Taxes

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.

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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

31.0 mln

enterprises in the economy

156.1 mln

persons are employed by those companies

9.4 trl

euro value added

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.

Corporate tax rate by 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.

Like any other country, Hungary has its own characteristics that attract businessmen

Low tax environment

9% tax of the positive CIT base and 15% tax on capital gains

The most attractive industries for investors

food industry, pharmaceuticals, mechanical engineering, IT and tourism

Personnel reserve

the country has well-trained local personnel, especially in the field of IT and software development

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

For investors in the field of R&D investments, encouraging innovation and technological advancement, a significant reduction in the tax base is possible.

Local business tax

Each municipality can levy its own tax at a rate of no more than 2%.

No double taxation

Taxes paid abroad can be offset against Hungarian corporate tax.

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%

Bulgaria maintains tax treaties with many countries, allowing foreign companies to avoid double taxation

Economic context

the country has a fairly high level of macroeconomic stability and low inflation

Low tax environment

besides corporate tax, other tax rates are also quite low

Strategic geographic location

Bulgaria is located at the crossroads of Europe, Asia and the Middle East, which expands business opportunities

Business support

Bulgaria is an EU member and has access to funding that can support business: programs, funds for project financing, research and increasing the competitiveness of companies

The country has several other advantages in terms of starting a business.

Main advantages in Bulgaria to start a new company

Low labor costs

Salaries of qualified specialists are lower here than in other countries.

Establishing temporary or permanent residence in Bulgaria

It is enough to open a company and invest 256,000 euros or invest 312,000 euros in real estate in the country.

Government support

The government actively encourages investment through various incentives and business support programs, especially in the innovative and high-tech sectors.

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

There is a minimum tax of CHF 1,800 in the country, which can be credited towards corporate tax

Economic context

Liechtenstein has a high standard of living, a stable business environment and access to international financial markets

Low tax environment

in addition to low rates, businesses in the country can enjoy tax incentives

Privacy and asset protection

strict laws make the country a popular choice for those who value financial privacy

Stable political environment

Liechtenstein is one of the most stable and prosperous countries in Europe, which gives investors confidence in long-term prospects

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

Companies that do not operate in the country can benefit from a special tax regime.

Capital gains

They are included in the corporate income tax base, with the exception of income from the sale of real estate.

Tax holidays

New companies registered in Liechtenstein can receive a tax holiday of up to 3 years.

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

What else, besides the low tax rate, makes Luxembourg attractive to investors? Here are some general characteristics of the country.

Economic context

Luxembourg is one of the most economically developed European countries with a very high standard of living

Low tax environment

the country is a party to agreements on the avoidance of double taxation with more than 80 countries of the world

Attractiveness for foreign companies

Luxembourg has a reliable financial system, which allows attracting investment and capital to the economy

Stable political environment and governmental support

the state actively supports business, especially startups in the field of IT and software development

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

Since the 2025 tax year, the basic rate of corporate tax in Luxembourg has been reduced by 1%. Previously, it was 15%.

Additional taxes to corporate tax

Two additional taxes are imposed on the amount of corporate tax in Luxembourg: solidarity (7%) and municipal business tax, the rate of which is set by each municipality independently.

Low corporate tax

Even taking into account solidarity and municipal business taxes, corporate tax in Luxembourg remains somewhat lower than in most countries of the European Union.

We have described in detail how corporate tax is levied in Luxembourg in our article.

Luxembourg

Taxes

Accounting

Corporate tax in Luxembourg explained

Read 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

Switzerland is traditionally considered one of the most attractive countries for business

Economic context

the country has a stable economy and currency, virtually no corruption, Swiss banks are considered some of the most reliable in the world

Low tax environment

residents enjoy favorable tax rates

Attractiveness for foreign companies

to open a company in Switzerland, you do not need to understand the many forms of legal entities, there are only two: a joint-stock company and a limited liability company

Convenient geographical location

high standard of living and excellent social infrastructure.

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

It consists of two parts: the federal part is 8.5%. Cantonal or municipal rates vary in each individual canton.

