Thomas | Posted on 18/09/2024 |

In this article

The Best Countries to Start and Grow a Business in 2025

This article aims to identify the best places to do business globally by evaluating a comprehensive range of factors that contribute to a thriving business environment. We will analyze various countries across five key categories: Business Entry, Business Operations, Growth & Expansion, Business Exit, and Underlying Factors.

Which factors do we look at?

Our analysis is structured chronologically, following the typical stages of a business lifecycle:

Business Entry
Business Operations
Growth & Expansion
Business Exit.

We utilize our own research with data from reputable global indices and reports, including the World Bank's "Doing Business" report, the Tax Foundation's "International Tax Competitiveness Index (ITCI)," the "Global Entrepreneurship Monitor (GEM)," the "Index of Economic Freedom" and the the Economist's "Business Environment Rankings".

Comparison of Countries for Startup Businesses

A. Business Entry

Country	Procedures (Steps)	Time (Days)	Cost (% of Income)	Minimum Capital
Singapore	Few, Online	1-3	Low	None
Denmark	Few, Online	4-10	Low	DKK 40,000 (25% upfront)
Estonia	Few, Online	1-5	Low	Low
New Zealand	Moderate, Online	5-15	Low	None
Switzerland	Moderate	10-20	Moderate	CHF 100,000 (20% upfront for registered shares)
UAE	Moderate, Zone Dependent	15-30	Low (Zone Dependent)	Varies by Zone
Lithuania	Few, Online	3-7	Low	Low
Canada	Moderate	5-15	Low	None
Australia	Moderate, Online	10-20	Low	None
Netherlands	Moderate	7-14	Low	EUR 0.01
Sweden	Moderate	10-20	Low	SEK 25,000
US	Moderate	7-14	Low	None
UK	Moderate	7-14	Low	None
Germany	Moderate	14-28	Moderate	EUR 25,000 (can be cash or non-cash)
France	Moderate	14-28 (48 hrs to 4 weeks for SAS)	Moderate	EUR 1
Japan	Moderate	14-28	Moderate	JPY 1
Finland	Moderate	7-14	Low	EUR 0
Ireland	Moderate, Online	7-14 (30 days for branch)	Low	EUR 0
Norway	Moderate, Registration Required	10-20 (Incorp. within 2 weeks)	Low	NOK 30,000
South Korea	Moderate	14-28	Moderate	KRW 100 Million (for FIPL benefits)
Taiwan	Moderate	14-28	Moderate	None
Portugal	Moderate	14-28	Moderate	EUR 1
Czech Republic	Moderate	14-28	Moderate	CZK 1
Poland	Moderate	14-28	Moderate	PLN 5,000

