Aerial view old town, Tallinn, Estonia

Tallinn, Estonia has the highest concentration of entrepreneurs in Europe, according to research

Estonia has the highest concentration of entrepreneurs in Europe, according to research.

Nearly one in five adults (19.4 per cent) see themselves as either a would-be entrepreneur or owner/manager of a new business in the Baltic state.

Montenegro (14.9 per cent) and Turkey (14.2 per cent) were in second and third place when it comes to the concentration of start-ups, according to tech supplier RS Components.

>See also: What Estonia’s youngest inventor can teach us about entrepreneurship

The UK by comparison ranked in 17th place in Europe with 8.2 per cent of the country being entrepreneurs. In fact, Britain lags behind Kazakhstan and Romania when it comes to entrepreneurial activity.

Top 20 countries with most aspiring entrepreneurs and new business owners

# Country %
1 Estonia 19.4
2 Montenegro 14.9`
3 Turkey 14.2
4 Latvia 14.2
5 Israel 12.7
6 Netherlands 12.3
7 Slovakia 12.1
8 Kazakhstan 11.3
9 Lithuania 11.3
10 Austria 10,9
11 Romania 10.8
12 Luxembourg 10.7
13 Iceland 10.6
14 Ireland 9.6
15 Croatia 9.6
16 Georgia 8.6
17 United Kingdom 8.2
18 Portugal 8.2
19 Hungary 7.9
20 Switzerland 7.4

Source: RS Components

What can the UK learn from Estonia?

Estonia ranks #1 in ease of its tax system

The International Tax Competitiveness Index measures how easy or not it is to run a business in different countries of the OECD, according to several metrics. Estonia has maintained pole position for several years compared with 25th-ranked Britain.

Digital-first administration

Estonia is recognised as the world leader for digital e-government and that has extended to registering a business remotely in Estonia without having set foot inside the country – which is helpful in an age of digital nomads. You can register your business remotely through the e-Residency programme. However, setting up a business in Estonia is best suited for purely digital businesses, such as Amazon dropshipping intermediaries, which act as a middleman between customers and manufacturers. Estonia is not the place to register a business if you manufacture or physically handle goods yourself.

Low tax rate for company dividends

The tax rate for company dividends drops to just 14 per cent providing the company has been issuing dividends for at least one year. And start-ups do not pay any tax until they have issued their first dividends. (By comparison, UK higher-rate taxpayers pay 32.5 per cent on dividends.)

Further reading

Millennials: which is the best city for your start-up?

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