Cost of Doing Business in Europe: 20 Countries Compared

We compared taxes, labour costs and market access across 20 European countries to help founders understand where their business money could go further.

Choosing where to run a business in Europe can have a major impact on payroll, profitability and how easily a company can scale. The differences between markets are significant: Bulgaria combines comparatively low labour costs with a 10% corporate tax rate, while Germany has a much higher operating-cost environment and a combined statutory corporate tax rate of around 30%.

That does not automatically make the cheapest country the best choice. A software company preparing to hire 100 people will care about talent depth and scalability, while a five-person consultancy serving international clients may put greater weight on tax, administration and flexibility. A company selling into Germany may even benefit from paying more to stay close to its customers.

This comparison therefore looks beyond headline tax rates. It is designed to help founders understand where costs are lower, what they may gain by paying more and which European markets could make sense for different types of businesses.

Europe Business Cost Comparison: 20 Markets

*For Albania, Serbia and North Macedonia, the figures shown are approximate gross-wage equivalents per hour calculated from official national gross monthly wage data. They are included to give founders a useful directional comparison, but they are not directly comparable with Eurostat’s total hourly labour-cost measure, which also includes broader non-wage employer costs.

The table shows why tax alone does not tell the full story. Hungary has the lowest corporate rate in this comparison, Bulgaria combines low tax with one of the EU’s lowest labour-cost environments, and Romania remains comparatively affordable while offering a larger hiring market. Germany costs considerably more, but its customer base, industrial ecosystem and specialist talent can justify that premium for the right company.

Three Numbers Worth Knowing

Eurostat estimates average hourly labour costs at €34.9 across the EU and €38.2 in the euro area in 2025. Bulgaria, Romania and Hungary were among the lowest-cost EU markets, while countries such as Denmark and the Netherlands were considerably more expensive.

For a company employing 50 or 100 people, that difference can have a significant impact on annual operating costs. A small professional-services firm may be less sensitive to payroll, but labour economics become increasingly important as headcount grows.

What Does the Cost of Doing Business Really Include?

Corporate tax is easy to compare because it produces one clean percentage, but real companies have many more expenses. Salaries, employer contributions, recruitment, workspace, technology, accounting, legal support, insurance, travel and compliance all affect how much capital a company needs to operate.

Employment costs deserve particular attention because gross salary does not equal total employer cost. Eurostat’s labour-cost measure includes wages and salaries as well as non-wage expenses such as employer social contributions, which is why salary comparisons alone can give founders an incomplete picture.

A five-person consultancy and a 50-person customer-support company could produce the same revenue yet reach completely different conclusions about where to locate. The first may care more about tax efficiency, while payroll could dominate the cost structure of the second.

Which Markets Should Founders Consider First?

There is no useful way to declare one country the universal winner. Bulgaria may suit a lean software or outsourcing company, while a manufacturer could value Poland, Czechia or Germany more because infrastructure, suppliers and customers outweigh the difference in payroll.

What Would a 10-Person Software Company Choose?

Consider a founder building a B2B software company with six developers, a designer, a customer-success manager, a salesperson and an operations employee. The company starts with 10 people but wants the option to grow towards 50 or more if the product succeeds.

Sofia is difficult to ignore when preserving the runway is the main priority. Bulgaria offers competitive labour economics, a low corporate tax rate and EU membership, which can make it attractive for software, outsourcing and other people-intensive businesses.

Bucharest becomes more interesting when the founder starts thinking beyond the first few hires. Romania remains comparatively affordable, but its larger labour market provides more room to recruit specialist roles. Warsaw costs more again, yet Poland’s deeper talent pool may make scaling easier as the organisation grows.

Berlin is likely to be the most expensive choice in this example, but it may still produce stronger economics for a company selling mainly to German enterprises. Closer access to customers, investors and experienced specialists can sometimes be worth more than the payroll savings available elsewhere.

The Low-Cost Advantage Is Changing

Founders should avoid assuming that today’s cost gaps will remain unchanged. Labour costs rose sharply in several traditionally lower-cost European markets between 2024 and 2025, including 13.1% in Bulgaria and 11.6% in Croatia, while Romania, Hungary and Poland also recorded meaningful increases.

