GBCI 2022: business complexity in EMEA

TMF Group’s Global Business Complexity Index 2022 (GBCI) explores 292 different indicators relating to business complexity, to provide in-depth analysis of the global and local challenges that impact on the ease of doing business across the world.

Insights from the GBCI can help investors pick and manage their target markets with greater confidence. Those jurisdictions that are perceived to be the most complex are often among the most attractive for talent and customer opportunities. Local knowledge will help when it comes to navigating this complexity, allowing you to managing exposure to compliance risk and find your path to growth.  

In this article, we take a deep dive into the EMEA region, to examine the drivers of business complexity in each jurisdiction, or conversely, what makes them simpler environments for investment or setting up operations.

2. France

France remains in second place in our 2022 rankings. Historically employee centric, the French government’s approach during Covid-19 emphasised that approach with economic schemes to help absorb some of the impact of the pandemic, supporting companies and, in turn, their staff. Although this support was attractive to businesses, benefitting from the schemes added administrative complexity. France also continues to be particularly challenging for business due to the number or labour laws that protect the employee.

Accounting and tax can be particularly complex in France due to local language requirements and the number of taxes and tax reports that need to be filed. These factors are challenging for foreign businesses which must adapt to local ways of working.

France is considered a leading jurisdiction for ESG, especially environmental and social legislation, and was an early adopter of EU rules, developing ESG regulations before the EU. Examples include gender equality legislation and rules for the employment of people with disabilities, which apply for companies with as few as 20 employees. 

Although France is positioned as a complex jurisdiction, the current French government is business-oriented and is attempting to make the jurisdiction a more attractive destination. Therefore, complexity here lies in traditional and structural barriers.

You have so many different taxes and taxes for everything. You can have taxes on jewellery, you can have taxes on publicity, you can have taxes on water. You have taxes on many things, depending on your activity. A basic subsidiary will have to pay and fill out documents for around ten different things, even for a small company. It surprises foreign investors because they are not used to having so many different taxes to prepare.

Dive into the data for France on the Complexity Insights dashboard.

6. Greece

Greece continues to be a complex place to do business. As in previous years, a key driver of complexity are the constant changes to legislation, with 150-200 new laws and 1,500-2,000 new decisions every year. 

Although a changeable legislative climate is not new, the jurisdiction has become more complex in the last year, moving up the rankings from 13th in 2021. This has been driven by a new digital system introduced during Covid-19. Without this system, there would have been no other way for businesses to incorporate and operate due to a previous reliance on face-to-face contact between organisations and government bodies. 

The introduction of digital processes typically simplifies incorporation and operations in the long term. However, it can create an initial period of increased complexity. We expect doing business in Greece will become simpler in the coming years thanks to this move, but it has produced pain points for the time being. As an example, the government has created a template for online business incorporation. However, it is only relevant for around 10% of businesses. For businesses that cannot benefit from the template, a visit to a notary is still required. 

Accounting and tax digitalisation has also been problematic. The government’s ‘MyData’ portal allows entities to upload tax records (sales) in real time, including the reporting of expenses and assets. In the long run, this aims to reduce complexity by giving the authorities a more complete and current view. However, revenues and expenses for 2021 need to be backdated. The Greek government has postponed the deadline for the submission of documents related to backdated revenues, due to the complexity of this process. MyData also requires investment: a minimum of €20,000 for medium to large businesses.

Despite the increase in complexity in the jurisdiction, Greece does remain attractive and there are hopes than in future years it will reap the benefits of its focus on digitalisation. 

During the Covid years, there was no other way because, in practice, we didn't have electronic government processes. Within six months, the government tried to implement certain things, but it turned out to be electronic bureaucracy. So, we moved from the typical bureaucracy to the digital.

Dive into the data for Greece on the Complexity Insights dashboard.

7. Turkey

Turkey changes regulations regularly and continues its efforts to digitalise public services. Challenges lie in the short time period given to adapt to changes and lack of a collaborative cross-government effort, making compliance difficult. Regulatory changes are introduced with minimal information and guidance. Although it is difficult to adapt these changes within the required timeframes, they are intended to make Turkey a major player in the global economy. 