B. Business Operations

Country	Corporate Tax Rate	Loss Offset Rules	Capital Cost Recovery	Tax Incentives (R&D, etc.)	Exit Taxation	Top Marginal Income Tax	Capital Gains Tax	Dividend Tax	Employee Stock Options	Income Tax Complexity
Singapore	17%	Generous	Accelerated	Extensive	Low	22%	0%	0%	Good	Low
Denmark	22%	Generous (60% limit)	Accelerated	Extensive	Low	55.9%	42%	27%	Good	Moderate
Estonia	20%	Unlimited carry-forward and carry-back	Full Expensing (Cash Flow Based)	Extensive	Low	21.6%	20%	0%	Good	Low
New Zealand	28%	Limited	Standard	Moderate	Low	39%	0% (except property)	0% (if imputation credits)	Good	Moderate
Switzerland	Varies by Canton, 8.5%-15% average	Varies by Canton	Varies by Canton	Varies by Canton	Varies by Canton	Varies by Canton	Varies by Canton, 0% in most cases	Varies by Canton	Good	Moderate
UAE	9% (Mainland), 0% (Qualifying Free Zones)	Limited	Accelerated	Extensive (Free Zones)	Low (Free Zones)	0%	0%	0%	Good	Low
Lithuania	15%	Generous	Accelerated	Extensive	Low	32%	15%	15%	Good	Low
Canada	15%	Generous	Accelerated	Extensive - SR&ED program offers tax credits for R&D	Low	54%	50% (included in income)	0% (certain inter-corporate dividends)	Good	Moderate
Australia	25%	Generous	Accelerated	Extensive	Low	45%	50% (included in income)	0% (certain inter-corporate dividends)	Good	Moderate
Netherlands	19% (up to €200,000 profit), 25.8% (above €200,000)	Generous	Accelerated	Extensive - Innovation Box offers 9% tax rate on qualifying income	Low	52%	31%	15%	Good	Moderate
Sweden	20.6%	Generous	Accelerated	Extensive - R&D tax relief can reduce corporate tax liability up to 20%	Low	57.2%	30%	30%	OK	Moderate
US	21%	Generous	Accelerated	Limited (R&D credit reduced)	Moderate	37%	20%	20%	Good	Moderate
UK	19%	Generous	Full Expensing (Phased Out in 2023)	Extensive - EMI & CSOP schemes offer tax advantages	Low	45%	20%	7.5% - 38.1%	Good	Moderate
Germany	15% (can be lower with incentives)	Generous	Accelerated	Extensive - R&D tax incentive up to €1 Million per year	Moderate	45%	25%	25%	Good	Moderate
France	25.8%	Generous	Accelerated	Extensive - Patent Box offers 10% tax rate on qualifying income	Moderate	45%	30%	30%	Good	Moderate
Japan	23.2%	Generous	Accelerated	Extensive	Moderate	55.9%	20.3%	20.3%	Good - Taxed on sale	Moderate
Finland	20%	Generous	Accelerated	Extensive	Low	51.1%	30%	25.5%	Good	Moderate
Ireland	12.5%	Generous	Accelerated	Extensive	Low	40%	33%	20%	Good	Moderate
Norway	22%	Generous	Accelerated	Extensive - SkatteFUNN scheme offers 19% tax credit for R&D project costs (limitations apply)	Low	38.2%	22%	22%	Poor	Moderate
South Korea	25%	Generous	Accelerated	Extensive	Moderate	45%	20%	15%	Good	Moderate
Taiwan	20%	Generous	Accelerated	Extensive	Moderate	40%	45%	20%	Good	Moderate
Portugal	21%	Generous (65% of taxable income)	Accelerated	Extensive - ACE (Allowance for Corporate Equity) available	Moderate	48%	28% (0% for EU companies under certain conditions)	28% (0% for EU companies under certain conditions)	Good	Moderate
Czech Republic	19%	Generous	Accelerated	Extensive	Moderate	23%	15%	15%	Good	Moderate
Poland	19%	Generous	Accelerated	Extensive	Moderate	32%	19%	19%	Good	Moderate

