Doing Business in Europe: A Comprehensive Guide

Key considerations for business growth in Europe

Europe is a large and diverse market, with many promising subregions with a lot to offer: from skilled, highly educated talent hungry for success to a healthy business establishment climate.

Before you take your first steps toward setting up your business or hiring in European countries, here are a few key considerations to keep in mind:

• The politics across the region often cause significant shifts in the regulatory environment, as well as the availability of certain types of talent within certain countries (like Brexit for the UK)
• Non-EU nationals may or may not have the right to work in the EU, depending on their nationality or family relationships with EU citizens
• The EU provides several advantages for businesses expanding across different countries that belong to the EU, as well as for young entrepreneurs
• When hiring EU citizens, you must follow specific regulations provided by the union, regardless of the type of contract (fixed-term, part-time, or temporary agency work)
• Many countries—both in and outside of the EU—offer several types of visas, including the digital nomad visa, for workers from abroad (like Croatia, Estonia, Malta, Spain, etc.)
• The Netherlands, Sweden, Denmark, Finland, and Switzerland are the top five most digitally-ready European countries, also boasting a significant number of early adopters when it comes to technology
• Both regulatory frameworks (such as the GDPR) and European business etiquette may require you to take a soft approach when reaching out to potential customers
• In many European countries, English is spoken on a very high level, so localization doesn’t have to be the priority
• Business culture can vary widely; in some countries, building a personal relationship with clients is typical and expected, while in others, even small talk is not appreciated

The benefits of expanding your operations to Europe

Europe is a melting pot for diversity. With a population of over 700 million people, it provides a vast consumer base for businesses to target. A large portion of this consumer base also has a high income and great purchasing power, especially in countries like Germany, Switzerland, or the UK.

But the benefits of doing business in the European market go beyond these.

Access to highly educated and skilled workforce

Europe is known for its highly skilled workforce, making it easier for businesses to find qualified employees.

There are many multilingual, well-educated individuals with vast experience from multinational companies that have exposure to different markets. For instance, the Netherlands and the UK are also known for their pools of expats from all over the world living and working in these countries.

On top of that, hiring from many of Europe’s subregions, like Eastern Europe, is still much more affordable than, for example, from Silicon Valley, while innovation and tech talent are of the same quality.

Healthy business culture

Europe boasts a supportive business ecosystem with access to accelerators, networking events, and government initiatives aimed at fostering entrepreneurship and innovation. This ecosystem provides resources and support for startups and small businesses to thrive and grow.

For example, the Netherlands is known for many incentives coming from the government to not only attract businesses to open their local subsidiaries but also to move their headquarters to this country.

Many European countries also have a simple business registration process that doesn’t take more than a week, such as Denmark, Estonia, France, and Norway.

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Access to the EU Single Market

The EU Single Market refers to the free movement of goods, services, capital, and people within the European Union (EU), creating a unified marketplace with over 440 million consumers.

Once you gain access to the EU Single Market, you can benefit from the elimination of tariffs, quotas, and other trade barriers between EU member states, which reduces administrative burdens for businesses.

The EU Single Market also establishes common standards and regulations for products and services across member states, which streamlines global compliance, one of the most complex hurdles in doing business across borders.

Businesses operating within the EU Single Market can also access capital markets, banking services, and investment opportunities across member states.

Strong legal and regulatory framework

Most European countries, especially in the EU, have established comprehensive regulations and directives that govern various aspects of business operations, including consumer protection, competition law, data privacy, intellectual property rights, and environmental standards.

This robust legal framework provides clarity and stability for businesses, ensuring compliance with uniform standards across member states and fostering a level playing field for competition.

For example, the General Data Protection Regulation (GDPR), implemented by the EU in 2018, sets strict standards for the collection, processing, and protection of personal data. This regulation applies to businesses operating within the EU or targeting EU residents, regardless of their location.

The EU's competition law prohibits anti-competitive practices such as price-fixing and abuse of dominant market positions, promoting fair competition and consumer welfare. This regulatory framework ensures that businesses operate ethically and responsibly, contributing to a healthy business environment in Europe.

Great time zone and language coverage

Europe spans multiple time zones, so expanding your operations to this continent allows you to set up in the “middle” between the APAC and NAM/LATAM regions, ensuring a good overlap with almost every time zone.

This will allow you to interact with clients, partners, and suppliers across different regions of the world conveniently.

The linguistic diversity in Europe also creates an incredible opportunity to cater to a broad customer base in their native language even in different continents—taking just Spanish and English as examples—increasing customer satisfaction and loyalty.

Legal and compliance challenges of doing business in Europe

Europe is a diverse and complex market—even within the same subregion legal requirements and business regulations can differ widely. Here are some legal and compliance challenges you may face on your way to setting up your business operations in Europe.

Competitive hiring landscape

With many companies looking to employ skilled workers from this continent, and especially from high-cost-of-living countries, hiring becomes fairly competitive. You must provide really attractive benefits packages and high salaries to win over the best talent, increasing your overall employment costs.