Economic difficulties have also caused problems for Turkey in the past year. The Turkish lira has depreciated against foreign currencies and the country has experienced hyperinflation. The annual CPI for Turkey in 2021 was 40%, with the production index around 86%. In the first quarter of 2022, production index rates reached 100%, meaning there will be a significant impact on the price of consumer goods in the months following. Such uncertainty and flux can drive complexity for foreign businesses. 

Despite the challenges, Turkey will be an affordable market and considered attractive for foreign investors. However, the propensity for consumers to decrease may deter foreign investment.

In an environment where we offer services to multinationals and the decision-makers are outside of Turkey, you need to make all relevant parties aware of frequent changes in regulation and ask them to act quickly to adapt to the required changes as the signing authority. That is the main difficulty for all market stakeholders.

Dive into the data for Turkey on the Complexity Insights dashboard.

8. Italy

Italy has become increasingly complex over recent years, moving from 15th position in 2021 to eighth in this year’s GBCI. 

This hike in complexity is partly due to Italy being one of the first countries in Europe to introduce e-invoicing in 2020. Cross-border invoices will be added to the existing digital business-to-business transaction requirements from July 2022. While the steps required to transition to e-invoicing are challenging and time-intensive, in the long term it should make operations far simpler by reducing manual input of accounting documentation. In the future, e-invoices could become the basis of VAT returns. 

Despite the shift to digital invoices, the entity activation process in Italy remains highly manual, usually taking between 30 and 90 days. During the incorporation phase of new Italian companies, a notary needs to be involved, requiring in person company proxy holders. Also, incorporation documents must be notarised abroad, in person, and electronic signatures are not accepted. A large backlog caused by Covid-19 increased timeframes due to access restrictions at the Revenue Agency and Trade Register public offices.

After incorporation, additional complications arise from the rules around resolutions having to be passed by boards of directors and shareholders, which usually only take place twice a year.  
The process of opening a bank account in Italy is also complex. Italy has aligned with the EU directive’s anti-money laundering (AML) laws, but Italian regulators are applying additional restrictions to identify UBOs. This leads to additional documentation requirements, some of which must occur in person.  

Alongside EU AML and UBO register alignment, Italy follows common accounting standards. Like Luxembourg, Italy’s accounting standard is Local GAAP, but this has gradually become more aligned with IFRS principles.

Italy has a highly regulated labour market which can cause complications for businesses due to inflexibility. Any settlement or termination agreements with employees must be carried out in front of the labour office or trade unions. Additionally, labour law regulations frequently change along with governments, although Prime Minister Draghi looks set to lead a (rare) stable period of government ahead. 

Dive into the data for Italy on the Complexity Insights dashboard.

10. Poland

Over the past year the Polish government introduced multiple pieces of legislation that were passed in a short timeframe and accompanied with little public guidance. The main change was the introduction of the ‘Polish Deal’, which was significant as it overhauled taxation system. It did not just change tax laws impacting corporations, entrepreneurs and employees, but also the way that salaries are calculated. With a lack of guidance from the authorities, this has caused salary calculation problems for companies. 

Labour laws in Poland were already complex and the Polish Deal implementation in January 2022 led to the resignation of several government officials and two amendments to this new law with more to come later this year. 

Before the Russian invasion of Ukraine, Poland was witnessing a hesitancy of foreign business activity. For example, the Polish government and judicial system challenged some principles of EU legislation, resulting in some funding being put on hold. Although Poland wants and needs foreign investment, the Polish government has prioritised state investment. 

The Polish government needs foreign investment but would like to ensure that the dominant position remains with the state. We already have the Polish real estate holding. There are plans to create further state-supported groups to control assets and achieve greater independence from foreign businesses, such as hotel holdings or a national group of Polish food producers, which can make the Polish market difficult for others to operate in. However, the geopolitical situation in the CEE region changed dramatically and might result in Poland strengthening its ties with the western European and US economies.

Dive into the data for Poland on the Complexity Insights dashboard.

13. Sweden

Sweden has become more complex in recent years. One driver of business complexity is a focus on transparency requirements. For example, Know Your Customer (KYC) procedures have become more challenging and there is now a need for face-to-face interviews in certain circumstances, which can slow down processes and drive complexity. 

Another area is the reliance on paper processes for VAT registration, such as the need for wet signatures and mail handling. Although the Covid-19 pandemic did act as a catalyst for the simplification of certain processes, such as providing exemptions for face-to-face shareholder meetings, digital signatures were not introduced during the pandemic, leading to the delay of certain filings. 

