More and more entrepreneurs around the world are interested in relocating their business, opening it in new countries or expanding it. New opportunities can be found in almost any country.
When compiling our rating, we used data from various sources including research and foreign country databases, which all require different parameters to determine their rankings. The first part of the rating is dedicated to the opening of small businesses (IE), while the second part focuses on the best countries for entrepreneurship in general.
General situation in the business arena in 2023
The global economy has been forever changed by the events of 2020-2022, causing it to behave unpredictably and making it difficult for analysts to work at full capacity. Some of the world's leaders have given way to newcomers, and exciting new opportunities have opened up for entrepreneurs.
At the beginning of 2023, attention was focused on the Middle East and Asia as Europe seeks alternative sources of natural resources such as oil and gas. The coronavirus pandemic has also played a role in this shift, as it has greatly affected China and temporarily taken it out of the game. While entrepreneurs in many countries have seen new opportunities during the pandemic, China and Hong Kong are still struggling with the disease.
Leading positions are held steadily by some European countries, mostly in the West. Meanwhile, the USA and Canada, while not having lost much of their rating, are not in the TOP-5. However, one cannot speak of a strong instability in their economies.
TOP 5 countries where it's easiest to open and run a small business
Sole proprietorship is one of the easiest ways to set up a small business. The main disadvantage is that in the event of bankruptcy, you will have to pay with your own property, while a legal entity is insured against this. But in a number of countries, an individual entrepreneur can participate in simplified taxation programs, which become profitable with moderate annual turnover. And, in some states, even a foreigner can register as an individual entrepreneur without leaving home, through the online services of state institutions.
Registration of a legal entity is a more complicated procedure and usually requires authorized capital. However, it guarantees the inviolability of personal property in the event of bankruptcy and allows the hiring of employees. This, in turn, may become the basis for the founder to obtain a residence permit (or its analogues). Contrary to popular misconception, not all states are ready to grant residency to someone who just opened a company.
Below, we provide a list of countries where it's easiest to open an individual entrepreneur and a law firm. In some cases, it only takes a couple of weeks.
Serbia
This small country is ideal for starting a business in several ways. Firstly, since it's not a member of the EU, it calmly issues a residence permit to foreigners based on the registration of an individual entrepreneur or LLC. The main requirement is that the business is not fictitious.
Secondly, any form of entrepreneurship can be established quickly and easily, requiring only a basic package of documents and a short waiting period of 2-3 weeks.
Thirdly, individual entrepreneurs with a small annual turnover (up to 6 times the average annual salary in the country, which is a little over 110 thousand euros) have the opportunity to apply for a simplified taxation system. The system's advantage is a stable low tax rate (the amount depends on the type of activity), but the downside is that the entrepreneur must pay a fixed amount, even if they have zero income.
United Arab Emirates
In addition to being an excellent place for doing business (which will be discussed below), the UAE also offers ease of company formation. This is because the country recognizes that while oil is profitable, it cannot sustain the welfare of the state indefinitely. Therefore, it's important to establish international business relationships.
There are two types of companies that a foreigner can open in the UAE - local and in a free economic zone. The local company is suitable for those who are going to conduct offline activities, that is, open some kind of institution, store, etc. However, it is important to understand that in some industries, a second founder, who is a citizen of the Emirates, owning a package of at least 51% of the shares, will be required. Moreover, it is necessary to rent an office in advance and take out medical insurance. Additionally, the registration of a local company will take more time and require going through the authorities.
On the other hand, a company in a free economic zone is formalized in a simpler way with a "one window" process, without office rent and medical insurance. Furthermore, almost all activities imply that 100% of the shares will belong to the owner. A significant disadvantage, however, is that business can only be conducted in the economic zone in which the company was registered.
If a person owns a company in the UAE, they can get a resident visa and use it to transport spouses and children to the country. However, living in the UAE is not mandatory, but it is enough to not leave the country for more than six months.
Italy
Italy remains an excellent option for business immigration. Additionally, it is one of the countries in Europe in which small and medium-sized businesses prevail, making it relatively easy to open a small business here.
An individual entrepreneur or LLC (with an authorized capital of at least 10,000 euros) is best suited for starting a business in Italy. The registration process is straightforward and transparent - you can enter your data in the business register of the chamber of commerce and industry online and receive your company registration number, TIN, and information about entering into social insurance registers within a few weeks. However, foreign citizens of third countries need to obtain a Schengen visa category D, which is typically done in parallel with the company registration process. Upon arrival in Italy, a residence permit is issued within 8 days based on the visa. If you hold a passport from Cyprus or another EU country, you can skip this step altogether.
Montenegro
In Montenegro, opening an LLC or individual entrepreneurship is extremely easy. For instance, an individual entrepreneur with certain types of activity only requires their international passport to register. However, many prefer to open an LLC since it offers greater flexibility in terms of business activities (you can indicate several types), and the authorized capital requirement is very low - only 1 euro. Upon registration of either form of entrepreneurship, a businessman is granted a residence permit in Montenegro.
The procedure for opening a company in Montenegro is quite simple and fast:
- The hardest part is drafting the articles of association or memorandum of association, and at this stage, it is better to involve local specialists. However, this step can be skipped when applying for an individual entrepreneur (IP).
- To open a company in Montenegro, you need to rent accommodation in the country and make a translation of your passport.
