How to choose a country for IT business operations — guest column

Many IT companies operate remotely, engage freelancers/employees, and provide services to clients worldwide. As a result, the need to establish physical offices in different countries is often absent, allowing businesses to operate through any jurisdiction, considering the owners' preferences and plans.

Sergiy Barbashyn, lawyer and owner of Barbashyn Law Firm, explains what to expect when setting up a business abroad and which countries IT companies can consider in 2025 in an exclusive column for AIN.

Here, IT businesses face numerous questions:

• costs of incorporation and company maintenance

• whether the country suits the business’s specific needs

• how to reduce expenses, including taxes

• how to open a bank account for transactions

It is important to note right away that a “universal” jurisdiction does not exist. When choosing a country for company formation or structuring, it is essential to consider both the characteristics of each country and the needs of your business today and in the near future: tax burden and transparent tax system, intellectual property protection/IP regimes, employees and investors, bank accounts, etc.

Read more: Starting a business abroad: how to set up your startup in Europe

Payments and Taxes

For companies with low expenses, a country with minimal corporate income tax rates may be suitable. Notably:

Estonia – an attractive 0% corporate income tax, provided that dividends are not distributed.

Bulgaria – 10% corporate income tax.

Poland – 9% tax on revenue from sales below €2 million.

Intellectual Property Protection and IP Regimes

Typically, IT businesses generate most of their revenue from creating and selling intellectual property rights. To attract and foster the development of IT and creative industries, some countries provide tax reduction opportunities.

For example, Cyprus offers an IP-box regime, allowing companies to reduce the corporate income tax rate by up to 80% of profits. However, this is a rather complex process that requires ongoing product development activities and the physical presence of team members in Cyprus. Similar IP regimes exist in Poland, Luxembourg, Ireland, Portugal, and several other countries.

Employees. Different EU countries have varying income tax rates, ranging from 10-15% (e.g., Bulgaria, Czech Republic, Lithuania) to 50-70% (e.g., Sweden, Germany, Denmark). However, tax rates alone are not always the key factor.

Some EU countries impose minimum salary requirements for foreign workers, which can be twice as high as the local minimum wage. Others enforce quotas on foreign employees, limiting their share to 10-20% of the workforce. Apart from tax rates, companies should also consider factors like quality of life, healthcare, and climate when choosing a country.

Investors. Startups are often established with the goal of securing investments for project development—whether from a single investor or multiple sources. As a project grows and secures funding, legal challenges may arise in structuring these investments, such as equity sales, employee stock options, or SAFE agreements.

If you are looking for the most flexible jurisdictions for receiving investments and issuing shares, consider:

• C-Corp in the U.S.

• LTD in the U.K.

Bank Account. Opening a bank account is not always easy in every country. This is an essential factor, as it is a must-have for certain types of businesses. For example, Google requires sellers to have a bank account in the same country or region where their seller account is registered to receive payments. The list of countries mentioned is not exhaustive, and each case should be analyzed individually.

Which countries to consider for IT in 2025?

ESTONIA 🇪🇪

THE UK 🇬🇧

CYPRUS 🇨🇾

POLAND 🇵🇱

PORTUGAL 🇵🇹

THE USA 🇺🇸

UKRAINE 🇺🇦

Selecting a country for IT business operations is a strategic decision that impacts the company's future growth, its ability to attract investments, work with international clients, and ensure intellectual property protection. The list of countries above is not exhaustive and should be carefully analyzed on a case-by-case basis.

Before incorporating a company, consider the following questions:

• How many shareholders and board members will there be?

• In which countries is the target audience located?

• Who are the competitors, and which jurisdictions have they chosen?

• Will the company need to issue shares to attract investment?

• Who are the company’s clients, and will VAT apply?

• Are warehouse or office spaces required for business operations?

• Are stock option agreements necessary to attract top employees?

• How complex is the registration and maintenance process?

• Does the company need licenses or permits for its activities?

The author: Sergiy Barbashyn, lawyer and owner of the Barbashyn Law Firm