However, despite some areas of complexity, Sweden remains a highly attractive jurisdiction for foreign direct investment. It is a neutral and law-abiding jurisdiction that is highly aligned with EU legislation. This means that it is a natural point of investment for any company operating in EU jurisdictions and accustomed with the processes. It is also a key destination for global business, with the highest number of startups outside of Silicone Valley. 

Sweden's overall regulatory business environment is among the most business friendly. Starting a business in Sweden is also relatively easy and straightforward. Recently, Sweden has become a hub for startups; is has become the most advanced country for automation in the Nordic region as well.

Dive into the data for Sweden on the Complexity Insights dashboard.

17. Belgium

Belgium ranks relatively highly in our GBCI. Situated in the heart of Europe with the headquarters for both the EU and NATO, it is a business-friendly and internationally aligned nation. However, its employment and payroll requirements can make it a complex environment for foreign companies to operate in. 

For example, Belgium has compulsory regulations governing remuneration of employees. The Joint Committee, a consultative committee between the employers’ union and the union of employees’ representatives, determines minimum wage, year-end bonus and all other possible premiums, compensations, and benefits. 

The Covid-19 pandemic has further increased complexity in this area. It has led to additional reporting obligations and safety procedures that employers must comply with. In addition, the increased teleworking in Belgium means that employers must have structural teleworking agreements in place with their workforce, which require specific reimbursements of costs incurred by the employee.

Part of Belgium’s complexity is due to the economy being highly unionised. Within individual sectors, representatives of unions are constantly negotiating with employers to ensure the buying power of the workforce is guaranteed. With global inflation rates increasing, this is likely to intensify as a hot topic.

Several investment incentives granted by the federal and regional governments - such as financial assistance and grants, investment subsidies and tax breaks - have resulted in a business-friendly environment across Belgium.

Dive into the data for Belgium on the Complexity Insights dashboard.

20. Germany

Germany has gradually increased in complexity in recent years. Drivers include labour laws, complexity around payroll and differing social security institutions, and tariff agreements.

One aspect are labour laws against discrimination in the jurisdiction. There are strict laws in place that work to avoid any sort of discrimination. All organisations must apply this legislation and it can be quite strict – for example, including the words “young company” in a job description could be seen as age discrimination.

Although these laws can increase the administrational burden, they do create a more equal and fair society, making the jurisdiction more attractive to some businesses. Furthermore, businesses themselves often have their own diversity and inclusion policies and monitoring in place, so for most it shouldn’t be a case of reinventing the wheel to meet this legislation.

Germany also offers progressive benefits when it comes to the environment, such as tax subsidies for hybrid and electric cars, and environmentally friendly investments. We expect such incentives to be more commonplace as the world responds to the global climate crisis. So, by meeting a ‘greener’ way of living and working early, Germany is set become a better place to do business in the coming years.

Germany is not a complex place to do business. However, labour laws and aspects related to payroll, along with different social security institutions and tariff agreements, can create some complexity. Germany's stable political, economic and tax regime offer high protection for business ventures.

Dive into the data for Germany on the Complexity Insights dashboard.

23. Austria

There are a number of factors that make Austria’s business environment complex, and others that help to make doing business simpler. For instance, Austria is a member of the EU, making it easier for companies that already operate within another member state. 

Something that drives complexity is the set of legal guidelines around different trade licenses required for some types of business.  

The Covid-19 pandemic also created complexity for businesses due to the short-time work model. This allowed employees to reduce their average working time to 10% but still receive 80-90% of their usual salary which would be subsidised by the government. This was a very effective scheme that allowed organisations to avoid significant redundancies, however applying for and putting such systems into place was not always straightforward. 

Despite the complexity, Austria remains a highly attractive jurisdiction due to its high wealth and stability. Although a small jurisdiction geographically, it has significant global reach.

There are complex legal guidelines concerning the different trade licences, depending on the type of business. Some trades don’t require a trade licence, but many do. Labour laws and payroll accounting are extremely complex. However, on the other hand it is fairly easy to establish a company in Austria and the fiscal laws are similar as in other European countries.

Dive into the data for Austria on the Complexity Insights dashboard.

