The countries with the lowest corporate tax rates in Europe
Corporate tax is one of the most important taxes for business. In which European countries is the tax rate the lowest, how is it regulated and what other benefits for companies are in the countries available.
If you are going to start a business in one of the European countries, you should understand the business rate for European businesses. The country where you will have to pay taxes can significantly impact your company's profits.
What is corporate tax for business in Europe
Any company that does business in one of the European countries is required to pay taxes. One of the most important direct taxes is the corporate tax. It is levied on the profits earned by companies during the financial year. Corporate tax is paid on net profit minus any allowable business expenses. For example, in addition to standard expenses such as wages, equipment and office expenses, you can deduct the cost of any gifts or donations, as well as tax losses from previous years. Revenue from the corporate tax rate is one of the most important sources of income for the budget of any European country.
Even though many European countries are members of the EU and EFTA, corporate tax rates are still different. This depends on the country's economic policy. Those countries that seek to attract investment set lower rates. As a rule, in Western European countries, especially where the social services system is well developed, tax rates are higher.
Who is obliged to pay corporate tax for business?
- companies located in the country;
- corporations doing business in the country on income from that country;
- foreign businesses who have a permanent establishment in the country, or
- corporations deemed to be resident for tax purposes in the country.
In 2024, Eurostat released the annual Key figures on the European business 2024 edition. This collection contains the official statistics on business changes in Europe.
Key statistics for the EU’s economy
The overwhelming majority (99.1%) of active EU businesses were micro or small enterprises employing fewer than 50 persons. Their economic weight was lower in terms of their contribution to employment or value added. Micro and small enterprises employed just under half (49.0%) of the EU’s business economy workforce, while they contributed just over one third (35.4%) of the value added.
There were 51 000 large enterprises (with 250 or more persons employed (1)) in the EU’s business economy. These large enterprises represented less than 1% (just 0.2%) of the total number of enterprises. However, their economic weight was considerably greater: large enterprises employed more than one third (35.6%) of the EU’s business economy workforce and generated an even higher share of its wealth (47.5% of value added).
| Micro enterprises (less than 10 persons employed) | Small enterprises (10 -49 persons employed) | Medium-sized enterprises (50-249 persons employed) | Large enterprises (more than 250 persons employed) | |
| Number of enterprises | 94.1% | 4.9% | 0.8% | 0.2% |
| Number of persons employed | 30.1% | 18.9% | 15.4% | 35.6% |
| Value added | 19.2% | 16.1% | 17.1% | 47.5% |
Top 10 countries with the lowest corporate tax rates in Europe in 2025
Although every company has to pay corporate tax in European countries, it can be very interesting to see which country has the lowest tax rate. If the company is not producing anything specific local, it can have a positive effect on the profits if the company is started in another country.
| Country | Rate, % |
| Hungary | 9 |
| Bulgaria | 10 |
| Liechtenstein | 12,5 |
| Luxembourg | 14 (excluding solidarity and municipal business taxes) |
| Switzerland | 14,6 |
| Lithuania | 15 |
| Romania | 16 |
| Poland | 19 |
| Finland | 20 |
| Czech Republic | 21 |
Hungary
Hungary is keen to attract as much foreign investment into its economy as possible. This explains why it has the second lowest corporate tax in the world, and the lowest rate in Europe.
Hungary has a current corporate tax of 9%, which gives it a place among the countries with lowest business taxes.
For those who want to open a company in Hungary, the country's legislation offers some advantages.
Some of the tax advantages in Hungary
Reduced tax base
Local business tax
No double taxation
In general, even though the corporate tax in Hungary is the lowest in Europe, the country is only in 52nd place in the Ease of Doing Business ranking and this should be taken into account when choosing a location for a company.
Bulgaria
Another country that offers companies a very low corporate tax rate. Bulgaria maintains tax treaties with many countries, which greatly simplifies the taxation process for foreign investors. Bulgaria is among the top countries with the cheapest corporate tax in Europe.
The сurrent corporate tax rate in Bulgaria is 10%
The country has several other advantages in terms of starting a business.
Main advantages in Bulgaria to start a new company
Low labor costs
Establishing temporary or permanent residence in Bulgaria
Government support
In recent years, the Bulgarian economy has experienced significant growth, which has created a favorable business environment. However, Bulgaria, like most Eastern European countries, is still undervalued in terms of foreign investment.
Liechtenstein
The country is not a member of the European Union, but is nevertheless one of the world's financial centers. Low tax rates and ease of company registration have led to the rapid growth of the number of registered legal entities in Liechtenstein.
Liechtenstein has a 12.5% corporate tax currently
Like many European countries, Liechtenstein has a well-developed network of double taxation agreements with other countries.
Other benefits for companies in Liechtenstein
Special tax regime
Capital gains
Tax holidays
Luxembourg
Luxembourg is traditionally considered a very attractive country for business. It has a well-developed banking and financial sector, and the country itself is located in the heart of Europe and has close business ties with all countries.
