Europe remains one of the most attractive regions in the world for entrepreneurs seeking business opportunities, thanks to its stable economy, advanced infrastructure, and access to a single market of more than 450 million consumers. However, for small businesses and international founders, setup costs can vary significantly across countries.
The search for the cheapest company formation in Europe often leads to destinations that combine affordability, simplicity, and a supportive legal environment.
From fast online registration to competitive tax rates, several European countries have positioned themselves as ideal choices for entrepreneurs who want to establish a cost-effective presence in the European Union.
What Makes a Country the Cheapest for Company Formation?
The cheapest country in Europe to start a business is not necessarily the one with the lowest registration fee-it’s the one that provides long-term affordability and business stability.
Entrepreneurs need to evaluate both initial and ongoing costs before making a decision. Key factors that influence company formation costs include:
- Government and registration fees: Some EU countries charge less than €300 to incorporate, while others can exceed €1,000.
- Minimum share capital: Low or symbolic capital requirements-like €1 in Lithuania or Bulgaria-make entry easier for startups.
- Tax structure and incentives: A low corporate income tax or special tax treatment for small and micro-enterprises can greatly reduce long-term costs.
- Ease of doing business: Fast digital registration systems, such as those in Estonia and Lithuania, save time and professional fees.
- Accounting and compliance obligations: Jurisdictions with simplified reporting and low accounting service fees are ideal for smaller operations.
- Labor and operational expenses: Lower wages, rental prices, and utility costs make certain Eastern European countries more competitive.
When all these elements align, entrepreneurs gain access to a business-friendly environment that minimizes bureaucracy, costs, and risk-the hallmark of a truly cheap company formation option in Europe.
Top 5 Cheapest Countries in Europe to Start a Business (2025 Edition)
1. Bulgaria
Bulgaria is widely considered the most affordable European country for company formation. The corporate income tax rate of 10 % is the lowest in the European Union, and the registration process is both simple and quick-usually completed within three to five business days.
Entrepreneurs can establish a Limited Liability Company (OOD) with a symbolic share capital of €1. Administrative procedures are centralized through the Commercial Register, and many filings can be done electronically.Â
For those seeking professional assistance, Lawhill.bg provides comprehensive company formation services in Bulgaria, including full support with incorporation, banking setup, migration and relocation, and corporate law matters such as share capital changes, director updates, and statutory amendments.Â
Bulgaria also boasts low office rental prices and labor costs, making it a top choice for small businesses, logistics firms, and IT service providers looking to minimize expenses without compromising EU access.
2. Lithuania
Lithuania strikes a balance between low setup costs and a transparent, modern business environment. The corporate tax rate is 16 %, with reduced rates of 0 % or 5 % available for small enterprises that meet specific criteria. For small partnerships (MB – Mažoji Bendrija), the required starting capital is just €1, making it one of the most accessible business structures for new entrepreneurs.
Company formation can be done remotely through secure digital tools, allowing foreign investors to register without physical presence. The entire process can be completed in a few days, including VAT and tax registration.
Lithuania also offers access to EU funding programs and an advanced fintech ecosystem, making it especially appealing for startups, online businesses, and technology-driven ventures.
For entrepreneurs seeking professional assistance, Lawhill, a trusted Lithuanian legal firm, provides complete support in company formation, corporate law, and ready-made companies.Â
3. Romania
Romania has become a dynamic hub for affordable business formation. The corporate tax rate stands at 16 %, but micro-companies benefit from preferential rates of 1-3 %, depending on the number of employees. This makes it one of the most tax-efficient jurisdictions in the region.
Company formation typically takes 3-5 days, and the costs of accounting and compliance are among the lowest in the EU. In addition, Romania’s growing digital infrastructure, skilled workforce, and improving transport networks attract foreign investors in manufacturing, technology, and professional services.
For entrepreneurs seeking scalability and affordability, Romania is a strong contender.
4. Estonia
Estonia has transformed company formation through its e-Residency program, which allows global entrepreneurs to register and manage companies completely online. The system is ideal for remote founders, freelancers, and global service providers.
The standout feature is Estonia’s unique corporate tax model–profits are only taxed (20%) when distributed as dividends, meaning retained earnings can grow tax-free.Â
The incorporation process is among the fastest in Europe, typically taking one to three days. This structure encourages reinvestment and innovation, positioning Estonia as a leader in digital entrepreneurship.
5. Latvia
Latvia offers entrepreneurs a simple, cost-efficient route to European business registration. A limited liability company (SIA) can be formed with a symbolic share capital of €1, and registration is usually completed within a week.
Corporate tax is 20 %, but like Estonia, it is applied only when profits are distributed. This approach promotes reinvestment and helps small companies grow faster.
Latvia’s location between Western Europe and the Baltic markets also makes it a strategic base for logistics and technology-oriented enterprises.
Key Legal and Tax Considerations When Choosing a Country
Choosing the right jurisdiction for company formation requires more than comparing tax rates. Entrepreneurs must understand the legal and regulatory landscape to ensure compliance and sustainability.