24. Kazakhstan

Kazakhstan remains in the top third of the ranking but has moved down from 16 in 2021. Drivers of complexity in the jurisdiction include frequent legislative changes that can be retrospective. Businesses operating in Kazakhstan can struggle to meet such changes.

However, Kazakhstan is an attractive jurisdiction for foreign businesses. Since 2012, the jurisdiction has been working towards the goal of becoming one of the world’s 30 most developed countries by 2050. This means that creating lucrative business opportunities is firmly on the agenda.

For example, since 2016 the government has worked to make starting a business simpler by removing registration fees for small to medium businesses. It has also made registration times shorter and overhauled the need for a company seal. Businesses can now be incorporated within 14 days, driving simplicity. Registering a property can still be a time-consuming process, taking up to 40 days. So, even though incorporation may be simpler, certain steps that follow this can be more complex.

In Kazakhstan it is smart to have a prior incorporation plan that includes multiple areas, such as the business model to general maintenance of the entity. There's always a minimal amount of compliance even for dormant companies that can create complexity.

Dive into the data for Kazakhstan on the Complexity Insights dashboard.

26. Slovenia

Slovenia is a relatively complex jurisdiction to operate in. Yet it is a progressive and attractive market, located in the centre of the European Union.

Companies operating in Slovenia are subject to frequent legislation changes which increase the administrative burden. This also increases the risks associated with failing to comply with the rules and regulations. The rules for tax returns are particularly complex for companies to navigate.

On the other hand, Slovenia’s government has invested so that companies increasingly can submit documents digitally. This is a common theme among the less complex jurisdictions in the GBCI, as it better ensures that submissions are accurate and easy to submit. 

Like many of its European neighbours, Slovenia can be considered progressive when it comes to employee rights. For example, employees of all companies are entitled to an untaxed holiday allowance. Additionally, some companies are already introducing a 30-hour working week with full pay, and this may gradually become the norm in the future.

In light of the Covid-19 pandemic, it is also a country that has particularly embraced the growing trend for employees working from home and has sought to keep this new-found flexibility in the future.

Slovenia is a forward-thinking jurisdiction. This results in a safe and stable environment for businesses to operate in, although they must comply with legislation that is often subject to change.

Dive into the data for Slovenia on the Complexity Insights dashboard.

29. Slovakia

Slovakia ranks 29th in this year’s GBCI. However, it is one of the least complex jurisdictions within the Central and Eastern Europe region. There is a level of redundant bureaucracy: for example, the Slovak language is exclusively required for communications and accessing the government portal. This portal can only be accessed with a national ID card or with a special ID card that takes a relatively long period of time to acquire.

Slovakia has very complicated tax regulations, especially around VAT. Despite this, there is very little tolerance for late filings and negligence on part of the businesses.

The economic situation in Slovakia tends to follow and reflect the course set by the EU market and behaviour of the biggest EU countries.

The escalation of the Russia and Ukraine situation will undoubtedly add complexity to Slovakia. Things will depend greatly on developments in the crisis, with the potential for a detrimental effect on the whole of society, the economy, and the political situation.

Slovakia is a standard CEE country with a relatively well-established infrastructure, legislation harmonised with the EU and the euro currency. Some remnants of redundant bureaucracy that are being mitigated by ever expanding digitalisation and modernisation of all compliance processes.

Dive into the data for Slovakia on the Complexity Insights dashboard.

31. Ukraine

Ukraine’s ranking as the 31st most complex place to do business was based on pre-conflict benchmarking, with the research concluded in January 2022. We expect Ukraine to continue to become a significantly more complex business environment, because of the short and long-term impacts of the invasion by Russia. It is far too early to accurately predict how businesses in Ukraine will recover from the conflict.

Looking back to before the conflict, Ukraine had in place many great initiatives for foreign investors. For example, Diia City, which offers preferable and highly competitive tax and legal regimes for IT businesses. According to Ukraine’s president Volodymyr Zelensky, this was designed to transform Ukraine into the largest IT hub in Europe.

Yet Ukraine is still highly fiscal in its approach to laws and regulations. Inconsistencies between laws make it difficult for businesses to ensure they are fully compliant. More recently, the Ukrainian government has started to initiate more strict regulations to impose taxation on the commercial activity of international businesses.

2022 is expected to be a difficult year considering the escalation of conflict with Russia.

