the United Kingdom and Norway.
Denmark
According to the Ease of Doing Business 2020 ranking, Denmark was until then the best country in Europe for doing business and had been so for several years. The state continuously undertakes reforms in different areas to facilitate business development. For example, it has reduced the costs of building permits, placing it fourth in the world in this criterion.
It also stands out for offering fast, digital, and inexpensive business registration, as the process can be completed in a few days and at a low cost. Only five procedures and an average of 3.5 days are required to set up a limited company.
It also stands out in the tax area with a competitive corporate tax rate (22%) and a transparent and efficient tax system. It excels above all in cross-border trade, where it ranks as an absolute world leader with a score of 100/100 thanks to simple and efficient regulations that facilitate trade and a strategic geographical location in the heart of Europe, among other factors.
Sweden
Sweden ranked second within the European Union and tenth worldwide in the World Bank's Ease of Doing Business 2020 ranking, thanks to a combination of regulatory, administrative, and business environment factors that facilitate entrepreneurial activity.
Company registration in the country is simple and digitized, requiring only four procedures and an average of 7.5 days to set up a company. It also stands out for its high efficiency in administrative procedures, with streamlined processes, especially for obtaining electricity and registering property, where it ranks ninth globally in both categories and offers times and costs below the OECD average.
In the tax area, it is even more attractive than Denmark, with a corporate tax rate of 20.6%, one of the lowest in the EU, and an efficient and transparent tax system.
In addition, the country is a hub of innovation and offers an entrepreneurial ecosystem with strong government support for research and development. It has a vibrant ecosystem of startups, especially in technology and biotechnology, particularly in cities such as Stockholm and Gothenburg.
Lithuania
Lithuania ranked 11th worldwide and third in the European Union in the World Bank's Ease of Doing Business 2020 ranking. It takes only four procedures and an average of 5.5 days to set up a company, and it stands out for its efficient processes for obtaining building permits, ranking tenth globally. In addition, the process for registering property is extremely simple and efficient, placing the country fourth worldwide. Efficiency in contract enforcement is also noteworthy, placing the country seventh worldwide.
Luxembourg
Although it does not rank among the top countries in the Ease of Doing Business 2020 ranking, Luxembourg excels in many aspects of entrepreneurship. Within the ranking, the country stands out in cross-border trade, where it ranks as a world leader with a score of 100/100 in the Ease of Doing Business 2020 ranking, alongside Denmark.
In addition, the Luxembourg economy is one of the most dynamic in Europe and one of the most open in the world, regularly ranking among the top 10 in global rankings based on territorial competition, digitization, and innovation.
Currently, the financial sector is one of the most important in the country, accounting for 25% of Luxembourg's GDP, and over the last fifteen years, Luxembourg has become the leading European center for investment funds. In addition, many of the world's largest multinational companies, such as Pepsi, Ikea, Accenture, Burberry, Procter & Gamble, Heinz, JP Morgan, FedEx, Amazon, and Deutsche Bank, among others, have set up operations in Luxembourg.
When it comes to entrepreneurship, Luxembourg has a wealth of programs and resources to support innovation and entrepreneurship, making it much easier to start a project from scratch. Some of these institutions are the House of Entrepreneurship, Luxinnovation, the Chambre de Commerce, the Chambre des Métiers, the House of Sustainability, the House of Training, the House of Startups (HoST) and the Luxembourg-City Incubator (LCI).
In addition, Luxembourg offers multiple programs specifically designed to support companies developing in certain sectors or to help the development of companies in specific areas such as digital transformation, innovation or sustainability. Some of these programs are Fit 4 Start, Fit 4 Digital, Fit 4 Innovation and Fit 4 Sustainability.
