5 European Countries Great for Startups
The location of one's business is key when mapping a business plan and developing a long-term strategy. It affects the financial and talent-based aspects of a business. Furthermore, it decides how or with whom a business can scale.
With a new wave of entrepreneurs looking to go global, countries around Europe have begun to cater for their needs hoping that they will become the haven for future business giants -- much like Silicon Valley. This short list looks at five European countries that are entrepreneur-friendly and have great hubs for startups.
Despite the uncertainties of Brexit, United Kingdom remains a key player in the world of startups. With London at its core, the U.K. holds offices to a number of tech unicorns and a collective of talented designers, programmers and engineers at its fingertips.
Currently, the U.K. leads in the European venture capital investment world, as it reached approximately £4.5 billion worth of venture capital investment in 2017, according to investor Gil Dibner.
Additionally, Paymentsense, a merchant service provider, found that the U.K. technology startup scene has grown by 5.9 percent in the last five years, further illustrating that the U.K. leads the way when it comes down to European tech startup scenes.
Regarding taxes, the corporation tax rate in the U.K. is at a moderate 19 percent, while the government has also made plans to cut corporate tax down to 17 percent by 2020. Companies with a taxable turnover of more than £85,000 have to sign up for VAT (value-added tax).
Ireland is just a short flight from the U.K. and has one of the most startup friendly environments regarding location and tax -- making it a suitable country for startups. It currently holds offices to companies such as Facebook, Twitter and Google, who are all enjoining the low corporation tax the country embraces.
Additionally, investment in Irish tech companies has doubled from 2014 to 2016, which reached new heights of €888 million, according to the Irish Venture Capital Association.
Ireland's corporation tax rate is currently at an appealing 12.5 percent, which is smaller than majority of the other countries on this list.
Germany is alternatively a great country for starting a business as it holds hundreds of startups, mostly in its capital Berlin. Companies like Soundcloud, Splash and Dubsmash began out of Germany and made waves in their industries, with Soundcloud now boasting over 177 million tracks on its platform.
Moreover, there is a belief that there will be a sizable rise in the number of startups in Germany after Britain leaves the European Union, as several key bonuses of being in the United Kingdom will end, such as freedom of movement.
Regarding taxes, the corporation tax is at 15 percent in Germany with companies also being subject to trade taxes. Small businesses that do not exceed €50,000 do not need to pay VAT.
Having produced companies such as Spotify, Majong and Klarna, it is clear that Sweden, with a population of over just 10 million, is punching above its weight in the startup world.
A research paper from the Research Institute of Industrial Economics, written by Fredrik Andersson, Fredrik Heyman, Pehr-Johan Norbäck and Lars Persson, argues that "a key explanation for the high entrepreneurial activity in the Swedish business sector during the last two decades stems from economic reforms in the 1990s that mitigated several hurdles to entrepreneurship." It also claims that Sweden has become more entrepreneurial than the United States itself.
Sweden currently has a corporation tax rate of 22 percent. However, it is looking to cut the corporation tax down to 20.6 percent by 2021, for the purpose that it will further boost business activity.
Finland, a country with a population of 5.5 million, is among the ideal of places to start a business. The country has produced companies such as the mobile game company Supercell and video game company Rovio, both of which are key players in the world of gaming.
While Finland has already established several highly successful companies, it has also been receiving a substantial amount of foreign interest, as foreign investment into Finnish startups grew to €208 million, an annual increase of 33 percent.
Currently, Finland has a corporation tax rate of 20 percent, which dropped from 24.5 percent in 2014.