Top 5 Countries with the Lowest Corporate Tax in Europe

Corporate tax rates play a crucial role in selecting the right jurisdiction for starting a business or expanding into new markets. Across Europe, several countries offer exceptionally low corporate tax rates, creating thriving business environments and driving significant economic growth. To help you make an informed decision, we’ve identified the top five European countries with the lowest corporate tax rates and explored why they are ideal destinations for setting up your business.

What is Corporation Tax and Why Does it Matter?

Corporation Tax, also known as Corporate Tax or Company Tax, is a type of direct tax charged on the income or profits of a company or similar legal entity. Since corporate tax rates vary significantly between countries, it is essential for entrepreneurs and businesses to carefully assess the tax landscape of potential jurisdictions. Choosing a jurisdiction with a favourable corporate tax rate can significantly impact your company’s bottom line, freeing up resources for growth and reinvestment.

Top 5 Countries with the Lowest Corporate Tax Rate

To fully optimise your finances, we have put together a list of the top 5 countries with the lowest corporation tax in Europe:

1. Hungary – 9% Corporation Tax

With a remarkably low corporate tax rate of just 9%, Hungary stands out as a premier destination in Central and Eastern Europe for attracting foreign direct investment. Major industries include food processing, pharmaceuticals, motor vehicles, machinery, electrical goods, information technology, and tourism.

Setting up a Hungary Limited Liability Company (LLC) is the preferred option for foreign investors due to its straightforward structure and attractive benefits. Notably, foreign investors can own 100% of the shares in a Hungarian LLC, providing full control and flexibility.

2. Bulgaria – 10% Corporation Tax

With a corporate tax rate of just 10%, Bulgaria stands out as one of Europe’s most attractive destinations for businesses seeking tax efficiency. This low rate, combined with reduced labour costs, has positioned the country as a rising hub for foreign investment and business relocation.

Many companies are moving operations to Bulgaria to take advantage of these financial advantages while benefiting from its strategic location within the European Union. Additionally, its straightforward regulatory framework further solidifies Bulgaria as a top choice for investors looking to optimise profitability.

3. Ireland – 12.5% Corporation Tax

Ireland’s corporate tax rate of just 12.5% has solidified its reputation as one of the world’s most attractive jurisdictions for foreign investors. For companies engaged in Research and Development, the tax rate is even lower at 6.25%. However, non-trading income and income from excepted trades are taxed at a higher rate of 25%, ensuring a balanced system.

As the only English-speaking country in the Eurozone monetary system, Ireland provides a unique advantage for businesses seeking a foothold in Europe. Its independent jurisdiction, stable political climate, and commitment to the EU make it a strategic choice for global companies. Additionally, Ireland’s Western location serves as a vital gateway for transatlantic trade and investment, further enhancing its appeal.

4. Cyprus – 12.5% Corporation Tax

With its competitive corporate tax rate of just 12.5% and sophisticated business environment, Cyprus has always been a dream destination for many foreign investors.

The island’s extensive network of double-taxation treaties with over 60 countries, including many high-tax nations in Western Europe and key states in Central and Eastern Europe, makes it an ideal hub for businesses targeting emerging markets. Additionally, Cyprus boasts a stable economy, low operational costs, and a business-friendly infrastructure, solidifying its reputation as an attractive and efficient low-tax jurisdiction.

5. Lithuania – 15% Corporation Tax

Offering a corporate tax rate of 15%, Lithuania is becoming an increasingly popular destination and is one of the most competitive in the EU. However, small companies and agricultural companies can apply a reduced CIT rate of 0% or 5% (0% or 6% from 1 January 2025) if certain conditions are met.

Lithuania’s strategic location between Western Europe and the growing markets of Eastern Europe adds to its appeal, along with its highly educated, multilingual workforce.

Conclusion

Europe offers a range of low-tax jurisdictions, each with unique advantages. Whether you prioritise ultra-low rates like Hungary and Bulgaria or broader incentives like Ireland’s R&D tax credits, these countries present exciting opportunities for businesses seeking financial efficiency and growth. Choosing the right destination requires careful planning, but with the right guidance, you can leverage these tax-friendly environments to your advantage. Here atVireon we offer specialised guidance through the whole company formation process for a large number of jurisdictions!

For more information on the above or assistance with choosing the right jurisdiction for your business venture, contact the experts at Vireon. Call our team at +48 (0) 732 070 326 or fill out our contact form.