Europe has become a hotspot for global expansion. Affluent economies, stable legal systems, varied cultures and a wealth of business opportunities mean it’s little wonder that many companies look to Europe when embarking on their expansion journey.
Of course, ‘Europe’ isn’t a destination in itself, so you’ll have to choose where in Europe is best for your business. The ‘big three’ European countries to employ in change every few years. But currently, the top spots are taken by Germany, the UK and France.
These countries are positioned at the top for having the highest GDP, but is this an accurate reflection of how suitable they are for expanding businesses? What really makes these nations so desirable? And what do you need to be mindful of when looking to expand?
Employing in Germany
Germany’s GDP amassed over 3.57 trillion euros in 2021, making it the largest in Europe. In fact, it’s had the continent’s largest economy since 1980 — before East and West Germany were reunited. And in 2019, Germany accounted for nearly a quarter of the EU’s total GDP!
The country is also home to plenty of innovation, with over one-third of adults educated to tertiary level in Germany obtaining their degree in the science, technology, engineering and mathematics (STEM) fields. As such, it’s little surprise that Germany hosts two-thirds of the world’s leading trade fairs. And in terms of its geographical location, Germany is bordered by nine countries — a strategic positioning within the EU.
Germany’s economic success can also be attributed to its highly skilled workforce, developed transport infrastructure and, perhaps, its clear-cut approach to compliance.
Germany has a reputation for playing by the rules and is renowned for its strict regulations. Whilst this could, on face value, make it an unattractive place for foreign companies to employ, having explicit, unambiguous rules often makes it easier to stay compliant.
However, employing in Germany isn’t without its challenges.
Ranking 125th in the world for ease of doing business (DB), it can be a tedious process to set up a German entity, and the country is home to some of the strictest employee protections in the world — not to mention a complex corporation tax scheme. A high minimum wage and lofty payroll taxes also mean that employing in Germany can quickly become expensive.
Employing in the UK
Following closely behind Germany is the United Kingdom. With a GDP of GBP 2.2 trillion at the end of 2021, the UK is the fifth-largest economy in the world.
Despite its size compared to other European superpowers, the UK encompasses four distinct nations, many regions and hundreds of different dialects. Its stable economy and thriving tech start-up scene mean the UK is one of the best places for businesses looking to extend their international footprint. Whilst London is a hyper-connected hub of highly educated and skilled workers, the UK is also home to other major cities such as Manchester, Edinburgh and Bristol that all have something unique to offer expanding businesses. These footholds provide a diverse workforce comprised of people from all over the globe, giving access to truly world-class talent.
The UK has fewer regulations around doing business than many other developed nations. It’s regularly ranked as one of the easiest places to employ — not least because English has become the international language of business. Its flexible, transparent regulatory system, low corporation tax and tax incentives all encourage foreign attention, and over the years, it’s established itself as an attractive destination for growing businesses.
Arguably, employing in the UK has become more complex in recent years. Although everyone in the UK is still navigating the impact of Brexit, it’s already clear that international travel and trade within the EU have become much more challenging. The UK’s tax system is also burdensome, and it can take over 110 hours each year to fulfil all necessary tax obligations. Employment laws in the UK are also very changeable and require businesses’ constant attention to ensure they don’t slip up on compliance.
Employing in France
As Europe’s third-largest economy, France is a progressive and industrialised nation. The country offers an openly pro-business environment that’s propped up by a sophisticated financial market and well-educated workforce.
France’s investment climate encourages new business. The French government expanded its policies to continue attracting interest and investment from overseas organisations, making it an attractive location for growing businesses. The capital of Paris is one of Europe’s most important financial centres. It boasts a diverse and bustling culture and houses the Sophia Antipolis technology park: an area with the highest concentration of technology engineers outside the Silicon Valley.
Bolstered by an entrepreneurial culture, France’s business sector is focused on technology and innovation — and the country’s business leaders are reputably innovative, firm and talented.
However, as with employing anywhere in Europe, companies must understand the country’s laws, rules and regulations to expand into France successfully.
The process of setting up a business in France is lengthy. Coupled with intricate labour laws and high employer costs, there are several strict regulatory hoops to jump through. Similarly to Germany, there’s a heightened emphasis on employee rights and protections in France. For example, in the wake of increased hybrid working, French employees now legally have the ‘right to disconnect’ from any work-related technology they use outside working hours.
Facilitating your European expansion
No matter where in the world you’re looking to employ, it can quickly become an incredibly arduous and complex process — not to mention that you’ll have to stay on top of all of the ever-changing employment regulations. And you don’t need us to tell you that non-compliance comes with consequences.
Partnering with a global employer of record (EOR) like TopSource Worldwide gives you peace of mind that you’re complying with all relevant employment regulations in your chosen location. Whether you’re employing in Germany, the UK or France, our local experts know all the up-to-date rules and nuances associated with expanding into Europe’s top three locations. Our global EOR services provide hassle-free management of your employees, from start to finish.
Outsourcing your international employment obligations to TopSource Worldwide means we’ll ensure legal, HR and payroll compliance across the board and will help you find and onboard the best talent available. Our full-employment model simplifies your overseas expansion as we complete all statutory filing and provide electronic payslips for all your employees. We’re also aware that every business is different, so we’ll always tailor our EOR offering to your bespoke needs.
We’ll remove any hassle associated with expanding overseas, keeping your business on the right side of compliance so that you can employ anywhere in Europe seamlessly. Get in touch to find out more.