1. Corporate Taxation
Each country has distinct tax obligations. While Bulgaria and Romania offer low flat taxes, others, like Estonia and Latvia, tax profits only upon distribution. This affects cash flow management and reinvestment strategies.
2. VAT and Reporting Obligations
EU countries require businesses to register for Value-Added Tax (VAT) once they exceed a revenue threshold, usually around €40,000-€85,000. Some countries require monthly VAT filings, while others allow quarterly reports.
3. Double Taxation Agreements
Most European countries have extensive double taxation treaties, allowing foreign entrepreneurs to avoid paying tax twice on the same income. This is especially relevant for multinational or remote companies.
4. Legal Structure and Ownership
Foreign investors should confirm whether residency or local representation is required. Many jurisdictions, such as Lithuania and Estonia, allow 100 % foreign ownership and non-resident directors, making them ideal for international founders.
5. Accounting and Annual Filings
Even low-cost jurisdictions have reporting obligations. Companies must submit annual financial statements and comply with local accounting standards. Outsourcing to a local accountant ensures compliance and transparency.
Understanding these legal aspects from the beginning prevents costly mistakes and builds a strong foundation for future operations.
Comparing Company Formation Costs Across Europe
| Country | Approx. Setup Cost (€) | Corporate Tax | Registration Time | Notable Benefits |
|---|---|---|---|---|
| Bulgaria | 300 – 600 | 10% | 3 – 5 days | Lowest tax rate in the EU, minimal bureaucracy |
| Lithuania | 500 – 800 | 16% (0–6% for small firms) | 3 – 5 days | Remote setup, transparent regulation, low share capital |
| Romania | 400 – 700 | 16% (1–3% for micro) | 3 – 5 days | Fast process, low operational costs |
| Estonia | 250 – 800 | 20% (on distributed profits) | 1 – 3 days | Fully digital registration, reinvestment tax-free |
| Latvia | 300 – 700 | 20% (on distributed profits) | 3 – 7 days | Low share capital, EU access |
Bulgaria leads with the lowest taxes and operating expenses, while Lithuania and Romania stand out for cost efficiency combined with modern business environments. Estonia and Latvia are ideal for digital entrepreneurs who prioritize simplicity and remote management.
Fast-Track Options: Ready-Made Companies and Remote Registration
Ready-made companies-already registered entities with clean legal histories-allow investors to start operations immediately. These companies usually include a registered address and a bank account, which accelerates business activities like invoicing or signing contracts.
In Lithuania, Lawhill offers ready-made companies that include a registered legal address and all mandatory formation documents. While bank accounts are not transferred with the company (as banks require a full KYC review for every new owner), Lawhill provides assistance in opening a corporate bank account through its established banking network, significantly speeding up the process.
All company formation steps and transfers can be handled entirely remotely. For foreign founders, the process is completed through a notarized power of attorney, allowing investors to finalize every requirement without traveling. This makes remote setup straightforward, efficient, and ideal for entrepreneurs seeking fast entry into the EU market.
Common Mistakes to Avoid When Registering a Company Abroad
Even in affordable jurisdictions, entrepreneurs can make costly errors during or after incorporation. Understanding these risks helps avoid delays and unnecessary expenses.
- Overlooking Hidden Costs: While some countries advertise low registration fees, additional expenses-such as translation, notary certification, or local representation-can increase total costs.
- Ignoring Long-Term Compliance: Low setup fees don’t always mean low maintenance costs. Annual filings, VAT registration, and accounting services are ongoing obligations that must be budgeted for from the start.
- Choosing a Country Based Solely on Tax: Taxes are important, but factors like infrastructure, digital services, and labor availability also determine long-term success.
- Failing to Verify Legal Requirements: Each country has different shareholder, director, and registered office requirements. Failing to meet these can delay or invalidate the registration process.
- Not Seeking Professional Advice: Setting up a company in another country involves legal, tax, and linguistic challenges. Professional support from experienced firms like Lawhill ensures that every step-from incorporation to compliance-is handled correctly, avoiding costly administrative mistakes.
Avoiding these pitfalls ensures a smooth incorporation process and a compliant, sustainable business setup in the European market.
Conclusion
Starting a business in Europe does not have to be expensive. By choosing one of the top five affordable jurisdictions, entrepreneurs can minimize setup costs while accessing a stable, regulated market.
Each country offers distinct advantages: Bulgaria provides the lowest tax rates, Romania supports small enterprises with flexible taxation, Lithuania combines affordability with strong digital infrastructure, Estonia leads in online incorporation, and Latvia offers simplicity and EU connectivity.
Entrepreneurs who value security, transparency, and efficiency can benefit from partnering with Lawhill, a Lithuanian legal firm that helps both local and international clients establish businesses across Europe with full legal and administrative support.
The key to success lies in balancing cost with compliance. With careful planning and professional guidance, entrepreneurs can establish a company in Europe efficiently, affordably, and with confidence.