C. Growth & Expansion

Country	Ease of Access to Finance	Interest Rates	Currency Stability	Early Stage Investment	Venture Capital	Late Stage Investment	Education & Skills (STEM)	Labor Market (Talent)
Singapore	Very High - Bank loans, venture capital, government grants	Low	Very High	High - Active angel investor and seed funding network	High (All Stages)	High	Very High	Competitive
Denmark	High - Bank loans, venture capital, government grants	Low	High	High - Strong angel investor and incubator network	High (All Stages)	Moderate	High	Competitive
Estonia	High - Bank loans, venture capital, EU grants	Low	High (Euro)	High - Growing angel investor and accelerator ecosystem, government support	High (Early/Mid)	Limited	High	Competitive - Talent drain to Western Europe
New Zealand	Moderate - Bank loans, some venture capital, government grants	Moderate	Moderate	Moderate - Some angel investor presence, government seed funding programs	Moderate (Early/Mid)	Limited	High	Competitive - Skills shortage in certain sectors
Switzerland	High - Bank loans, venture capital	Low	High	High - Well-established angel investor network, government seed funding	High (All Stages)	High	High	Competitive
UAE	High - Bank loans, some venture capital, free zone incentives	Low	High (USD Peg)	Moderate - Limited angel investor presence, some government initiatives	Moderate (Early/Mid)	Limited	Moderate	Competitive - Reliance on expat talent
Lithuania	Moderate - Bank loans, some venture capital, EU grants	Low	High (Euro)	Moderate - Emerging angel investor network, EU funding programs	Moderate (Early)	Limited	High	Competitive - Talent drain to Western Europe
Canada	High - Bank loans, venture capital, government grants	Low	Moderate	High - Active angel investor and seed funding network, government grants	High (All Stages)	High	High	Competitive - Startup visa programs, tech hubs
Australia	High - Bank loans, venture capital	Low	Moderate	High - Strong angel investor and incubator network, government grants	High (All Stages)	High	High	Competitive
Netherlands	High - Bank loans, venture capital	Low	High (Euro)	High - Well-established angel investor network, government incentives	High (All Stages)	High	High	Competitive - Startup visa programs, strong tech sector
Sweden	High - Bank loans, venture capital	Low	Moderate	High - Large and active angel investor network, government programs	High (All Stages)	Moderate	High	Competitive - Strong tech sector, focus on work-life balance
US	High - Bank loans, venture capital	Moderate	High	Very High - Largest and most developed angel investor and seed funding ecosystem	Very High (All Stages)	Very High	High	Competitive
UK	High - Bank loans, venture capital	Low	Moderate	Very High - Extensive angel investor network, government schemes (SEIS/EIS)	Very High (All Stages)	Very High	High	Competitive - Skilled worker visa program, global talent hub
Germany	High - Bank loans, venture capital	Low	High (Euro)	High - Well-established angel investor network, government programs	High (All Stages)	High	High	Competitive
France	Moderate - Bank loans, some venture capital	Low	High (Euro)	Moderate - Smaller angel investor community, some government support	Moderate (Early/Mid)	Moderate	High	Competitive
Japan	Moderate - Bank loans, some venture capital	Low	Moderate	Moderate - Limited angel investor presence, government initiatives	Moderate (Early/Mid)	Moderate	High	Competitive - Aging population, but strong technical skills
Finland	High - Bank loans, venture capital, government support	Low	High (Euro)	High - Active angel investor and incubator network, government support	High (Early/Mid)	Moderate	High	Competitive - Strong education system, tech hubs
Ireland	High - Bank loans, venture capital	Low	High (Euro)	High - Strong angel investor and seed funding network, government programs	High (All Stages)	High	High	Competitive - Startup visa programs, strong tech sector
Norway	High - Bank loans, venture capital	Low	Moderate	High - Smaller angel investor community, government programs	High (Early/Mid)	Moderate	High	Competitive - Strong social safety net, focus on work-life balance
South Korea	Moderate - Bank loans, some venture capital, government grants	Moderate	Moderate	Moderate - Emerging angel investor network, government initiatives	Moderate (Early/Mid)	Limited	High	Competitive
Taiwan	High - Bank loans, venture capital, government support	Low	Moderate	High - Active angel investor and accelerator network, government support	High (Early/Mid)	Moderate	High	Competitive
Portugal	Moderate - Bank loans, some venture capital, EU grants	Low	High (Euro)	Moderate - Limited angel investor presence, government programs	Moderate (Early)	Limited	Moderate	Competitive - Talent drain to other EU countries
Czech Republic	Moderate - Bank loans, some venture capital	Low	High (Euro)	Moderate - Emerging angel investor network	Moderate (Early)	Limited	Moderate	Competitive - Talent drain to other EU countries
Poland	Moderate	Low	Moderate	Moderate	Moderate (Early)	Limited	Moderate	Competitive

D. Business Exit

Country	Exit Taxation
Singapore	Low
Denmark	Low
Estonia	Low
New Zealand	Low
Switzerland	Varies by Canton
UAE	Low (Free Zones)
Lithuania	Low
Canada	Low
Australia	Low
Netherlands	Low
Sweden	Low
US	Moderate
UK	Low
Germany	Moderate
France	Moderate
Japan	Moderate
Finland	Low
Ireland	Low
Norway	Low
South Korea	Moderate
Taiwan	Moderate
Portugal	Moderate
Czech Republic	Moderate
Poland	Moderate