For example, living in the UK, specifically in London, which is where most of the key talent is located, is very expensive. Employees require high wages in comparison to other European countries. The situation is similar in the Nordics, where the cost of living is also among the highest in the world.

Daunting bureaucratic processes

Although digitalization has been in full swing across many countries within the region, you still may stumble across bureaucratic hurdles when doing business in Europe.

While in countries like Estonia, it’s very easy to set up a business, in Poland, the same process will take much longer and require you to fill out a lot of paperwork. You will likely need to engage local lawyers to set up contracts, deal with admin tasks, and ensure compliance.

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Differences in communication and business culture

Differences in communication styles and business culture across European countries can pose a challenge for businesses operating in the region. These differences stem from varying cultural norms, societal values, and historical contexts, influencing how individuals interact and conduct business.

For example, while some countries like Estonia and Finland prioritize direct and concise communication, others such as Italy and Spain tend to favor more expressive and context-dependent communication styles.

“The Dutch and the American culture are quite similar, and even the Israeli culture is similar to the Dutch culture because we come across as quite direct,” says Dennis Valkema, Deel’s country leader for the Netherlands.

“The cultural background gives a great understanding of how people in different cultures communicate with each other and how you should approach them. I think it's very important because when you do business with someone, a lot of misunderstandings can come out of just speaking different languages in the cultural sense.”

Complex regulatory environment

Europe has a complex regulatory environment due to the diversity of legal systems across different countries and the extensive regulations imposed by the European Union (EU), such as data privacy regulations, laws related to intellectual property rights, competition laws and antitrust regulations, and more.

Businesses operating in multiple European countries must comply with various national laws as well as EU regulations, which can be time-consuming and costly to navigate.

Also, each European country has its own tax laws and accounting standards, making it challenging for businesses to navigate tax compliance and financial reporting requirements. Companies operating in Europe must adhere to local tax regulations, including corporate income tax, value-added tax (VAT), and transfer pricing rules, which vary across jurisdictions.

Employer costs and employee benefits across the region

While some European countries have a very high cost of living, others are popular for offering affordable, but highly-skilled talent. Here’s an overview of employer costs for multiple countries across the continent.

Employee benefits, just like other employment laws, vary by country.

One of the biggest differences compared to the US, for example, is that paid annual leave is statutory for full-time employees.

In some countries, the number of paid days off increases with tenure. In Finland, employees are entitled to 30 days of paid annual leave, while in Switzerland, employees get 20 days of PTO per year, unless they’re under 20 or over 50, in which case they’re entitled to 25 days of PTO.

Bonuses also depend on where you hire from. In Belgium, employers need to pay two additional salaries per year (13th and 14th salary) and the Eco Voucher of 250 EUR (~270 USD), which is paid in June. In Croatia, on the other hand, and in many other countries, bonuses are not mandatory but can be provided voluntarily (and taxed as salary).

In Slovenia, Slovakia, and the Czech Republic, work-from-home allowance is a mandatory employee benefit. Austria has a similar statutory benefit: the monthly work equipment allowance.

Some countries have meal allowances, like Serbia and Slovenia. Employees in Spain and Portugal are entitled to professional training as a statutory benefit and receive Christmas allowance.

Some additional resources you may find useful:

• Working hours in the EU
• Annual and other types of leave in the EU
• General terms of employment within the EU
• Part-time working arrangements in the EU
  

💡 Pro tip: Check out our Global Hiring Guide for more country-specific information on minimum wages, taxes, paid leave, and other employer costs and employee benefits.

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Success stories: How Deel helped customers expand across Europe

Deel operates in Europe through its own entities in almost all countries of the continent. Our in-house legal counsels, payroll experts, HR experience specialists, and customer success managers have immense knowledge about the region, helping our customers access unique insights to ensure success and grow their business.

For instance, thanks to Deel, Lyre’s didn’t have to give up on an excellent candidate who was also a perfect culture fit—located in Bulgaria, away from Lyre’s headquarters.

Keego Mobility, a company based in Taiwan, has been able to hire the right talent for their business—instead of finding a location where they’d be able to hire from. Their global journey started with a hire in Berlin, and continued with the Netherlands, Sweden, and more.

Similarly, Zoomo, an Australian company, increased its speed to market by quickly hiring workers in Europe: Spain, Germany, and France. The team is thankful to Deel because we helped them become more ambitious in their expansion plans.

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Grow your business in Europe

Is Europe your next stop in global expansion? Whether you need assistance entering the European market or accessing the best talent that will bring value to your business, Deel can help.

Our services entail hiring full-time employees and independent contractors, providing support with visa applications, consolidating and running payroll for your entire international workforce, HR management in one, global-friendly platform, and more.

Book a demo with our team to learn more about how Deel works and let us know how we can best enable you to reach your business goals.