Lowest Tax in Europe - The TOP 10 Countries in 2026

How to Read This Guide

Many entrepreneurs search for “lowest tax in Europe” and assume it’s purely about a headline corporate tax rate. In 2026, that approach is outdated. The safest way to choose a low-tax country is to look at the full picture:

• Corporate tax + dividend tax + income tax (total burden, not just one number)
• EU market access (if your clients are in the EU)
• Residence + presence requirements (from 0 days per year to a minimum presence/year)
• Further tax optimisaion possible (yes or no)
• Stability and predictability (tax rules that don’t change every year)

The list below is therefore ranked by overall tax efficiency + practicality, not by headline tax alone.

Top 10 Lowest-Tax Countries in Europe (2026)

1) Bulgaria 🇧🇬 EU member

Bulgaria remains one of the most consistent low-tax jurisdictions inside the European Union, attractive for operating companies, holding structures, and internationally active digital nomads. What makes Bulgaria clearly the number 1: Taxes can be reduced to 10% in total without beeing a resident in Bulgarian and with residency permit to 7,5% total tax.

• Corporate income tax: 10% flat
• Dividend tax: 5%
• Personal income tax: 10% flat


• Residence required: no
• Presence in Bulgaria required: no (Even with beeing a resident in Bulgaria no presence is mandatory)
• Tax optimisation possible? Yes the tax burden can be even lowered with the right structure

➼ Further information:

2) Romania 🇷🇴 EU member

Romania stands out with micro-company regimes that can reduce effective taxation for qualifying businesses, especially smaller service companies and startups. Second place might be surprising as taxes have been raised over the last years. The approval from the Romania tax authorities through our tax planing (ANAF) a total tax of only 10% is possible (we use it ourselves) instead of 19-32% in total.

• Micro-company tax: 1%–3% on turnover (if eligible)
• Standard corporate tax: 16%
• Dividend tax: 16%
• Personal income tax: 10% flat

➼ Further information:

3) Hungary 🇭🇺 EU member

Hungary has the lowest headline corporate tax rate in the EU, making it a serious option for operational businesses where profits are retained or reinvested. Hungary has with 9% the lowest corporate tax without threshold limitation, that's a fact. Other taxes like dividend tax of 15% makes it more tax-unfriendly to see it as a whole. With tax planning from GO EU only 15% tax in total is possible, all ruled out with the Hungarian Tax authorities legally. (Residency permit is mandatory to do so)

• Corporate income tax: 9%
• Dividend tax: 15%
• Income tax: 15%
• VAT: 27%

➼ Further information:

4) Serbia 🇷🇸 Not EU

Serbia has one of the best tax rates for small companies in Europe, making it a serious option for operational businesses with smaller revenues. Foreigners, whether EU or non-EU citizens, can form and fully own a company or sole proprietorship in Serbia without having a Serbian residence permit or living there. There are no legal limits preventing non-residents from registering businesses.

• Corporate income tax: 15%
• Dividend tax: 20%
• Income Tax: 10-20%
• VAT: 20%

5) Croatia 🇭🇷 EU member

You do not need to be a resident of Croatia to open and own a company there. Foreigners (both EU/EEA citizens and non-EU nationals) can form a Croatian company without being residents.
Physical presence in Croatia matters for maintaining a Croatian residence permit, particularly for temporary residence permits based on employment, business activity, or self-employment

• Corporate income tax: 10-18%
• Dividend tax: 12%
• Personal Income tax: 17-35%
• VAT: 25%

Best for: manufacturing, trading, EU operational companies, groups optimizing corporate tax.

6) Cyprus 🇨🇾 EU member

Cyprus is a classic EU hub for international business thanks to a competitive corporate tax rate and a strong treaty network. It can be effective for holdings, IP, and cross-border structures when substance is planned properly. Cyprus allows non-residents (EU or non-EU) to incorporate and fully own a company there without holding a residence permit or living in Cyprus. Anyone can register a company, and foreigners can act as both shareholders and directors.
Temporary residence permits like the Pink Slip allow you to stay in Cyprus for extended periods, but they are designed for people actually residing in the country beyond tourist stays.