E. Underlying Factors

Country	Political & Legal Stability	Transparency & Governance	Entrepreneurial Culture	Social & Cultural Factors	Quality of Life
Singapore	Very High	Very High	Strong - Government support for innovation, active startup ecosystem	Favorable - Multicultural workforce, English proficiency	High - Modern infrastructure, safe environment, but high cost of living
Denmark	Very High	Very High	Strong - High trust society, supportive government policies	Favorable - High social trust, strong work-life balance, but high taxes	Very High - Strong social safety net, excellent public services
Estonia	High	Very High	Strong - Digital nation, e-Residency program, supportive ecosystem	Favorable - Tech-savvy population, English proficiency, but small talent pool	High - Growing economy, digital infrastructure, affordable living
New Zealand	Very High	Very High	Moderate - Focus on traditional industries, growing startup scene	Favorable - Easygoing lifestyle, English-speaking, but geographic isolation	Very High - Beautiful natural environment, good work-life balance
Switzerland	Very High	Very High	Strong - Innovation-driven economy, access to capital, high quality of life	Favorable - Multilingual workforce, high quality of education, but high cost of living	Very High - Excellent infrastructure, safe environment, beautiful scenery
UAE	High - Stable government, but geopolitical risks	Moderate - Improving transparency, focus on business-friendly regulations	Growing - Government initiatives to promote startups, free zone incentives	Mixed - Expat-heavy workforce, cultural differences, but tax-free income	High - Modern infrastructure, luxurious lifestyle, but heat and cultural restrictions
Lithuania	High	Moderate - EU membership improving transparency, some corruption concerns	Growing - Government incentives for startups, growing tech sector	Favorable - Tech-savvy population, increasing English proficiency, but talent drain	Moderate - Growing economy, affordable living, but limited social safety net
Canada	Very High	Very High	Strong - Government support for innovation, strong tech hubs, multiculturalism	Favorable - Multicultural society, bilingual (English/French), welcoming to immigrants	Very High - Universal healthcare, strong social safety net
Australia	Very High	Very High	Moderate - Strong economy, but traditional industries dominate	Favorable - High quality of life, English-speaking, outdoor lifestyle, but high cost of living	Very High - Excellent infrastructure, healthcare, education, strong social safety net
Netherlands	Very High	Very High	Strong - Open to innovation, supportive ecosystem, strong tech sector	Favorable - Multilingual workforce, English proficiency, tolerant society	Very High - Excellent infrastructure, cycling culture, high quality of life
Sweden	Very High	Very High	Strong - Focus on innovation, strong tech sector, supportive government policies	Favorable - High social trust, strong work-life balance, gender equality	Very High - Comprehensive social welfare system, excellent public services
US	High	High	Very Strong - Largest venture capital market, entrepreneurial culture, risk-taking attitude	Diverse - Melting pot of cultures, English proficiency, but high healthcare costs	High - Varying quality of life depending on location, high cost of living in major cities
UK	High	High	Strong - London a global financial hub, active startup ecosystem, access to talent	Favorable - Multicultural society, English-speaking, but high cost of living in major cities	High - Varying quality of life depending on location, good public transportation in cities
Germany	Very High	High	Moderate - Strong in engineering and manufacturing, risk-averse culture	Favorable - High quality of education, skilled workforce, but bureaucracy can be challenging	High - Good infrastructure, social safety net, but language barrier can be a factor
France	Moderate - Some social unrest, bureaucratic challenges	Moderate - EU membership improving transparency, but corruption perceptions remain	Moderate - Improving startup ecosystem, but risk-averse culture	Mixed - High quality of life, but language barrier and labor regulations can be challenging	High - Cultural attractions, cuisine, healthcare, but high cost of living
Japan	Very High	Moderate - Efforts to improve corporate governance, but some corruption concerns	Moderate - Risk-averse culture, but government promoting innovation and startups	Mixed - Homogenous society, strong work ethic, but language barrier can be challenging	High - Technological advancements, safety, but high cost of living in major cities
Finland	Very High	Very High	Strong - Focus on innovation and technology, supportive government policies	Favorable - High social trust, strong work-life balance, good education system	Very High - Universal healthcare, excellent education, natural beauty
Ireland	High	High	Strong - Attractive to foreign investment, strong tech sector, English-speaking	Favorable - Welcoming to immigrants, English-speaking, but housing costs are high	High - Growing economy, vibrant culture, but cost of living increasing
Norway	Very High	Very High	Moderate - Strong social safety net, but high taxes and cost of living can be deterrents	Favorable - High social trust, gender equality, but language can be a barrier	Very High - Excellent public services, high quality of life, but expensive
South Korea	Moderate - Geopolitical risks related to North Korea	Moderate - Improving transparency, but corruption perceptions persist	Moderate - Strong work ethic, but risk-averse culture	Mixed - Technologically advanced, but competitive work environment	High - Technological advancements, good public transportation, but air quality issues
Taiwan	Moderate - Geopolitical tensions with China a factor	High	Strong - Government support for startups, growing tech sector	Favorable - Technologically advanced, Mandarin proficiency helpful, but cultural differences	High - Affordable living, convenient public transportation, but air quality concerns
Portugal	High	High	Moderate - Growing startup ecosystem, but bureaucracy can be slow	Favorable - Affordable living, welcoming culture, but language barrier can be a factor	High - Sunny climate, beaches, historic cities, affordable healthcare
Czech Republic	High	High	Moderate - Growing startup scene, but some bureaucracy and corruption concerns	Favorable - Affordable living, well-educated workforce, but limited English proficiency	High - Historic cities, affordable healthcare, good public transportation
Poland	High	High	Moderate - Growing startup ecosystem, but bureaucratic hurdles persist	Mixed - Affordable living, but language barrier and talent drain to Western Europe	Moderate - Improving quality of life, but income inequality and air

