Introduction
Every country has its own distinct advantages for businesses, leading to variations in the best environment for startups. In today’s interconnected world, common challenges faced by businesses can amplify the pressure of running a company, making it increasingly crucial for entrepreneurs to choose the right location for their firm.
Business Name Generator has analyzed 50 countries considering business tax rates, economic GDP growth, and the cost of startup procedures to determine the optimal location for a startup.
The study also looks at each country’s happiness score, the cost of living, and quality of life to find out where is home to the most content employees, helping drive productivity and growth.
The Ten Best Countries to Launch a Startup in 2023
Based on the economic and social metrics mentioned above, we can reveal the best countries to launch a startup in 2023.
Czech Republic
The Czech Republic emerged as the best country to launch a startup in 2023. With new business procedures costing just 1.1% of GNI per capita, it’s one of the least expensive places to start trading. Labor costs are also reasonable, with salaries averaging $1,800 per month.
Finland
Finland ranked as the second-best country for startups. Businesses are taxed a standard 20% and registering a business (startup procedures) costs just 0.7% of GNI per capita, so costs are relatively low from this perspective. The country is also home to the world’s happiest people, which has positive implications for business leaders. Studies have shown that happy employees lead to better business outcomes, including increased productivity, improved work quality, and higher retention rates.
Sweden
Sweden placed third with the cost of launching a startup being just 0.5% of GNI per capita. The nation boasts the highest GDP among the top five countries at $59,324 per capita. Coupled with its relatively low cost of living ($881.20 per month excluding rent), this suggests a large consumer base with disposable income that could support a local startup. However, business tax in Sweden is slightly higher compared to the Czech Republic and Finland at 20.60%.
Estonia
In terms of GDP, Estonia placed 98th on the global stage and, impressively, comes fourth position in our start-up index. The Northern European country has a reasonable average salary figure of $1,200 per month and the cost to start up is just 1% of GNI per capita. However, the average monthly cost of living is $829.90 without rent, leaving little disposable income to spend.
Slovakia
Slovakia rounds off the top five with start-up costs equalling 1% of GNI per capita, which is on par with Estonia. Although the labor costs are higher ($1,550 per month on average), it is the second most affordable country in our top ten to live in after Portugal, with the cost of living excluding rent totaling $660.40 per month on average.
United Kingdom
Despite current economic uncertainty, The United Kingdom placed sixth in the overall ranking, beating all other G7 countries, including The United States and Germany. The island country is the only one where business startup procedures don’t cost a penny. On top of this, the business tax rate is currently fixed at 19% on capital generated.
Netherlands
The Netherlands has the best quality of life out of every country in the ranking, with a score of 198 out of a possible 240. The country also boasts the second-highest happiness score in the top 10 (7.4) after Finland. However, business leaders should be aware of the elevated labor costs with average monthly salaries costing $3,900. On top of this, the corporate tax rate is 25.8% – 6.8% more than in The United Kingdom.
Austria
Similarly, Austria charges business taxes of 25% on capital generated – the third most taxed location in the top 10. Entrepreneurs should also keep in mind the startup procedures in this country, which are currently at 4.7% of GNI per capita – the highest in the top 10 ranking overall. However, Austria ranks eighth thanks to its healthy score for the quality of life (186.21) and happiness (7.2) of their people.
Denmark
In Denmark, business start-up procedures cost just 0.2% of GNI per capita, which contrasts sharply with Austria’s 4.7%. However, employing staff could prove to be costly for start-up founders, with Danes typically earning $5,900 per month on average. Despite this, business owners can expect a happy workforce as the people of Denmark score second only to Finland for happiness (7.6).
Portugal
The 10th spot in our list of the best countries to launch a startup goes to Portugal. The nomad hotspot has one of the highest business tax rates in the world at 31.5%, which is 12.5% more than The Czech Republic. However, startup procedures are reasonable at 1.9% of GNI per capita and the monthly cost of living averages $626.10 with rent excluded.
The Five Most Challenging Countries in Which to Launch a Startup in 2023
At the other end of the scale, our research also revealed the countries that offer the least favourable environment for startups and their employees.
Philippines
The Philippines ranked as the most challenging country in which to launch a startup. The cost of launching a startup is the highest among all the countries analyzed, totaling 23.3% of GNI per capita. Moreover, the average salary is relatively low at $850 per month, and the quality of life score for employees is the lowest (81 out of a possible 240) among all the locations ranked, which could negatively impact productivity, employee engagement, and job satisfaction.