Although the aspects mentioned in the previous points are of great importance, one of the most important factors influencing the Grand Duchy's appeal is undoubtedly Luxembourg's tax benefits for companies. Corporate tax in Luxembourg, combined with municipal tax on economic activities and the contribution to the employment fund, results in a maximum aggregate tax rate of 23.87% in the city of Luxembourg in 2025. Although the tax rate is attractive compared to other countries such as France, Belgium, or Italy, it is fairly close to the European average, which at first glance seems to contradict the claim of exceptional tax attractiveness. However, given the considerable number of possible tax optimizations and benefits in Luxembourg, the actual rate can be reduced considerably.
Estonia
Although Estonia is not at the top of the ranking, it is famous for being the future of digital nomads as it was the first country to announce an official visa for digital nomads and has consistently promoted digital growth.
The innovative e-Residency program allows entrepreneurs from any country to create and manage a company in Estonia 100% remotely with access to digital banking services and a clear and favorable tax environment. In addition, this country has a technological infrastructure that is extremely favorable for digital nomads, greatly facilitating online procedures and providing a hassle-free experience. A small sample of its level of digitization is the presence of the second fastest public Wi-Fi network in the world.
Furthermore, the country has a fairly favorable corporate tax rate of 22% with non-distributed profits exempt from tax.
Comparison and conclusions
Before choosing the best country to start a business as a foreigner in Europe, it is necessary to compare key indicators that reflect the ease and efficiency of the business environment. Some of these indicators have been presented in the previous sections, but it is useful to have a comparative table.
The following table integrates and compares the five countries previously reviewed in terms of three of the most relevant factors: ease of starting a business, obtaining construction permits, and international trade. These aspects are crucial because they determine the speed and cost of starting operations, the agility to develop infrastructure, and competitiveness in global markets. In addition, the corporate tax rates in force in 2025 are included, as corporate tax has a direct impact on the profitability and attractiveness of each jurisdiction.
| Country | Starting a Business (Score / Ranking + explanation) | Dealing with Construction Permits (Score / Ranking + explanation) | Trading Across Borders (Score / Ranking + explanation) | Corporate Tax Rate 2025 |
| Denmark | 92.7/45 Digital, fast, and low-cost registration, only 5 procedures and 3.5 days on average. | 87.9/4 Very efficient processes, among the best times and costs in Europe for permits. | 100.0/1 World leader: fast and simple export/import, minimal documentation. | 22.0% |
| Sweden | 93.1/39 Simple, digital registration, only 4 procedures and low administrative cost. | 78.0/31 Faster than OECD average, though less efficient than Denmark. | 98.0/18 Agile and cost-effective international trade processes. | 20.6% |
| Lithuania | 93.3/34 Very low costs and high digitalization, only 4 procedures and 5.5 days on average. | 84.9/10 Agile construction permits, competitive costs and times. | 97.8/19 Advanced logistics infrastructure and strategic location. | 16.0% |
| Luxembourg | 88.8/76 Longer process (16.5 days), but increasing digitalization and a stable environment. | 83.9/14 Relatively agile and transparent permits compared to Europe. | 100.0/1 Excellent performance in foreign trade, fast and efficient procedures. | 23.87% |
| Estonia | 95.4/14 100% online registration, e-Residency, and ultra-fast procedures. | 82.6/19 Digitalized permits and simplified processes, though with room for improvement. | 99.9/17 Digital trade, minimal bureaucracy, and record times. | 22.0% (only on distributed profits) |
Choosing the right country to set up a business in the European Union is a strategic decision that can determine the success and competitiveness of a business. Although there are countries that make things easier in several areas, as we have seen throughout this article, when it comes down to it, there is no single “best” option; rather, the choice depends on the specific priorities and needs of each project. It is therefore extremely important to review the most important aspects for the business project and choose a jurisdiction accordingly. Perhaps the most important thing is to be able to carry out administrative procedures online and quickly, or perhaps the most important thing is advantageous taxation.
Furthermore, if you choose to start a business in Luxembourg or are thinking of doing so in this country but have not yet made up your mind, at EasyBiz we can help you make the best decisions and carry out the incorporation process without any headaches. Do not hesitate to contact us.