A. Business Entry: Establishing Your Presence

A smooth and efficient business registration process is crucial for getting your company up and running quickly and cost-effectively. The following factors assess the ease of establishing a legal presence in each country:

Procedures: We will examine the number of steps required to legally register a company, including company establishment, registration for VAT, employee registration, setting up bank accounts, and other essential formalities.
Time: The number of days needed to complete all registration procedures is a key indicator of bureaucratic efficiency.
Cost: We will analyze registration costs as a percentage of average income per capita to determine affordability.
Minimum Capital Requirements: The presence and level of mandatory initial capital investments can present a barrier to entry for new businesses.

Availability of Facilities and Accommodation:

Office Space: Availability, cost, and quality of commercial real estate.
Industrial Facilities: Availability of specialized facilities (e.g., manufacturing plants, laboratories) and industrial parks.
Housing: Availability, affordability, and quality of housing for employees.

B. Business Operations

Once your business is established, the regulatory and tax environment as well as the digital and physical infrastructure will have a significant impact on your day-to-day operations and long-term profitability. This section evaluates the key aspects of each country's business regulations and tax system.

Taxation:

We'll analyze both corporate and individual taxation, taking into account:

Business Taxes:

Corporate Tax Rate. Read our global corporate tax rate comparison.
Loss Offset Rules
Capital Cost Recovery
Tax Incentives & Complexity (Patent Boxes, R&D Tax Credits, Tax Advantages for Investors)
Exit Taxation

Individual Taxes:

Top Marginal Personal Income Tax Rate
Capital Gains Tax Rates
Dividend Tax Rates
Employee Stock Options
Income Tax Complexity

Regulatory Environment

This section assesses the overall regulatory framework governing business operations, including the ease of doing business, the extent of government intervention, and the quality of supporting infrastructure.

Business Freedom: We evaluate the level of economic freedom businesses enjoy, encompassing factors like property rights protection, freedom from corruption, and the flexibility to operate without undue government interference. This assessment draws upon established indices like the Index of Economic Freedom.
Ease of Doing Business: We analyze the simplicity and efficiency of regulations related to starting a business, obtaining permits, enforcing contracts, and resolving insolvency. This analysis considers established rankings like the World Bank's "Doing Business" report.

Physical Infrastructure and Logistics

Transportation Infrastructure: We assess the quality and efficiency of transportation networks, including roads, railways, ports, and airports, which are crucial for the smooth flow of goods and services.
Logistics and Supply Chain: We evaluate the efficiency of customs procedures, the availability and quality of warehousing facilities, and the reliability of delivery services, all of which impact the cost and speed of moving goods within and across borders.
Utilities: We examine the reliability and cost of essential utilities like electricity, water, and telecommunications, which are fundamental for business operations.

Digital Infrastructure & Innovation

Internet Access: Internet penetration, speed, and cost.
Technological Adoption: Prevalence of digital payments, e-commerce infrastructure, and ease of using government digital services.

C. Growth & Expansion: Funding, Talent, and New Markets

Scaling a business successfully requires access to capital, talent, and new markets. This section assesses the factors that support business growth and expansion in each country.

Financial Accessibility

Ease of Access to Finance (bank loans, venture capital)
Interest Rates
Currency Stability

Investment Environment

Early Stage Investment (angel investors, seed funding)
Venture Capital (VC) across various funding rounds
Late Stage Investment for mature companies

Talent & Human Capital

Education & Skills (particularly in STEM fields)
Labor Market Dynamics (competitive wages, flexible work options, employee productivity, attracting international talent through startup visas)

Market Access & International Trade

Domestic Market Size
International Trade Openness (trade as a percentage of GDP)
Ease of Trading Across Borders (customs procedures, logistics, trade costs, membership in trading blocs)

D. Business Exit

Whether you're planning to sell your company, go public, or simply wind down operations, the process of exiting a business involves important considerations.

