Low corporate tax rates can promote healthy levels of competition, encourage investment and create jobs, yet certain leading countries still maintain extremely high corporate tax rates. Businesses are constantly making pleas for reduction in their taxes, and several countries can boast stronger economies as a result of tax reduction. Let’s take a look at the ten countries in the EU with the lowest business tax rates.

1) Cyprus (10%)

Cypriot capital

Cyprus has become a haven for global businesses due to its low tax rates. It has entered into double tax treaties with many countries to ensure that income cannot be taxed twice – an advantage which other countries with low corporate tax can also offer.

2) Bulgaria (10%)

Bonuses for Bulgaria

Meanwhile, many Russian-based companies have chosen to operate in Bulgaria due to the substantially lower corporation tax rates on offer compared to neighbouring countries such as Greece.

3) Ireland (12.5%)

Attracting global brands

The 12.5% corporation tax rate in Ireland led to Google establishing itself as a presence there, whilst the European arm of Facebook is based in the country too. This demonstrates how smaller countries can attract some of the world’s most iconic brands by cutting corporation tax, attracting vast tax income even at relatively low rates.


Investing in stability

After suffering notably from the global financial crisis, Latvia has seen vast growth over recent years after cutting its corporation tax to 15%. Lithuania too has attracted vast foreign investment, and is also noted for its stable economy.

6) Romania (16%)

Getting businesses off the ground

Romania offers not only one of the lowest corporate tax rates in the EU, but also low personal tax rates. Currently standing at 16%, rumours that the tax will be raised or lowered to ensure that the smooth running of the country to continue are yet to come to fruition. Romania also helps small business with no more than nine employees via a micro-enterprise tax, in which companies can pay 3% tax on their profits rather than the usual 16% rate.

7) Slovenia (17%)

Year-on-year reductions

Slovenia has recently seen a 1% reduction in corporation tax, which will be repeated in subsequent years until 2015 when it reaches 15%, stimulating the economy and encouraging new enterprise.

8)Czech Republic (19%)

No double taxation

The Czech Republic has also seen a 1% annual reduction in corporate tax, with government revenue boosted by adding 1% to VAT rates recently. The country also enjoys a double tax treaty with nearby Switzerland.

9) Hungary (19%)

Space to prosper

In Hungary, small businesses with an income of up to HUF 500 million only pay a rate of 10% corporate tax, as opposed to 19%, allowing new or small businesses to increase their chances of swift growth.

10) Poland (19%)

A fairer system?

In Poland, non-residents only have to pay corporate tax on income that is generated in Poland, whereas companies that are resident must pay tax on income no matter where it stems from.

Countries that offer low corporate tax rates do so because it is known for stimulating growth and encouraging investment. This approach does not always work, but several nations have seen their economy boosted noticeably as a result of lower corporate taxation. Low taxes can also encourage individuals to enter into business and to compete in the market. Small businesses in particular are known for making a loss before they make a profit, so low corporation tax rate can enable them to stem the flow of losses, and make their operations a success where higher taxes may prevent them from doing so. If you are considering opening an offshore company, choosing a country with lower tax rates could provide a real financial boost.