For entrepreneurs, freelancers, and global companies looking to expand into Europe, choosing the right country for incorporation is a critical decision. Costs vary widely across the EU — from corporate tax rates and labor expenses to compliance fees and market accessibility.
The good news? Several EU member states offer exceptionally cost-efficient environments for starting and operating a business.
In this guide, we explore the cheapest countries in the European Union to set up a company, highlighting the pros, cons, and strategic reasons these jurisdictions attract investors from around the world.
Whether you’re an early-stage founder or a mature company pursuing EU expansion, this breakdown will help you design a smarter, cost-effective entry strategy.
1. Hungary — Europe’s Most Cost-Efficient Full-Service Environment
Hungary consistently ranks among the best-value business hubs in the EU.
Combining the lowest corporate tax rate in the EU (9%), competitive labor costs, developed logistics networks, and investor-friendly policies, Hungary offers an outstanding price-to-value ratio for businesses of all sizes.
Pros
EU’s lowest corporate tax (9%)
Fast and affordable company registration (often within 1–3 days)
Strong manufacturing, logistics, tech and shared-service sectors
Central geographic location ideal for EU distribution
Access to highly qualified workforce
Attractive government incentives for investors
Cons
Higher employer social contributions compared to some regions
Hungarian-language documents create a learning curve for newcomers
If you’re exploring expansion or cost-efficient market entry, Hungary is one of the most strategic jurisdictions in the EU. Learn more about business opportunities in Hungary.
2. Estonia — The Digital Entrepreneur’s Paradise
Estonia remains a global leader in digital governance. Its groundbreaking e-Residency program has created a frictionless environment for remote founders who want to operate inside the EU without physically relocating.
Pros
Fully online company formation
Minimal bureaucracy, highly automated systems
Low maintenance costs and simplified accounting
Startup-friendly ecosystem
Cons
Dividend tax structure may be costly for reinvestment-heavy companies
Physical presence often required for certain banking services
Estonia is ideal for digital entrepreneurs, SaaS founders, consultants, and online service providers.
3. Lithuania — One of the EU’s Most Competitive Corporate Ecosystems
Lithuania combines low operating costs with a rapidly developing fintech and technology sector. The country is a rising star in Europe’s financial innovation landscape.
Pros
One of the most affordable labor markets in the EU
Fast company registration
Strong banking and fintech ecosystem
Attractive tax structure for SMEs
Cons
Smaller internal market
Higher taxes than Hungary for certain corporate structures
Lithuania is excellent for tech companies, fintech innovators, and logistics firms.
4. Bulgaria — Low Costs With Strategic Potential
Bulgaria is often mentioned as one of the cheapest countries in the EU overall, from corporate taxes to living costs. However, its advantages must be balanced with practical considerations.
Pros
10% flat corporate tax — second lowest in the EU
Very low labor and rental costs
Growing technology and outsourcing sectors
Cons
Banking still more traditional and sometimes slower
Lower purchasing power compared to Western EU markets
Perception challenges for luxury or high-margin brands
Bulgaria works well for manufacturing, outsourcing, and early-stage service companies seeking low baseline costs.
5. Poland — Cost-Efficient with Strong Market Scale
Although not the absolute cheapest, Poland offers a strong combination of affordability and market size.
It has one of the largest workforces in the EU and a rapidly growing innovation ecosystem.
Pros
Large domestic market and strong purchasing power
Competitive labor cost compared to Western EU
Relatively easy incorporation and compliance
Strategic location for Central and Eastern European operations
Cons
Corporate taxation more complex than in Hungary or Bulgaria
Higher administrative workload for SMEs
Poland is ideal for companies seeking affordability and scale, especially manufacturing, logistics, and BPO sectors.
Important Consideration: Talent Mobility and Immigration Rules
When choosing an EU country for incorporation, the ability to hire foreign professionals often plays a major role.
European talent mobility is undergoing significant modernization, especially through reforms of the EU Blue Card system.
Countries with simpler, more investor-friendly immigration systems have a competitive edge, especially for companies that depend on non-EU talent such as engineers, IT specialists, financial professionals, and executives.
Hungary, Lithuania, Estonia, and Poland all participate in the Blue Card framework, providing structured pathways for high-skilled workers.
Which EU Country Is the Cheapest Overall?
While each jurisdiction has strengths, Hungary currently offers the best price-to-value ratio when combining:
corporate taxation (lowest in EU)
company registration speed
financial compliance cost
access to EU markets
labor competitiveness
logistics strength
government incentives
Bulgaria is marginally cheaper in certain categories, but Hungary provides a significantly more robust and international business environment, making it the most balanced and cost-effective option.