Exit Taxation: Capital gains tax rates, dividend tax policies, and exit taxes.
Resolving Insolvency:
- Recovery Rate for creditors in the event of insolvency.
- Strength of Insolvency Framework (legal framework for resolving insolvency).

E. Underlying Factors: Shaping the Business Landscape

Beyond regulations and taxes, fundamental factors shape a country's overall attractiveness for businesses.

Political and Legal Stability:

Political Stability: Democratic institutions, geopolitical risks, frequency of policy changes.
Judicial Independence: Fairness and efficiency of the legal system, protection of property rights.
Rule of Law: Consistency and predictability in the application of laws and regulations.

Social Well-being and Development:

Healthcare: Quality, accessibility, and cost of healthcare services.
Education: Quality and accessibility of education at all levels.
Equality and Social Inclusion: Gender equality, LGBTQ+ rights, and social mobility.

Sustainability and Resilience:

Energy Dependability: Reliability and sustainability of energy sources.
Economic Sustainability: Long-term economic prospects, resilience to economic shocks.
Environmental Health: Air and water quality, environmental regulations, commitment to sustainability.

Transparency & Governance:

Corruption Perceptions: Levels of corruption in the public and private sectors.
Government Effectiveness: Efficiency of public services, regulatory framework stability, and reliable policymaking.

Social & Cultural Factors:

Social Capital: Levels of trust and strength of social networks.
Entrepreneurial Culture: Attitudes towards risk-taking, innovation, and entrepreneurship.
Diversity & Inclusion: Diversity in the workforce and inclusivity in business practices.
Language: Prevalence of English or other widely spoken languages.

Quality of Life:

Living Standards: Measured by the Human Development Index (HDI).
Safety & Well-being: Personal safety, security, and overall health environment.

Selected countries

About this project

Target businesses

Startups and Scale-ups in Advanced and Emerging Economies

We define our target businesses as innovative, growth-oriented ventures operating within developed and advanced emerging economies. These businesses typically have the following characteristics:

Stage: Early-stage to growth-stage companies, ranging from newly founded startups to established SMEs (Small and Medium-sized Enterprises) with high growth potential.
Private limited company. We only look at private limited companies or similary commonly used legal entities for startups.
Innovation Focus: Businesses that are introducing new products, services, or business models, often leveraging technology to disrupt traditional markets or create new ones.
Scalability: Ventures with the potential and ambition for rapid growth, both in terms of revenue and market reach.
Funding Needs: Companies that often require external capital to fuel their growth, ranging from seed funding to later-stage venture capital.
Sector: While not limited to any specific industry, these businesses are often found in sectors such as technology, biotechnology, clean energy, advanced manufacturing, and other knowledge-intensive fields.
Workforce: Typically employ highly skilled workers and place a strong emphasis on talent acquisition and retention.
Market Orientation: While many may start with a focus on domestic markets, these businesses often have the potential or ambition for international expansion.
Regulatory Environment: Operating in countries with relatively developed business ecosystems, these ventures benefit from supportive infrastructure but must navigate varying regulatory landscapes.
Exit Potential: While not an immediate concern for many, these businesses often have long-term exit strategies, whether through acquisition, merger, or public offering.

This definition encompasses a wide range of businesses, from tech startups in Silicon Valley to innovative manufacturing SMEs in Germany, biotech ventures in the UK, fintech companies in Singapore, or digital service providers in the UAE. The common thread is their potential for high growth and their operation within economies that have robust support systems for entrepreneurship and innovation.

Weighing system

Weighting of Business Environment Factors for Startups and SMEs in OECD Countries

A. Business Entry (5%)

This category has a lower weight as entry procedures are generally streamlined in OECD countries, making it less of a differentiator for startups and SMEs.

Procedures (30%): Reflects the importance of process simplicity in starting a business.
Time (30%): Equally weighted with procedures, as time to start can significantly impact market entry.
Cost (25%): Slightly lower weight as costs are generally manageable in OECD countries.
Minimum Capital Requirements (15%): Lowest weight as many OECD countries have minimal requirements.

B. Business Operations (35%)

This category carries substantial weight due to its critical importance for the day-to-day running of startups and SMEs.

