So you’re thinking about incorporating a small business in Europe — great idea! The European Union offers freedom of settlement for companies, meaning that if you’re an EU citizen (or even a non-EU investor in many cases), you can legally incorporate a company in any member state and then operate freely across the single market thanks to EU rules on establishment and services. In other words: incorporations are also possible in Bulgaria, Hungary, Poland, and Romania. But why do we talk about those countries?
Not all countries are created equal when it comes to taxes, corporate setup process, and ongoing compliance costs. After having written about Germany and Ireland (both being part of the EU), in this article, we’ll walk you through four continental EU countries in its Eastern wing — Bulgaria, Hungary, Poland, and Romania — comparing their incorporation processes, tax systems, requirements for economic substance, reporting and accounting, plus the pros and cons of each for small business owners.
🇧🇬Bulgaria — Cheapest EU Incorporation + Low Tax
🧾Tax & Business Climate
Bulgaria is well known among entrepreneurs for its 10% corporate tax rate, which is one of the lowest in the EU. This flat rate applies uniformly to most small and medium enterprises. On top of that, dividends distributed to shareholders are taxed at just 5%, boosting net returns to owners.
🏢Incorporation Process
Incorporating a company in Bulgaria is surprisingly straightforward:
- You can set up a limited liability company (EOOD/OOD) with only BGN 2 (about €1) minimum share capital.
- In practice, the registration takes about 3–10 business days if all documentation is correctly prepared.
- Foreigners (EU or non-EU) can own 100% of the company, and you don’t necessarily need to travel to Bulgaria if you grant a Power of Attorney to a local representative.
📊Costs of Accounting
Budget realistically €800–€1,500 per year for professional accounting if you keep things simple. If your business grows and triggers an audit requirement (e.g., sales or assets rise above local thresholds), audit fees can be extra.
📍Economic Substance & Compliance
As an EU company, you need to:
- Have a registered office in Bulgaria.
- Maintain proper bookkeeping following EU standards.
- Submit annual financial statements (typically through an accountant).
- Register for VAT if you cross the local threshold (approx. €51k turnover).
But for most small businesses with moderate turnover, these are manageable.
👍 Pros
- Extremely low incorporation costs and tax burden.
- Fast setup and full EU market access.
- Low personal tax and dividend tax rates.
👎 Cons
- Local language documents and bureaucracy can be tricky without help.
- Banking relationships may take time to establish.
- Annual compliance (VAT, financial reporting) still required.
🇭🇺Hungary — Ultra-Low Corporate Tax + Central European Access
💰Tax System
Hungary boasts a 9% corporate income tax, the lowest corporate rate in the EU. That’s a huge win if your business generates profits and retains them to grow.
🧱 Incorporation & Requirements
- Forming a limited liability company in Hungary generally takes around 1–3 weeks, and you can often manage it remotely.
- Unlike Bulgaria, you’ll often work with a lawyer to prepare and file incorporation paperwork, so consider legal fees in your budget.
- Hungary also issues EU VAT numbers, helping if you plan to trade across borders.
📈Accounting & Substance
Ongoing costs are somewhat higher:
- Professional accounting typically runs €1,000–€2,000 per year, sometimes more if VAT and payroll are complex.
- Local substance (office space and a registered address) is required, though virtual office services are widely available.
👍 Pros
- Very low corporate tax rate fuels profit growth.
- EU market access with strong Central European infrastructure.
- Relatively streamlined digital setup.
👎 Cons
- High standard VAT (27%) can affect pricing/consumer sales.
- Costs can rise with mandatory compliance like audits above thresholds.
- Language and local legal nuances may require professional assistance.
🇵🇱Poland — Stable Environment with Reduced SME Tax
💼Tax & Structure
Poland’s standard corporate tax sits around 19%, but a 9% rate applies for small businesses with turnover below ~€2 million, making it attractive for early-stage SMEs.