The minimum corporate tax is 14% at this moment
Although the tax system in the Grand Duchy is quite complex, comfortable tax rates for almost all taxes make the country attractive to investors.
What else about taxes in Luxembourg for companies
New in tax legislation
Additional taxes to corporate tax
Low corporate tax
We have described in detail how corporate tax is levied in Luxembourg in our article.
Switzerland
Switzerland, like Liechtenstein, is not a member of the EU, but is an important partner. Thanks to various agreements that reduce market barriers, Swiss companies can operate in the EU internal market on almost equal terms with European companies. Switzerland is considered one of the best tax haven for online business.
Corporate tax is currently 14.6 % in Switzerland
The Swiss tax system includes three levels: federal, cantonal and communal.
More about tax rates and changes to the tax system
Compound corporate tax rate
Choosing a canton to set up a business
Increasing the tax rate
The most popular business for investment in Switzerland is the hotel industry. The top also includes pharmaceuticals, the restaurant segment, luxury goods production and agriculture.
Lithuania
Lithuania has recently become one of the most attractive countries for investors in the EU. This is largely due to its comfortable corporate tax rate.
Lithuania has a 15% corporate tax
In 2020, Lithuania was ranked 11th in the Ease of Doing Business ranking.
The government actively supports small businesses in the country, providing them with grants, subsidies and benefits.
Lithuania has created an equally comfortable environment for the development of start-ups, small and medium-sized enterprises and large corporations.
More advantages for businesses in Lithuania
State support
Reduced rate
Special territories
In the Tax Competitiveness Index, Lithuania is among the countries with one of the most competitive tax regimes in Europe due to low corporate taxes and a transparent tax system.
Romania
Corporate tax in Romania is paid by all companies registered as residents of the country, regardless of their territorial affiliation.
Romania offers a 16% corporate tax
In 2023, Romania's GDP was approximately $784 billion, making it one of the largest economies in Eastern Europe.
Also skilled labor force: a fairly high level of education combined with relatively low costs makes Romanian specialists competitive in the labor market.
The state also plays a large role in attracting investment. The main support measures include: subsidies and grants for the development of production and research, preferential lending and loan guarantees, tax incentives for strategically important industries and regions, export support and participation in international fairs.
Advantages for businesses of any scale and size
Small Business Support
Double Taxation Agreement
However, Romania is still only at the beginning of its path to becoming an attractive investment destination. It ranks only 55th in the Ease of Doing Business ranking.
Poland
Poland has seen significant economic growth in recent years, ranking 4th in the world for sourcing, nearshoring, and reshoring and 1st for EU companies. Proximity to EU markets allows companies to maximize their potential.
Current corporate tax rate in Poland is 19%
Besides low corporate taxes, there are several other reasons why a country may be attractive for companies.
Poland's tax system is very lenient towards companies. The burden of proof here lies not with them, but with the tax authorities.
Who pays corporate tax
Reduced rates
Poland is worth considering as an investment destination for companies looking to expand their operations and make long-term investments in a growing economy.
Finland
The Finnish tax system, along with the tax systems of other Scandinavian countries, is considered a classic example of a country with a highly developed market socially-oriented economy. Therefore, the level of tax rates in this country is quite high, but nevertheless lower than in other developed countries.
20% is the current corporate tax in Finland
The relatively low rate has existed in Finland for only 10 years, since 2014. Before that, it was 24.5%. The reduction in the tax rate has made Finland a comfortable country for foreign companies. In addition, companies are attracted by other advantages.
All companies registered in Finland are required to pay taxes in full. Companies pay taxes on both domestic and foreign income.
Advance tax withholding system
Additional fee
Finland has created favorable conditions for the development of small businesses, and the rules are the same for all entrepreneurs - Finns and non-Finns. So the path to small business in Finland is open to everyone.
Czech Republic
The Czech Republic is a country with a developed economy and a comfortable tax system. This makes it one of the best places in Europe to do business.
The current corporate tax rate is 20% in the Czech Republic
Although the corporate tax in the country is not the lowest, there are still several points that allow the Czech Republic to compete with other European countries in attracting investment into the economy.
Another advantage is a skilled workforce with relatively low wages.
Registration of a new company is easy
Company Registration
New in tax legislation
Entrepreneurship in the Czech Republic opens up many advantages for growth and development. Thanks to favorable conditions, a stable economy and a variety of business ideas, everyone can find their niche and succeed in this country.
Taxation rules in each country are set by national governments, but in some countries it may also be levied at the local level. A company must pay tax in the country where it is registered and does business. Therefore, before starting your business, it is important to study the tax laws.
Frequently Asked Questions (FAQ)
Which European country has the lowest corporate tax?
Who is required to pay corporate tax for business?
Which factors are important to consider when looking to start a new company?
Source: tradingeconomics.com, op.europa.eu, gsl.org, taxsummaries.pwc.com
We took photos from these sources: Behnam Norouzi on Unsplash
Very helpful!
Informative!
I didn’t get it.
This is outdated.