• Corporate income tax: 12.5%
• Dividend tax: often 0% for certain non-dom scenarios (case-specific)
• Legal environment: widely used in international structuring

Best for: international holdings, cross-border structures, founders needing EU credibility and professional infrastructure.

7) Malta 🇲🇹 EU member

Malta is often used for international structures. While the nominal corporate tax rate is high, effective taxation can be lower through Malta’s refund mechanisms — but only when structured correctly with professional support. Foreigners (EU or non-EU) can fully own and register a Maltese company without living there or holding a Maltese residence permit.
For a normal temporary or ordinary residence permit, Maltese authorities expect you to live in Malta because the purpose of these permits is actual residence in the country:

• Nominal corporate tax: 35%
• Effective tax (common ranges): often ~5–10% (structure-dependent)
• Setup note: not a “DIY” jurisdiction

Best for: international companies with professional compliance, founders needing EU structure with tailored tax outcomes.

8) Czech Republic 🇨🇿 EU member

Not the lowest-tax jurisdiction by headline rates, but included due to stability, EU credibility, and overall business strength. In practice, it can be competitive for real operational companies. Foreigners (EU or non-EU) can register and fully own a Czech company (such as an s.r.o. – the Czech limited liability company) without living in the country or holding a Czech residence permit. Founders and directors do not have to be residents.
There is no fixed “minimum days abroad” number stated in the law, but if you stop meeting the permit’s purpose and are absent long-term, renewal or even validity can be jeopardised because the purpose of your stay must still exist.

• Corporate income tax: ~19%
• Dividend tax: often ~15% (structure-dependent)
• Strength: stability, strong economy, central location

Best for: operational EU businesses prioritizing stability, reputation, and a strong local economy.

9) Lithuania 🇱🇹 EU member

Lithuania combines moderate headline tax rates with a modern, business-friendly environment and is increasingly popular for tech, fintech, and international services. Foreigners (EU and non-EU) can establish and fully own a Lithuanian company without residency and do not have to live in the country to register the business.
Lithuanian authorities expect you to be present enough to demonstrate that you are managing or actively participating in the company — if the immigration purpose no longer exists (e.g., zero activity and no physical presence), renewal may be denied.
There isn’t a published “minimum days per year” rule like in some countries, but extended long absence that undermines the activity for which the residence permit was granted can lead to refusal of renewal or even cancellation.

• Corporate income tax: ~15% (reduced rates may apply for small companies)
• Strength: growing ecosystem and EU credibility

Best for: tech and service businesses needing EU structure, stable compliance, and a modern business ecosystem.

10) Montenegro 🇲🇪 Not EU

Montenegro is Europe-only but not an EU member (candidate country). It remains relevant due to low corporate taxes and a relatively straightforward system. It can work for Europe-focused structures that do not depend on EU benefits. Foreigners and non-residents can incorporate a business there under the same conditions as locals. You can set up a company remotely, often via power of attorney, without physically being in Montenegro.
There are no legal requirements that directors or shareholders must be Montenegrin residents to register a company. Company ownership does not itself make you a resident. To live in Montenegro legally, you have to apply for a residence permit, which typically requires additional steps such as being employed by the company as its director and meeting immigration requirements.

• Corporate income tax: commonly 9%–15% (depending on bracket/structure)
• EU member: no (EU candidate)
• Use case: non-EU operational structures, regional planning

Best for: founders who want Europe-based low-tax operations without requiring EU legal/tax benefits.

Quick Comparison Table

Note: Rates are simplified and may vary by specific conditions, residency, treaties, distribution type, and legal structure.

Reality Check for 2026

“Lowest tax” is only helpful if the structure is sustainable and compliant. In 2026, authorities look at:

• Where you live (personal tax residency)
• Where management decisions are made (corporate tax residency risk)
• Where the business operates (permanent establishment risk)
• Substance (office, staff, director activity, contracts)

For most EU-focused entrepreneurs, the strongest “low tax + practical” options are typically: ➔ Company setup: Bulgaria, Romania, Hungary, Serbia, Croatia, How to start a business in Bulgaria and How to start a business in Romania The right choice depends on your business model, location, and growth strategy.