Europe has always been and remains a commercial hub, despite the growing economies in North America. Some countries in the Old Continent provide attractively low levels of taxation, which attract foreign investments.
Every business would like to spend less on taxes and gain more revenue.
So which European countries have the lowest levels of corporate tax and personal income tax?
BULGARIA: 10%
Bulgaria is a destination increasingly favoured by foreign companies. The simplified tax system is the reason our country is ranked first among countries having the lowest tax rates even more since, in some cases it is possible to apply a zero tax relief.
Recent data, as well as several classifications show that our country holds first place in European countries with the lowest tax rate, only 10% corporate tax and personal income tax.
Not only that but the tax rate in Bulgaria is fixed, which means that it doesn’t change with an increase in the taxable amount.
What makes Bulgaria an even more attractive destination for foreign investors?
The low tax rate percentage is just one of the reasons for the inflow of foreign investment, as other important factors that should be added:
the strategic location
the political & macroeconomic stability
the pleasant climate for both summer and winter tourism
the extremely rich natural resources
the highly qualified workforce
the favourable real estate prices
IRELAND & CYPRUS: 12.5%
One of the reasons why more than 1,000 multinationals have chosen Ireland as a strategic European base is its corporate tax rate of 12.5%. However, for individuals, Ireland is at a disadvantage (highest personal income tax rate 48%) compared to Cyprus (highest personal income tax rate 35%) or Bulgaria (10% fixed rate ).
As for Cyprus, it is wrongly considered to be an offshore tax haven for the wealthiest. This does not fully reflect reality – Cyprus offers a very favourable tax system (the same corporate tax rate as in Ireland), which is perfectly in line with EU and OECD policies. In addition, Cyprus is the first country to have fully adopted EU directives.
POLAND & THE CZECH REPUBLIC: 19%
It is well known that emerging countries have the best tax policy. Of course, this is done on purpose to stimulate both foreign investment and the economic development of countries. Poland keeps a 19% level of corporate tax, which guarantees a favourable investment climate, the establishment of foreign companies and the hiring of remote specialists.
As for the Czech Republic, foreign and local companies are subject to the same tax burden. Nevertheless, foreign capital is taxed at a lower rate of 15% and may even be exempt under specific circumstances. In addition, the highest personal income tax rate is 22%, which is lower than that in Poland, 32%.
LATVIA: 20%
Latvia is open to foreign investment and uses its tax rates to stimulate business development and the entree of foreign companies to the country directly. However, as with the previously mentioned countries, in terms of the rate of taxation on individuals, Latvia is less advantageous: the highest personal income tax rate is 31.4%.
In addition, the country is overwhelmed with skilled professionals who can be organised for remote work. This is the reason why Latvia, as well as Bulgaria, are often used as subcontracting locations by several companies, especially in the field of digital marketing.
The conditions in countries in the European Union are extremely stimulating for foreign capital. Nonetheless, for investors, other factors that should be taken into account are important, and in this respect, Bulgaria holds solid positions that lead to profitable trade between the foreign companies and our country.