Taxation (40%): High weight due to significant impact on business profitability and operations.
- Corporate Taxes (60%): Higher weight due to direct impact on business finances.
  - Corporate Tax Rate (20%): Significant impact on overall tax burden.
  - Tax Incentives for Startups (20%): Equally important for encouraging new businesses.
  - Capital Cost Recovery (10%): Important but less direct impact than rates and incentives.
  - Loss Offset Rules (10%): Same weight as capital cost recovery.
- Individual Taxes (40%): Lower than corporate taxes but still important for talent attraction.
  - Top Marginal Personal Income Tax Rate (15%): Impacts high-skilled employee attraction.
  - Employee Stock Options (15%): Crucial for startups to attract talent.
  - Capital Gains Tax Rates (10%): Affects investment attractiveness.
Regulatory Environment (30%): High weight due to impact on operational efficiency.
- Business Freedom (50%): Crucial for operational flexibility.
- Ease of Doing Business (50%): Equally important for overall business climate.
Digital Infrastructure & Innovation (20%): Significant weight due to importance for modern businesses.
- Internet Access (50%): Critical for digital operations.
- Technological Adoption (50%): Equally important for innovation and competitiveness.
Physical Infrastructure and Logistics (10%): Lower weight as generally well-developed in OECD countries.

C. Growth & Expansion (50%)

This category has the highest weight due to its crucial importance for startups and SMEs aiming to scale.

Financial Accessibility (35%): Highest sub-category weight due to critical need for capital.
- Ease of Access to Finance (40%): Crucial for ongoing operations and growth.
- Venture Capital Availability (40%): Equally important for high-growth startups.
- Interest Rates (20%): Lower weight but still important for cost of capital.
Investment Environment (25%): High weight due to importance for scaling businesses.
- Early Stage Investment (40%): Critical for startups in initial phases.
- Venture Capital (VC) (40%): Equally important for rapid growth phases.
- Late Stage Investment (20%): Lower weight but important for mature startups.
Talent & Human Capital (25%): Equal to investment environment due to importance of skilled workforce.
- Education & Skills (STEM focus) (50%): Critical for innovation-driven startups.
- Labor Market Dynamics (50%): Equally important for talent acquisition and retention.
Market Access (15%): Significant weight for growth potential.
- Domestic Market Size (60%): Higher weight as many startups focus on domestic markets initially.
- Ease of Trading Across Borders (40%): Important for international expansion.

D. Business Exit (2%)

This category has a low weight as it's less immediate for most startups and SMEs in their early stages.

Exit Taxation (50%): Equal weight with insolvency as both affect exit strategies.
Resolving Insolvency (50%): Important for risk mitigation and investor confidence.

E. Underlying Factors (8%)

While carrying a lower weight, this category remains important for the overall business environment context.

Political and Legal Stability (25%): Significant weight due to impact on business confidence.
Transparency & Governance (20%): Important for fair business practices and investor confidence.
Entrepreneurial Culture (30%): High weight due to importance for startup ecosystem.
- Risk-taking attitude (50%): Critical for encouraging new ventures.
- Innovation support (50%): Equally important for fostering growth and competitiveness.
Social & Cultural Factors (15%): Important for talent attraction and retention.
Quality of Life (10%): Relevant for attracting international talent.

Countries that almost made the list

Countries That Almost Made the List

The following countries were seriously considered for inclusion in our main list. Read below why they were not included.

Spain

Pros: Large EU market, attractive lifestyle, improving startup ecosystem

Cons: High unemployment, bureaucratic hurdles, slower economic growth compared to some EU peers

Why it missed: While improving, it still lags behind other EU countries in ease of doing business and economic dynamism

Italy

Pros: Large economy, strong in manufacturing and design, part of the G7

Cons: Complex bureaucracy, high taxes, political instability

Why it missed: Regulatory environment and economic challenges outweigh its market potential for many SMEs

Belgium

Pros: Heart of the EU, strong logistics sector, highly skilled workforce

Cons: High tax rates, complex federal structure, relatively high labor costs

Why it missed: While strategically located, its business environment is less competitive than neighboring countries

Austria

Pros: Strong economy, high quality of life, central European location

Cons: High labor costs, complex regulations, smaller market

Why it missed: Tough competition from neighboring Germany and Switzerland in attracting businesses

Hong Kong

Pros: Strategic location, low tax rates, international financial hub

Cons: Political uncertainties, high cost of living, limited land availability

Why it missed: Recent political changes have increased uncertainty for businesses

