Best Offshore or Low Tax Locations in Europe
Updated on Monday 29th October 2018
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The Cayman Islands, Panama, and other exotic locations are not the only options for investors looking to find countries that levy low corporate income tax rates. Investors can look towards Europe when opening a company in a low-tax jurisdiction.
Our offshore company formation agents who specialize in tax laws and relevant foreign investment laws in these countries can give you more information about the particularities of each jurisdiction.
Our offshore company formation agents who specialize in tax laws and relevant foreign investment laws in these countries can give you more information about the particularities of each jurisdiction.
We highlight some of the countries in Europe that have the lowest corporate income tax rate for resident and non-resident companies and those that impose no corporate income tax at all.
For detailed information about the actual offshore company setup in these locations, one of our agents can help you.
Countries with low tax rates in Europe
The table below offers examples as well as a short description of the main low tax locations in Europe.
| Country | Tax Rate |
| Bulgaria | The country has a low corporate tax rate of 10%, with resident companies taxed on their worldwide income and non-residents on their Bulgarian-source income. |
| Cyprus | The corporate income tax rate is 12.5%. |
| Hungary | The corporate income tax rate is as low as 9%. |
| Ireland | With a 12.5% corporate tax rate for trading income and a welcoming business environment, Ireland is a country of choice for many English-speaking investors. |
| Isle of Man | A European tax haven in the true sense of the word, Isle of Man has no corporate income tax for resident and non-resident companies. |
| Jersey | A zero corporate income tax is in place for resident and non-resident companies with a permanent establishment here. A 10% rate applies for financial services companies and 10% for utility companies. |
| Luxembourg | The corporate income tax rate is 15% for companies with a taxable income below 25,000 and 18% for companies that have a taxable income above 30,000 EUR. |
| Malta | After tax refund claims on all or part of the profits derived from Malta, the effective tax rate is between 0 and 10%. Other rates may apply. |
| Romania | The corporate income tax rate is very attractive for micro-enterprises, at 1% or 3% depending on certain factors. |
The corporate income tax rate is one of the taxes investors need to be aware of when selecting a low-tax jurisdiction, however, it is not the only one. The value-added tax is an indirect tax imposed in states throughout the EU. It applies to the provision of goods and services and it is levied at each stage within the production and the distribution chain. It can also apply to intra-EU acquisitions and to the imports of goods received from outside of the EU.
The European Union countries that have a low VAT rate are the following:
- 8% standard VAT rate in Switzerland with reduced rates of 3.8% and 2.5%.
- 17% reduced rate in Luxembourg, with reduced rates of 14%, 8%, and 3%.
- 18% rate in Malta and Turkey with reduced rates of 8% and 1% in Turkey and reduced rates of 0%, 5% and 7% in Malta.
- 19% rate in Romania, Germany, and Cyprus, with reduced rates as follows: 9% and 3% in Romania, 7% reduced rate in Germany and reduced rates of 0%, 5% and 9% in Cyprus.
- 20% in the United Kingdom and in Estonia, with a reduced rate of 5% in the UK and reduced rates of 0% and 9% in Estonia.
There is a distinction between exempted goods and services and those that are subject to a 0% rate. The reductions are generally available to goods and services that fall into the following categories: foodstuffs, newspapers and books, accommodation, transportation, education, and others.
What to look for in a low tax location
Tax havens are essentially praised by investors for their low tax regimes, however, this should not be the sole consideration when choosing to base a company in Europe. Investors have several options to choose from in regards to low taxes, as highlighted in the table above. Other aspects to consider would be the company registration process and its duration, the needed paperwork, and bureaucracy as well as the overall economic and business environment of the country.
Some examples that qualify for the criteria mentioned above include the following EU countries:
- Cyprus: this is a country that can be taken into consideration both by those who want a low-tax jurisdiction and those who are looking for a business-friendly environment. The country has been improving its corporate laws for the purpose of attracting investment and as a result, company formation is simple, with only one director and one shareholder needed to open a company and no requirements for residency.
- Malta is another example of an EU country that aims to attract investors through a tax regime that can be seen as very advantageous and encouraging a number of industries among which we can mention the gaming industry and, more recently, cryptocurrencies. Moreover, the company formation process is a straightforward one.
- Ireland: the country is a top location to base a business in Europe because of its exceptionally business-friendly regime and one of the lowest corporate income tax rates in the continent. Moreover, companies here benefit from an R&D scheme. assistance for investors is available through IDA Ireland.
These countries are just some examples of how low-tax jurisdictions can offer much more than reduced taxes for companies.
We invite you to contact us for adequate offshore incorporation aid. Our experts are able to answer your questions and guide you throughout the entire process of registering an offshore company.