Choosing a canton to set up a business

Choosing a canton is a strategic decision that can significantly affect tax liabilities. The lowest tax rates are in the cantons of Zug and Nidwalden. The highest are in the cantons of Geneva, Zurich and Bern.

Increasing the tax rate

In 2023, the Swiss government was considering increasing the rate to 15%, but this decision was postponed.

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 country has a very favorable attitude towards entrepreneurship and especially towards innovative companies

Economic context

Lithuania is an EU member and has access to European markets. This simplifies interaction with other members of the Union and provides an opportunity to use European business support programs

Low tax environment

Lithuania offers one of the most convenient tax regimes in Europe

Attractiveness for foreign companies

Lithuania has one of the fastest company registration procedures

Convenient geographical location

the country is located between Western Europe and the growing markets of Eastern Europe

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

In order to maximize the number and volume of investments, Lithuania has developed a state support system for foreign investors wishing to settle in Lithuania and operate here.

Reduced rate

Small companies and agricultural enterprises can apply a reduced corporate income tax rate of 0% or 6% from 1 January 2025, subject to certain conditions.

Special territories

Currently, there are seven free economic zones operating in the country. These are territories within which legislative acts establish extremely favourable economic and legal opportunities for companies.

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.

Romania’s strong points regarding international business

Geographical location

Romania is located in the center of trade routes from Europe to Asia and the Middle East, developed transport infrastructure simplifies logistics

Low tax environment

the tax system in the country is quite simple, and the rates are low

Support for innovation

the country is actively developing high-tech industries

Access to EU markets

since the country has been a member of the EU since 2007, companies are provided with free access to the EU markets

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

Small businesses with annual revenues of up to 1 million euros can choose a simplified tax system with a tax of 1-3% of revenue.

Double Taxation Agreement

Like most European countries, Romania has signed more than 80 double taxation agreements with countries around the world.

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.

Key advantages for doing business in Poland

Strategic location

Poland shares a border with Germany, which is the largest economy in the European Union. It also borders with other developed economies in Central and Eastern Europe

Proven attractive market

Poland is the leader in the Central and Eastern European region in greenfield investment, ranking third in Europe. The fact that 94% of investors are willing to reinvest in Poland is proof of their confidence in the Polish economy

Qualified and affordable workforce

many specialists speak English, while wage rates are approximately one-third of those in Western Europe

Government support for investment

the country offers various investment incentives for businesses, such as exemptions from local taxes and fees and investment incentives for business activities carried out within 14 special economic zones

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

The requirement to pay tax applies to both resident and non-resident companies if their income was received in Poland.

Reduced rates

Since January 2019, the country has been offering a preferential rate of 9% for startups in the first year of doing business and for those companies whose income does not exceed 1.2 million euros per year.

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.

Attractive advantage for foreign companies in Finland

Access to markets

the country has strong trade relations with other countries and is a member of the EU, companies have access to large markets

High standard of living

Skilled workforce

Finland has a highly skilled and educated workforce

Governmental support

the Finnish government provides businesses with a wide range of support services and financing options, including subsidies, loans and advisory services

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

Finland has an advance tax withholding system, which is designed to ensure a continuous and even replenishment of the budget revenue side. Corporate tax is withheld in advance from joint-stock companies and cooperatives.

Additional fee

If a company is not listed as a payer in the advance tax register, an additional fee will be withheld from the income of a foreign entity received in Finland.

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.

An open and welcoming market for foreign companies

Economic context

stable economy and legal system

Low tax environment

the Czech Republic has competitive tax rates for businesses, tax incentives for start-ups and those investing in innovative technologies

Attractiveness for foreign companies

the Trade Licensing Act gives foreign companies the same rights to do business as Czech companies

Advantageous geographical location

the Czech Republic is located in the center of Europe, which makes it an ideal logistics hub

Another advantage is a skilled workforce with relatively low wages.

Registration of a new company is easy

Company Registration

In the Czech Republic, you can easily register a limited liability company (LLC) and become its owner without having the status of a resident.

New in tax legislation

In 2024, the Czech Republic increased the corporate tax rate from 19% to 20%.

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.