Egypt
Egypt ranked in second place as the worst country to launch a startup thanks to its quality of life and happiness rankings, which are among the lowest globally, registering at just 91 and 4.2 respectively. However, with lower business tax rates (22.5%) and reduced startup costs (20.3% of GNI per capita), entrepreneurs can benefit from reasonable labor costs with the average salary being $1,200 per month.
India
Our research revealed India as the third most challenging country for launching a startup. Despite the availability of low-cost labor, India ranks lowest in terms of happiness (3.8) and quality of life (118). This could greatly impact job satisfaction, productivity, and overall well-being in the workplace. Additionally, the country’s 30% business tax rate may offset some of the savings gained from affordable labor costs.
South Korea
South Korea is the fourth country entrepreneurs may want to be cautious of, mainly due to its combination of high business taxes (27.5%) and high start-up procedures (14.6% of GNI per capita). Both average salaries and the average cost of living are also heightened at $2,900 and $1,028 per month respectively. However, if your business specializes in electronics, automobiles, and machinery, it can be the place to be as it’s known as one of the world’s leading exporters of those goods.
Vietnam
The fifth most challenging country for entrepreneurs is Vietnam. Although business tax rates are a standard 20% and the cost to launch is 5.6% of GNI per capita, the country has a poor record for salaries which may have contributed to the lower happiness and quality of life scores. However, economic growth is promising as the country placed fourth for this metric with 7% in 2022.
The United States Positioned 17th for Startups in the Overall Ranking
Surprisingly, America ranked outside of the top 10 and placed as the 17th best country to launch a startup. In 2022, the capitalist market economy experienced a low GDP economic growth rate of 1.6% – the third lowest overall. Though business tax rates differ by state, on average, startups can expect to pay 25.8% on capital generated.
Despite this, the US remains a popular destination for entrepreneurs due to its large market, well-developed infrastructure, and supportive legal system for protecting intellectual property.
The best countries to work as an employee
Working for a startup can be rewarding but also demanding, therefore, it’s crucial for entrepreneurs to prioritize the happiness, health, and well-being of their employees. This not only fulfills their responsibility to positively impact their employees’ lives, but it also leads to improved productivity, lower turnover rates, and a more resilient workforce.
With that in mind, let’s take a look at which countries offer employees the best quality of life, happiness rating, and the lowest cost of living (excluding rent).
The Netherlands lead the way for quality of life
The Netherlands offers the best quality of life for startup employees with a score of 197.8, while Luxembourg and Denmark follow very closely behind with scores of 195.9 and 195.1 respectively.
The quality of life score is calculated using a variety of data points relating to purchasing power, safety, health care, climate, cost of living, property price to income ratio, traffic commute time, and pollution.
| Country | Quality of Life Score |
|---|---|
| Netherlands | 197.8 |
| Luxembourg | 195.9 |
| Denmark | 195.1 |
Finland has the happiest employees
Finland scores 7.84 out of 10 for the happiness of its people, which is higher than any other country in the world – and researchers have praised Finland specifically on its ‘strong feelings of communal support and mutual trust’.
Denmark and Switzerland follow in second and third place with scores of 7.62 and 7.57 respectively.
These scores are based on metrics including gross domestic product per capita, social support, healthy life expectancy, freedom to make your own life choices, generosity of the general population, and perceptions of internal and external corruption levels.
| Country | Happiness Score (/10) |
|---|---|
| Finland | 7.84 |
| Denmark | 7.62 |
| Switzerland | 7.57 |
The monthly cost of living is the lowest in Egypt
Egypt’s cost of living is the lowest in the world (excluding rent) which means after an average salary of $1,200 per month, workers will have $927.40 left as gross disposable income.
India and Argentina follow as the two countries with the next most affordable cost of living, however, their average monthly salary means workers will have less than $300 USD disposable income.
| Country | Cost of Living (excluding rent) | Gross Disposable Income |
|---|---|---|
| Egypt | $272.60 | $927.40 |
| India | $317.00 | $293.00 |
| Argentina | $339.30 | $200.70 |
In summary, Europe comes out on top as the best place in the world to launch a startup with all top 10 countries in our ranking being located in this continent. Boasting a relatively harmonious economic and social environment that benefits both entrepreneurs and employees, there’s no doubt Europe will continue to be a popular location for budding entrepreneurs in 2023.
Methodology & sources
Starting with a seedlist of 50 countries, we used a weighted ranking to create this list, based on the following metrics: