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Do you want to compare the pros and cons of starting a company in different countries? This article compares Portugal, Estonia, Singapore, Ireland, the USA (Delaware), and the UK. Factors to consider when making these comparisons include the corporate tax rate, tax relief and credits for startups, access to venture capital, the cost and ease of registering and managing a company, and how easy it is to access digital services and avoid bureaucracy. It’s also relevant to consider the reporting requirements in each jurisdiction (such as filing tax returns and submitting annual company reports), whether you can start a company without physically having to relocate, how much support there is for startups and entrepreneurs, and which markets you can access (such as the EU). Pros and Cons of Starting a Company in the UK The UK is known for being an economic leader, having a highly skilled and educated labour force that’s expected to grow over the course of the next 15 years. However, its decision to leave the European Union in 2020 has resulted in significant changes to the business environment. That includes increased costs of cross-border trade and complexity in conducting business within the EU. The UK economy has also been affected by supply chain shortages post-Brexit, and rising inflation - with an economic recession on the cards in 2023. Main advantages of starting a company in the UK - It’s possible to register a limited company in the UK online. - It’s quick and easy to process company registrations in the UK: costing as little as £12, you can have a company registered within 24 hours. - Company founders don’t need to reside in the UK, but the company must have a UK registered address. - The UK’s WebFiling system allows companies to file documents and manage company information online. - The UK has established 155 double taxation agreements with countries around the world. - There are many business support schemes and funding available to UK businesses, particularly for knowledge-based enterprises and companies involved in research and development (R&D). - London has a wide range of business startup hubs and communities. Main disadvantages of starting a company in the UK - The corporate tax rate increased to 25% in April 2023, which is higher than other jurisdictions. - Because of Brexit, the UK no longer has easy access to the EU market which is a serious barrier to companies involved in cross-border trade or reliance on EU products and services. - Tax filing and company reporting takes 114 hours a year on average, which is quite long and can be rather costly if you pay professionals to assist you with this. Pros and Cons of Starting a Company in Portugal Portugal’s economy was negatively impacted by the global Covid pandemic, and has high levels of public debt. However, its economy is in recovery and there is government support for entrepreneurs and the business sector, such as access to credit and loan guarantee schemes. As a leader in financial services, telecommunications, and tourism - Portugal has many large corporations and an active startup community (mostly based around Lisbon). A Portuguese e-residency program is in the pipeline, although it is unclear when it will launch. Main advantages of starting a company in Portugal - As part of the EU, companies in Portugal have access to one of the largest market economies in the world. - It’s moderately quick to register a company in Portugal, and the application can be done online through an authorised agent. It takes just 5 to 10 days, or 1 to 2 days if the application is expedited. - The first year costs of operating a company are relatively low, from €80. Note that this estimate excludes costs of lawyers, authorised agents or migration service providers. Main disadvantages of starting a company in Portugal - It takes a relatively long time to file taxes in Portugal, averaging between 60 and 150 hours. - The corporate tax rate of 21% is not as low as many other jurisdictions. - Portugal’s e-services are not as comprehensive as they could be, which can make business administration complex and confusing. Pros and Cons of Starting a Company in Singapore If you’re looking for a place to start a company where you can get access to Asian markets, then Singapore is a good option. The country also has a supportive startup scene, advanced digital infrastructure, and a relatively low corporate tax rate. Main advantages of starting a company in Portugal - Singapore’s corporate tax rate of 17% is quite competitive globally. - It’s easy and affordable to start a company in Singapore, and your application can be done online and typically processed within 1 to 3 days. - In Singapore, there are a range of e-services available and a national, digital ID system called the Singpass, which is used by individuals and businesses to interact with government and private bodies. - There are various tax schemes that support startups in Singapore, as well as tax exemptions and access to venture capital. - Singapore boasts 27 bilateral trade agreements, which includes with the EU, China, the USA, India, South Korea and Japan - and many double taxation agreements too. - The average time to file taxes is just 64 hours, which is comparatively efficient. Main disadvantages of starting a company in Singapore - Foreigners starting companies in Singapore need to appoint a local third party to process the incorporation. - Foreigners may need to relocate to Singapore to operate their businesses there. - Foreigners starting companies in Singapore may need to appoint both a local company director and a local company secretary. - You’ll need to be physically present to open a bank account in Singapore. - Annual business costs are comparatively high, from around €4,000. Pros and Cons of Starting a Company in Ireland As an EU member state, Ireland has access to a large single market for trade, which is a major advantage of starting a company in Ireland. In addition, it has a very competitive corporate tax rate and is also the only official English-speaking member of the EU. Main advantages of starting a company in Ireland - It’s moderately quick to form a company in Ireland, which can be done in 3 to 7 working days. - Business incorporation can be done partially online. - Company taxes can be filed online through The Companies Registration Office’s online filing system, CORE. - The corporate tax rate is 12.5% for trading income, and even though this is expected to be increased to 15% it’s still comparatively quite low. - Ireland offers corporation tax relief for start-up companies and tax credits for companies involved in research and development. - Ireland has established over 70 double taxation agreements with other countries. - Many tech startups are incorporated in Ireland and there’s a bounty of tech talent in the country, with an active and supportive startup scene and access to venture capital. Main disadvantages of starting a company in Ireland - Company registration in Ireland for non-EEA and non-EU residents is more complicated. That’s because you need to have at least one director who is domiciled in the EEA. There are some possible exemptions, however. It’s more complicated for non-EEA residents to open a bank account in Ireland. Capital gains tax is 33%. The average time to file