When you are looking for clients in Europe you might wonder which country is the best for working and living. The answer to this question will include many factors and will depend on how you set up your contracts and your skills related to local industries. You might also consider personal preferences in terms of culture, climate and overall cost.
Key Considerations in Europe
EU citizens will not need a work visa in European countries, so any country is open to EU contractors. But those from third countries will need to evaluate how difficult it is to obtain a visa. Most EU countries will require a company sponsor for a visa, with varying qualifications for the contractor.
Each country will have a mix of industries, and may not differ that much from one another. An IT specialist or accountant can likely find clients in almost any EU country. But a country like Norway will be more attractive to a contractor with specialized experience in the oil and gas sector.
Income taxes can be high in Europe compared with the Americas or Asia. But some countries do offer ex-pat tax schemes or exemptions, like Portugal and Italy. You must also consider the impact of tax residency criteria and how it affects global earnings.
European culture is diverse and often a chief attraction for contractors. You might favour a country for its culture, food, climate or if you already speak the local language.
Cost of Living
While some countries in the EU are quite expensive, that may be offset by higher wages. There are also countries with very reasonable living costs, allowing you to retain more of your earnings.
While the EU does offer some continuity with regulations, each country will take a different approach. Germany is famous for requiring strict compliance at every level for ex-pat workers, including meeting its self-employment criteria. Spain is considered more relaxed when it comes to compliance.
Top European Countries for Contractors
This is a subjective list but does take into account the size and scope of the economy, tax breaks, breadth of industries and quality of life. Here are some of the best countries to work in Europe as a contractor.
Germany has the largest economy in Europe, along with a shortage of skilled workers. This creates an ideal scenario for contractors looking for clients. This is especially true for those with skills in IT, engineering and healthcare. You will have to navigate Germany’s self-employment criteria and labour leasing laws, but an umbrella company can help you with compliance.
Switzerland is part of the EU’s ‘right to travel’ rules and attracts many workers visa-free from EU countries. Contractors are welcome, and 25% of the workforce is comprised of self-employed and freelancers, many of them ex-pats.
Switzerland is of course a country of great natural beauty, neutral political policy and is multi-lingual. The cost of living is high in Switzerland, so your contract rates should reflect that reality.
Those favouring a warmer climate in Europe, along with more relaxed regulations might choose Spain to look for clients. You will have the flexibility to operate either as a freelancer, through a limited company or with a Spanish umbrella company. If you have a short contract (less than six months), you will be taxed using a flat rate of 24% on Spanish earnings.
The cost of living in Spain is very reasonable and there is excellent public transport. Considering the great cuisine, beaches and vibrant culture, Spain offers a lot to international contractors. Self-employed can apply for a visa on their own as an autonomo, so this is good news for non-EU contractors who might find it difficult in other European countries.
Portugal gets a lot of attention from ex-pats, especially retirees who take advantage of its generous residency programs. But this applies equally to contractors, who may be drawn to the Non-Habitual Residency scheme. This allows the use of a flat 20% tax on all income, and most global income sources are exempted. Only EU contractors are eligible for the program, but once you qualify it is good for 10 years.
Italy is another country that has real cultural appeal and offers ex-pats tax incentives. While it is not the largest economy in Europe, there should be sufficient opportunities for those interested. The real advantage is for ex-pats that plan to work for two years or more, as 70% of income is exempted from taxation. Combine that with a relatively low cost of living and you will be able to retain the maximum amount of earnings.
The island nation of Malta is part of the EU, so it deserves a mention as a place to look for clients. Malta has a unique beauty and culture situated in the Mediterranean, and non-EU nationals can obtain a work permit. It is also one of the few European countries that have a Digital Nomad Visa for those that just want to live there and work remotely.
How can Contractor Taxation help you in Europe?
Contractor Taxation has a network of umbrella companies across Europe that are ready to help you with client payments, tax withholding and compliance. Once you’re sure of which of these best countries to work in Europe is ideal for you, we’ll swing into action. Because each country is different, the local umbrella company will know exactly how to assist you with your contracts and availing of various tax and self-employment programs.
Other benefits of umbrella companies include:
- Manages all client payments, tax withholding and any social contributions
- Issues you a payslip each month, to a local or foreign account
- Sponsors work permits
- Helps set up the contract with the client
- Moderates any disputes with your client
- Advises on access to totalization and double taxation treaties
If you have questions about how an umbrella company can help you as an international contractor, please contact us at Contractor Taxation.