Dive into the data for Ukraine on the Complexity Insights dashboard.

32. Russia

Russia lies in 32nd place in the 2022 GBCI. However, this ranking was based on pre-conflict benchmarking, with the research concluded in January 2022. We expect Russia to continue to become a significantly more complex business environment, in large part due to the sanctions. These sanctions are likely to persist beyond any resolution of the current situation.

As a result of Russian’s invasion of Ukraine, a coalition of states including the EU, US, Canada and the UK, agreed in late February 2022 to ban seven Russian banks from the Society for Worldwide Interbank Financial Telecommunications (SWIFT) international payment messaging. This effectively cut those banks off from access to international financial markets and will economically isolate Russia. This move was aimed at pressuring Putin to end Russia’s military operations in Ukraine.

Aside from the conflict, businesses entering Russia need to be aware of idiosyncratic laws that are unique to the country. For example, all employees can apply for long-term maternity leave, with a minimum of 1.5 years paid, and up to three years in total. Our local experts also predict the introduction of extended voluntary health insurance, but this will not be mandatory.

Unstable currency exchange rates, high inflation, and raising of the key rate are adding complexity to operating in Russia.

Dive into the data for Russia on the Complexity Insights dashboard.

33. Romania

Romania’s business environment has become more attractive each year since the jurisdiction joined the European Union in 2007. It is a country with plentiful resources, and the Romanian people are hospitable and open to working within the international community. However, the public institutions and banks are bureaucratic and sometimes take a ‘form over substance’ approach which can add complexity.

Throughout the pandemic, the government put various support measures in place for employers negatively impacted by Covid-19. Yet these rules have not always been clear, and the process of implementing them can generate difficulties.

Looking at accounting and tax, legislative changes often occur without proper planning and analysis of their impact on the business environment. Yet the introduction of a ‘private virtual space’ for all taxpayers, is helping to simplify communications with the tax authorities.

In some areas Romania can be said to be progressive, such as the law that requires companies with more than 50 employees to ensure 2% of their positions are occupied by people with disabilities. If this obligation is not met, then additional taxes are due.

Being a developing country, Romania offers a lot of opportunities in various areas of business. Here you can find skilled professionals ready to take on the challenges of business development and growth in the local market.

Dive into the data for Romania on the Complexity Insights dashboard.

34. Croatia

Croatia ranks towards the middle of the index this year. Laws and rules are changing rather frequently and there is some discrepancy in how these rules are interpreted by enforcers at the local level. As such, many foreign businesses setting up in Croatia will require help from local experts.

Nonetheless, Croatia is a politically and socially stable jurisdiction. Complexity exists in accounting and tax, as expense reports are required to be prepared in physical format, with all original supporting documentation stamped and signed with wet ink. Similarly, all employment contracts require a wet ink signature, as a digital signature is still not considered valid. Human resources considerations are complicated by the short deadlines in the registration and de-registration of employees.

However, the pandemic has forced a move towards digitalisation. For example, over the last year, the tax authorities have accepted scanned copies of documentation, rather than requiring the original copy. This trend is likely to continue as we move beyond the pandemic.

The introduction of the euro currency from 1 January 2023 will help to simplify business operations. This alignment with the rest of the European Union will reduce the costs for banks and remove exchange rate differences.

Dive into the data for Croatia on the Complexity Insights dashboard.

37. Portugal

Portugal is a relatively easy place to do business and the re-election of the Socialist Party in January 2022 has guaranteed the political stability of the nation for the next four years. 

The most complex and timely process of setting up an entity in Portugal is opening a bank account. Bank response times are typically slow, and all documents must be prepared and legalised well in advance by the business’ representatives.

Our local experts predict that the flexibility which has been created by the pandemic, in part through the establishment of more online services, is likely to stay. The level of digitalisation is also expected to remain the same or even increase further.

Portugal has seen a steady rise in ESG reporting provisions since 2003. This is a step towards reaching the UN’s Sustainable Development Goal 12.6 that aims to encourage companies, especially large and transnational companies, to adopt sustainable practices and to integrate sustainability information into their reporting cycle.

Portugal is an operational jurisdiction with great potential in terms of political stability, language skills and digital services.

Dive into the data for Portugal on the Complexity Insights dashboard.