taxes each year is 82 hours, which is still reasonable but not as time efficient as other countries like Estonia. Pros and Cons of Starting a Company in Delaware, USA Considered an international tax haven, Delaware in the USA is a sought after location in which to start companies. This tax-friendly jurisdiction allows companies to base their headquarters anywhere in the US, where they may then be exempt from Delaware state tax. And companies registered in Delaware can also create a franchise and take advantage of lower franchise tax laws when operating outside Delaware. Many companies opt to form LLCs in Delaware, but the C-Corp structure is also particularly popular with venture capitalists as there’s no pass-through tax. C-Corps can also claim various deductibles. Boasting the second lowest tax rate in the US, it’s no wonder that Delaware attracts tech startups and innovators that require venture capital to scale and grow. One of the main factors when choosing between starting a company in Delaware and somewhere else such as Estonia, will be which market you want to do business in - the US or the EU. This may depend where you already have a network of clients and partners. Main advantages of starting a company in Delaware (USA) - Delaware has one of the lowest corporate tax rates globally. - Foreigners can start a company in Delaware without travelling there. - Registering a company takes around 5 to 15 days on average, although it can also be expedited to within 24 hours at an extra cost. - You can register an LLC online and with the assistance of a local agent, with the exception of residents of Cuba, Iran, North Korea, and Syria. - Companies can conduct all their business online, such as filing tax returns. That means foreign business owners can manage their Delaware companies remotely. - Delaware actively supports startups and entrepreneurs and there are many state grants and support programs. - Delaware is known for being a good place to find venture capital and many investors require companies to be registered in Delaware. Main disadvantages of starting a company in Delaware - You need to open a business bank account in person, which requires travel to the USA. - You’ll need to appoint and pay for an authorised local agent to represent the company. - The costs of running a business in Delaware each year are higher than other countries like Estonia. - Customer support is only available in English which may be a barrier for some people. - It takes an average of 175 hours to file annual tax returns in Delaware which is significantly longer than other jurisdictions. Pros and Cons of Starting a Company in Estonia Estonia is a popular choice of country in which to start a business for anyone wanting to access the EU market and competitive corporate tax rates. Estonia’s simple, easy and affordable startup costs and procedures, simplicity of managing a business remotely due to its highly advanced digital services, and its support for startups and entrepreneurs gives it the enviable position of being Europe’s most entrepreneurial country and top ranking country worldwide on the Tax Competitiveness Index. Estonia is also known for being one of the best countries in Europe for startup support, finding venture capital and for the sheer number of startups created each year, and is one of the 6 fastest growing hubs for startups in the world. Main advantages of starting a company in Estonia - Access to the EU market is a major advantage of starting a company in Estonia. - Estonia tops the Tax Competitiveness Index and has a very competitive corporate tax rate of 20% for distributed profits which is lowered to 14% if dividends are paid regularly for 3 or more years. Where profits are reinvested, no corporate tax is payable at all. - Estonia is one of the few places where you can start a company without needing a visa, local agent or local director. - Estonia’s dedicated e-Residency program specifically caters to foreigners wanting to start companies in Estonia. E-residents get digital access to e-services and the EU market, and can manage their companies remotely from anywhere. - Estonia boasts one of the fastest company incorporation procedures in the world - taking just 2 hours on average. Company registration can also be done 100% online. - It’s easy for companies to be managed remotely and digitally in Estonia, thanks to the Estonian digital ID and e-services. That means that taxes can be filed electronically, as can banking and payments be made online. - The e-Residency Marketplace provides access to a large number of professional services for foreign founders. - Estonia has established over 60 double taxation agreements, and also doesn’t charge capital gains tax. - The annual costs of running a business in Estonia are far lower than in many other jurisdictions, starting from €200 a year on average. - Estonia is well known for its entrepreneurial business culture and plethora of startups, as well as abundance of startup support and incubators. In fact, Estonia had the highest number of startups in Europe in 2022, according to the State of European Tech 2022 report. - Estonia is also a leader when it comes to attracting venture capital for businesses, and in 2022 raised more venture capital (VC) than any other European country, per capita. Main disadvantages of starting a company in Estonia - Estonia’s official language is Estonian, not English. However, its digital business environment can be accessed in three languages: English, Estonian and Russian. - Estonian e-Residency allows you to establish a company in Estonia; however it doesn’t confer actual physical residency or citizenship. - Estonia’s tax rate is competitive, but is not as low as some other jurisdictions. The final verdict: where to start your business If you’ve been searching for ways to compare Estonia vs the UK for managing a company, Portugal vs Ireland for starting a company, or Singapore vs Delaware for access to venture capital funding for startups, hopefully you’ve had some of your questions answered in the article. Comparing various country options such as Portugal, the UK, Delaware (USA), Ireland, Singapore and Estonia can be challenging. Ultimately, your choice of where to start a business will depend on a unique set of factors, particular to your exact circumstances. Based on our findings from research conducted by PwC aimed at comparing different jurisdictions in terms of various metrics, here are some of our insights and verdicts: Best country to start a business in for access to the EU market: Portugal, Estonia, Ireland Best country to start a business in for tech companies: Delaware, Ireland Best country to start a business in for startups: Estonia, UK, Delaware Best country to start a business in for a franchise: Delaware (USA) Countries in which a foreigner can start a company without an agent, local director or visa: Estonia, UK Most attractive tax incentives for foreign entrepreneurs willing to move country: Portugal Most attractive tax incentives for tech companies: Ireland, Delaware Best place for North American market access: Delaware Best place for Asian market access: Singapore Best place to expand globally: UK, Delaware Only country with e-Residency programme: Estonia Best digital services: Estonia Best country for access to venture capital: Delaware, Ireland, Estonia, UK |