This does not mean Central and Eastern Europe are suddenly expensive. It does mean a five-year business plan should account for wage growth rather than assume today’s labour-cost advantage will remain the same.

For long-term planning, the more useful measure is therefore cost-to-talent value: what the company pays, what skills it can hire and how sustainably that team can grow.

What About the Balkans?

Western Balkan markets can be overlooked in Europe-wide comparisons because EU statistics are easier to standardise. Yet Albania, Serbia and North Macedonia can be highly relevant for companies that serve international customers and do not require their main operation to sit inside the EU.

Albania and Serbia both have corporate tax rates of 15%, while North Macedonia’s rate is 10%. Albania can be interesting for tourism, professional services and outsourcing; Serbia has a stronger proposition for technology and engineering; and North Macedonia may suit lean, export-oriented service operations.

The important trade-off is EU membership. For a regulated or product-based company, this may materially affect the legal and operating structure. For a digital business serving customers internationally, it may matter much less.

At the same time, the founders who plan to use Albania as their workplace should know about the types of company formation options in Albania.

How Should You Compare Your Final Three Countries?

Once you have narrowed the shortlist, national averages become less useful. The next step is to model the actual company you intend to build.

Note: Once this model is prepared, validate the numbers with local accountants, recruiters and property providers. A European comparison is useful for finding the right markets to investigate, but it should not replace local due diligence.

Five Questions to Answer Before Choosing

Before making a final decision, founders should understand what the first 10 employees will actually cost and then repeat the calculation for 50 or 100 employees. A market that works extremely well for a small team may become difficult when specialist recruitment starts to matter.

Customer location is equally important. Saving on payroll is less valuable if the chosen base makes selling, servicing clients or building partnerships materially harder. Founders should also consider EU membership, local wage growth and their likely effective tax rate rather than relying solely on headline statistics.

A useful final stress test is to ask whether the same country would still make sense if operating costs increased by 20%. If the business case disappears, the location strategy may depend too heavily on today’s price advantage.

So, Where Does Business Money Go Furthest in Europe?

For a company that needs an EU base while keeping operating costs under control, Bulgaria is one of the strongest markets to investigate. Romania becomes particularly interesting when the company expects to build a larger team, while Hungary’s 9% corporate tax rate deserves attention from profitable businesses where taxation has a bigger influence on the economics.

Outside the EU, Serbia, Albania and North Macedonia can offer compelling options for internationally focused businesses. Poland becomes stronger as hiring scale grows, while Germany, France and the Netherlands are more likely to justify their higher costs when customer access, infrastructure and specialist talent directly support revenue.

The right location is therefore not necessarily the country with the cheapest salary or the lowest tax rate. It is the market where cost, talent, customers and scalability fit the economics of the company you actually plan to build.

Methodology

KOLEKR Insights reviewed the latest data available as of August 2026. Corporate tax figures are based primarily on current OECD and PwC-based European statutory-rate comparisons, while labour-cost figures for EU markets use the latest full-year 2025 Eurostat estimates.

For Albania, Serbia and North Macedonia, the table uses approximate gross-wage equivalents per hour derived from official national gross monthly wage data. These numbers provide useful directional context but are not directly comparable with Eurostat’s total hourly labour-cost measure, which also includes broader non-wage employer expenses.

Headline corporate tax rates should also not be treated as an individual company’s expected effective tax rate. Company size, local taxes, incentives, sector, turnover, international structure and ownership can materially change what a business ultimately pays.

This guide is intended to help founders and business leaders create a shortlist for further research. It is not personalised tax, legal, accounting or investment advice.

About KOLEKR Insights

KOLEKR Insights is an AI-powered Business Intelligence & Digital Media Platform for the Balkans & Europe.

We publish market intelligence, business comparisons, founder stories, executive interviews, ProTalks, company spotlights and thought leadership to help entrepreneurs and decision-makers understand opportunities across Europe.

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