38. Hungary

Compared with other EU countries, Hungary is relatively complex. Tax authority requirements are demanding, and the Hungarian language is generally requested for documentation, alongside hard copies of documents. In terms of payroll and human resources, a high number of regulative acts must be used daily, and these regulations are subject to frequent change. In fact, throughout the peak of the Covid-19 pandemic, regulatory changes were almost a weekly occurrence, making them challenging to follow.

Yet there is a simplified process for EU-based parent companies to incorporate a new entity in Hungary, with a centralised single process for incorporation and obtaining a tax ID.

The government has pledged to simplify taxes and automate processes. Hungary’s incumbent Prime Minister, Viktor Orbán, was re-elected in April 2022, which should provide a stable political and social situation.

An interesting law passed in Hungary this year, was the waiving of the 15% personal income tax for employees under 25 years old. The new regulation aims to make employing young people it more attractive to businesses, while giving young people a boost in getting independent and starting their own life.

Hungary remains attractive with a beneficial tax and incentive regime. Yet the Hungarian regulations are complex, and it is advisable to find professional support for foreign investors doing business in Hungary.

Dive into the data for Hungary on the Complexity Insights dashboard.

39. Spain

Spain has a complex business environment for foreign investors, with a high level of compliance obligations towards authorities. Navigating HR and payroll is particularly challenging, with Spain being home to the fifth most complex payroll system in the world.

Yet foreign investors are attracted to Spain for its strong consumer market and gateway to Spanish-speaking markets in Latin America. Spain is perfectly geographically positioned for an international business to set up and grow.

Spain is however a highly bureaucratic environment, which can make the day-to-day running of a business very complicated. For example, when setting up a business, a certificate of uniqueness must be obtained, and the incorporation must be physically granted before a public notary.

In terms of attempts to simplify operating in Spain, filings for tax, HR and payroll can be submitted electronically. This has of course been accelerated by the pandemic. Further, new regulations have come into play for start-ups which minimise the formalities.

In Spain there is a high number of formal obligations in terms of legal, accounting and tax as well as payroll requirements.

Dive into the data for Spain on the Complexity Insights dashboard.

41. Serbia

Serbia is modestly sized but presents a large opportunity as a high-growth market in Central Eastern Europe. Serbia has one of Europe’s lowest corporate income taxes, with a flat rate of 15%, alongside competitive VAT rates. The country is strategically placed within Europe to connect businesses with large consumer and corporate markets such as Germany, Italy, and Turkey.

Serbia as a nation is rooted in tradition, and a key source of complexity is the persistence of the nation’s official language of Serbian in dealings with tax inspectors. This is particularly challenging for foreign businesses and necessitates engagement with local expertise.

Serbia is undergoing a transition from a state of heavy requirement of physical processes, to becoming more digitised. Some operations, including the opening of bank accounts, and obtaining electronic certificates for e-signing, require the personal presence of legal representatives.

Serbia is a jurisdiction undergoing change. E-invoicing came into force from May 2022, meaning financial statements and tax returns can now only be submitted electronically. The ruling also enabled these documents to be submitted from abroad. More widely, e-business is being developed to simplify processes for businesses operating in Serbia.

Serbia is not that complex as things can be done fast in some areas important for investments.

Dive into the data for Serbia on the Complexity Insights dashboard.

46. Finland

Finland is a relatively simple market to operate in. Interacting with the Finnish administration is comparatively straightforward, meaning that establishing a company is a simple process. Guidelines can be found in English and there are no unnecessary complications or steps to begin operations.

Finland is among the most digital countries worldwide and continues to heavily invest in digitalisation, irrespective of Covid-19. The government has recently launched two transformation projects as part of the country’s mission to pioneer a digital economy - these are aimed at creating a system where all business transactions in Finland are based on digital, structured machine-readable information and processing. The government also plans to use digitalisation to streamline regulations and reduce unnecessary administrative burdens for companies.

However, it can be complex for foreign companies and especially non-residents to access the necessary systems to report taxes and there is an increased focus on foreign investment as a target for tax audits. As technology advances, it will mean that having the necessary knowledge will be key to avoiding fines and penalties.

Finland aims to be carbon neutral by 2035, which is impacting businesses. The Climate Change Act is being reformed and strengthened to achieve this target. Corporate governance laws contain provisions that require companies to consider ESG aspects related to their organisation and operations.