Chile

Pros: Most competitive economy in South America, political stability

Cons: Relatively small market, geographic isolation

Why it missed: While strong regionally, it doesn't quite compete globally with the top contenders

India

Pros: Huge market potential, fast-growing economy, large talent pool, booming tech sector

Cons: Complex regulations, infrastructure challenges, bureaucracy, regional disparities

Why it missed: Despite its immense potential, the regulatory complexity and infrastructure gaps pose significant challenges for SMEs and startups, especially those without substantial resources

Luxembourg

Pros: Wealthy economy, strong financial sector, EU member

Cons: Very small market, high cost of living, limited diversity in economy

Why it missed: Its advantages are somewhat niche and it's overshadowed by larger neighbors

Iceland

Pros: Innovative economy, renewable energy leader, high quality of life

Cons: Tiny market, geographic isolation, vulnerable to economic shocks

Why it missed: Limited scale and isolation make it less attractive for many types of businesses

Mexico

Pros: Large market, proximity to US, improving manufacturing sector

Cons: Security concerns, corruption issues, uneven development across regions

Why it missed: Despite its potential, persistent challenges in ease of doing business and security

Thailand

Pros: Growing economy, strategic location in Southeast Asia, improving infrastructure

Cons: Political instability, language barriers, complex regulations for foreign businesses

Why it missed: While improving, it still faces challenges in transparency and ease of doing business

Vietnam

Pros: Fast-growing economy, young workforce, increasing foreign investment

Cons: Infrastructure challenges, complex bureaucracy, intellectual property concerns

Why it missed: Despite its potential, it still lags behind in regulatory environment and ease of doing business

Israel

Pros: Strong innovation ecosystem, highly skilled tech workforce, robust startup scene, history of successful exits

Cons: Ongoing geopolitical tensions, recent conflict escalation, security concerns, small domestic market

Why it missed: Despite its renowned "Startup Nation" status and exceptional tech innovations, recent geopolitical events and escalated regional conflicts have significantly increased uncertainty for businesses. The current situation poses potential risks to operations, investment, and market stability, making it a more challenging environment for SMEs and startups in the short to medium term. While Israel's tech sector remains strong, the broader business environment is currently impacted by these geopolitical factors.

Malaysia

Pros: Strategic location in Southeast Asia, growing economy, multicultural business environment

Cons: Political uncertainty, moderate corruption issues, regional competition

Why it missed: Despite its favorable business climate and strategic location, Malaysia faces stiff competition from established regional hubs and emerging markets. Political instability and corruption concerns, though moderate, hinder its ranking among top global business destinations.

Disclaimer

Important Note for Entrepreneurs:

While this research provides a comprehensive overview of business-friendly environments, remember that every business has unique needs and priorities.

Your Specific Industry: Some industries thrive in specific locations due to factors like access to resources, specialized talent pools, or established ecosystems.
Your Business Model: Whether you're a tech startup, a manufacturer, or a service provider will influence the relevance of certain factors. For example, digital infrastructure might be more critical for a tech company than a traditional retailer.
Your Target Market: Consider your target customers and where they are located. If you're primarily serving a local market, factors like domestic market size and consumer spending will be more important than international trade openness.
Your Personal Preferences: Lifestyle factors, language, and cultural considerations also play a role in choosing the right location for your business.

Ultimately, the best place to launch or expand your business is the one that aligns with your specific goals, resources, and aspirations. This research is a starting point, not a definitive answer. Conduct thorough due diligence and seek expert advice to make the decision that's right for you.

Sources

Tax Foundation. (2023). International Tax Competitiveness Index 2023. Washington, DC: Tax Foundation. https://taxfoundation.org/
World Bank. (2020). Doing Business 2020. Washington, DC: World Bank. https://www.doingbusiness.org/
Global Entrepreneurship Monitor (GEM). (2023). Global Entrepreneurship Monitor 2023/2024 Global Report. https://www.gemconsortium.org/
The Heritage Foundation. (2023). Index of Economic Freedom. https://www.heritage.org/index/
Transparency International. (2023). Corruption Perceptions Index. https://www.transparency.org/
World Bank. (2023). Worldwide Governance Indicators. https://info.worldbank.org/governance/wgi/
Adhikari, T., & Whelan, K. (2023). Did raising doing business scores boost GDP? Journal of Comparative Economics, 51, 1011-1030. https://www.sciencedirect.com/science/article/pii/S014759672300032X