- Then, you should submit all the necessary documents to the Commercial Court in Podgorica (capital),
- You will receive your registration number. You also need to rent an office and obtain a director's work permit (not necessary for employees).
- After paying the first taxes, you can get a medical book, which is issued free of charge for both citizens and non-citizens of Montenegro.
With an individual entrepreneur, it will be even easier to open and pay taxes, as it requires a fixed monthly amount that includes not only taxes but also health and social insurance.
Armenia
In Armenia, both the registration of IP and LLC have become increasingly popular. The latter is particularly convenient for IT companies that operate all over the world but prefer to register in this quiet and remote corner of Europe. There are attractive tax incentives for this particular area of activity in Armenia.
Opening an individual entrepreneurship in Armenia is extremely simple. You need a passport and its translation, a legal address, a local phone number (which can be obtained by buying a SIM card), and a visit to the Business Entry Department at the Ministry of Justice, where you need to pay the fee in cash. After that, you need to get a social security card and open a bank account.
Opening an LLC follows a similar process, but with the addition of the constituent documents. The whole procedure takes just a few days, which is attractive for those who do not plan to stay permanently or for a long time in Armenia.
TOP 5 countries with the best business conditions
While ease of registering a company is important, many business owners also consider the opportunities for growth and profit. Therefore, it is worth finding out which countries have the most attractive conditions for developing a business.
The Economist Intelligence and the Global Entrepreneurship Monitor have compiled rankings that show which countries have better and more favorable business environments. The Economist Intelligence rankings examine conditions directly, while the Global Entrepreneurship Monitor conducts a survey among entrepreneurs to reveal their assessments and expectations. We will give both TOPs, and then consider the countries that are in both ratings.
According to the Economist Intelligence's 2022 rankings, the most favorable countries for doing business were:
- Singapore
- Canada
- USA
- Switzerland
- Hong Kong
- UAE
- Australia
- United Kingdom
- Netherlands
- Sweden
The Global Entrepreneurship Monitor gives a slightly different list:
- UAE
- Netherlands
- Finland
- Saudi Arabia
- Lithuania
- South Korea
- Norway
- Qatar
- Switzerland
- Spain
- USA
- Sweden
- France
- Germany
- Canada
Large countries with good economic indicators have become leaders despite the crises that have occurred. They remain stable and offer comfortable and attractive conditions for conducting various types of business.
UAE
The United Arab Emirates is attractive not only for starting a business, but also for running it. This is primarily due to the low tax rate, with income tax, dividends, interest, and capital gains taxed at 0%. Only the profits of banking, insurance, oil, and gas companies are taxed at 5%, as well as a percentage of VAT and customs duties for local companies (those not registered in a free economic zone).
In addition, the country provides a wide range of support for small and medium-sized businesses, offering and promoting loyalty programs for various industries. At the same time, the UAE stands out for the simplicity of rules, payments, and other nuances related to the business sphere: there is no annoying bureaucracy, let alone corruption. Everything is transparent and as accessible as possible, even for foreigners.
Netherlands
In the post-pandemic period, the Dutch government launched several programs to help small and medium-sized businesses, as well as the self-employed. This has stabilized the country's economy very well and once again proved that the northwestern part of Europe is one of the best places for business development.
True, taxes here are not the smallest - 25% on corporate profits, 19% VAT and 15% on dividends. But royalties and income of holdings are not taxed at all, which stimulates the opening of franchises, subsidiaries and, in general, creates healthy competition.
USA
- The USA remains a haven for IT companies, although other areas are no less in demand. Despite the rather high taxes and a rather large authorized capital (starting from $50,000), the States are a great place to run and expand various types of businesses, and there are a number of good reasons for this:
- Access to the global sales market and partnerships;
- Easy and transparent company registration and reporting system;
- The ability to get most of the taxes back due to benefits, subsidies, and state support programs;
- Constantly developing innovative market;
- Favorable attitude towards foreign businessmen - the conditions for them are no different from the conditions for US citizens.
You also need to remember that in some states, there are special benefits and exemptions from fees. Registering a company in the right state can be a good move to be exempt from part of the taxes.
Canada
The economic and legal system of Canada makes it comfortable and easy for entrepreneurs to open and operate their own businesses. Taxes here are quite reasonable: non-residents pay taxes only on the income they receive within the country, which will be appealing to those who do business outside of Canada. Additionally, each province offers tax rate reductions and a variety of benefits, resulting in an average corporate income tax rate of 15-25%.
Moreover, the country has programs that support certain business areas, such as IT and research and development. Tax credits, investment tax credits, and cashbacks are available for entrepreneurs in these fields. This not only allows Canadian businesses to increase their profits, but also conduct experiments in the field of science for the benefit of society.
Cyprus
Cyprus stands apart. It was not included in the listed ratings, although he has long been the leader among non-Europeans in terms of the softness of taxes and the simplicity of conditions. The first and most important condition is an agreement between Cyprus and many other countries on the absence of double taxation. So a businessman will have to pay income tax only once, and at a rate of 12.5%.
The advantages of doing business in Cyprus include the availability of benefits and the attention of the state to everyone without exception. In addition, when opening your own company, it will be easier for the founder himself and his family to obtain a residence permit and permanent residence. In addition, government programs provide very attractive investment opportunities, making it much easier and faster to obtain Cyprus permanent residence.
You can read in detail about how to open a company in Cyprus in our article.
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