🧾Incorporation Steps
The most popular business structure for small businesses is the limited liability company (spółka z ograniczoną odpowiedzialnością or Sp. z o.o.):
- You need a minimum share capital of PLN 5,000 (~€1,200) to incorporate.
- It’s possible to register the company electronically in just a few days via Poland’s S24 system, or take 1–2 months via traditional notary filing.
- After incorporation, companies automatically get a tax ID and statistical number, but you’ll still need to register for VAT and social contributions.
📊 Accounting & Compliance
- Accounting services typically start from around €100/month for basic bookkeeping.
- Beyond that, payroll tax, VAT reporting, and annual financial statements add to the cost and complexity.
🧠Economic Substance Requirements
To benefit from the reduced small taxpayer rate, you should:
- Maintain a registered office in Poland.
- Comply with VAT reporting if you exceed thresholds.
- File annual accounts and report beneficial owners.
👍 Pros
- Favorable reduced tax rate for small turnover businesses.
- Flexible environment with digital incorporation tools.
- Large domestic market and solid legal protections.
👎 Cons
- Higher VAT and payroll requirements compared with some Eastern peers.
- Accounting & social contributions add to ongoing costs.
- Incorporation may require some local expertise.
🇷🇴Romania — Micro-Enterprise Tax + Growing Tech Ecosystem
💶Tax & Incentives
Romania offers a standard 16% corporate tax, but the real appeal for many small businesses is the micro-enterprise tax regime, which taxes turnover at just 1–3% up to certain thresholds — especially appealing for service, digital, and consulting firms.
🏁 Incorporation Process
- A limited liability company (SRL) can be incorporated with a minimum share capital as low as 1 RON (≈ €1).
- Registration with the National Trade Register Office typically takes about 5–7 business days if documentation is in order.
- Foreigners are eligible to register companies; they may need notarized documents and certified translations if filing remotely.
📑 Accounting & Running Costs
- Accounting fees vary widely but expect €80–€300 per month depending on complexity and VAT obligations.
- If you file remotely through a notarized process, additional costs for notary appointments and document apostilles can extend the timeline and fees.
📌 Substance & Compliance
Romania requires:
- A registered business address.
- VAT registration when thresholds are met.
- Annual accounts and tax returns filed properly.
👍 Pros
- Very low turnover tax for qualifying micro-enterprises.
- Small capital requirement and fast incorporation.
- Access to EU markets and local skilled workforce.
👎 Cons
- Remote incorporation may be paperwork-heavy if you’re outside Romania.
- VAT and tax reporting still demand professional accounting support.
- Micro-enterprise regime has restrictions and must be carefully maintained.
🏁Bottom Line: Which One Is Right for You?
| Country | Best For | Tax Highlights | Ease of Incorporation |
| Bulgaria | Cost-sensitive startups | 10% CIT + 5% dividend | Fast and low-cost |
| Hungary | Profit-retaining SMEs | 9% corporate tax | Moderate setup cost |
| Poland | Growth SMEs with turnover | 9% SME rate | Structured but digital option |
| Romania | Small service/digital businesses | 1–3% micro tax | Quick but paperwork if remote |
📌Final Thoughts
If you’re planning to incorporate in the EU to take advantage of competitive tax regimes, freedom of settlement, and access to the single market, these four countries offer compelling but distinct advantages:
- Bulgaria is ultra-cost-efficient for small entities with minimal upfront capital.
- Hungary delivers Europe’s lowest corporate tax rate, perfect for firms that want to retain profits and scale.
- Poland strikes a balance of reduced tax rates and a strong business environment.
- Romania can be ideal for micro-businesses thanks to its turnover tax regime.
Whichever country you choose, make sure to plan for local economic substance (registered office, local operations), reliable accounting help, and understanding how VAT and social contributions apply to your business model. In any case you would need a professional local agent at your side. Consult Singabiz advisors early — the savings and compliance peace of mind make it well worth the investment. Within Singabiz® Network you can find professional advisors who can help you to incorporate in Bulgaria and Romania. We are working on expanding our network towards Hungary and Poland as well.