Once a business is up and running in Finland, the economic environment, taxation and legislation are stable and predictable, and the highly reliable and educated workforce in Finland, allows for business to thrive with a relative amount of effort and good degree of independence.

Dive into the data for Finland on the Complexity Insights dashboard.

48. South Africa

Although ranks in the less complex half of the GBCI, there are certain drivers of complexity. For example, engagement with governmental institutions, revenue authorities, police and the courts is generally slow, and does not have clearly defined processes. This can result in inconsistent information and execution. Furthermore, unreliable energy sources in the can cause regular power cuts, which can result in disruption and increased expenditure.

Payroll and HR continue to be the areas where South Africa is most complex. There are strong labour laws, which emphasises the protection of employee rights and advancement of equitable representation in the workplace. Although beneficial for employees, this does add complexity to businesses through additional compliance requests and increased risk of employee-related disputes. Businesses are required to register for the ‘Workmen’s Compensation’ (payment to family in the event of injury or death at work), which is time consuming and can take time to secure. This especially increases complexity when an entity has a foreign director, where this process must be manual and can take up to 8 months to complete.

Although South Africa continues to be the most sophisticated economy in Africa, it unfortunately is still quite inefficient in supporting foreign entities on their journey to investing and operating easily within its borders.

Dive into the data for South Africa on the Complexity Insights dashboard.

50. Bulgaria

Bulgaria remains a simple jurisdiction for foreign businesses. However, HR and payroll services are relatively complex, with labour laws that are strict and protective of employees. Extended reporting requirements also add complexity for businesses. Additionally, the requirement to use the local language and Cyrillic alphabet can cause challenges for foreign businesses.

Digitalisation has accelerated in Bulgaria, with electronic submissions being widely introduced, and will continue to do so under the new government. For example, in HR and payroll, electronic employee files are replacing the use of paper-based files.

Looking forward, Bulgaria has had a new government in place since late 2021, which has a declared focus to work on legislative changes in the judicial system and in fighting corruption. Attracting foreign direct investment is also a high priority for the new government. Therefore, Bulgaria is likely to become an increasingly attractive jurisdiction for foreign businesses to operate and invest in, although the rate of inflation is causing concern among businesses and the population.

There is limited complexity in Bulgaria when it comes to business establishment. Simplified governance, accounting, and tax compliance make it easy to start and operate a foreign business.

Dive into the data for Bulgaria on the Complexity Insights dashboard.

53. Cyprus

Increased digitalisation has created a simpler business landscape in Cyprus, with the government accelerating pre-existing digitalisation plans in response to Covid-19. 160 government services are already online, including the registrar for companies and the tax department. Setting up a business in Cyprus, as well as managing the associated certificates, filings, and tax returns, can all be done online in government department online hubs.

Cyprus has a ‘generous’ and user-friendly taxation regime which makes it attractive for multinational companies. Furthermore, in 2020, the government introduced the ‘Fast Track Business Activation Mechanism’ which aims to further attract foreign business in Cyprus. The scheme offers a number of benefits to new investors, such as completion of procedures for setting up a company within seven days from the day the company enters the scheme. It also ensures issuance of residence and employment permits within 4-6 weeks, depending on the number of permits requested and employment of a greater number of third country nationals in specific professions with specialised skills, such as digital.

Technology and innovation are at the heart of the Cyprus government’s long-term growth and development plans. It actively develops high-quality infrastructure such as 5G, satellite and highspeed broadband. A new research and innovation strategy has recently doubled the technology development budget. A new Deputy Ministry of Research, Innovation and Digital Policy has been created specifically to guide the continuing digital transformation of the island.

Dive into the data for Cyprus on the Complexity Insights dashboard.

54. Ireland

Ireland is typically one of the simplest jurisdictions in our GBCI. In 2021 and 2020 it was in the ten simplest jurisdictions. However, recent world events have made some aspects of business incorporation and operation slightly more complex.

During Covid-19, business incorporation and operation in Ireland could be slower due to the jurisdiction’s reliance on wet signatures. Unlike other jurisdictions, this wasn’t updated or moved to an online process during the pandemic. Instead, it was paused, slowing the speed of incorporation and operation.

Furthermore, the new global minimum corporation tax has led to the increase of Ireland’s tax rate from 12.5% t0 15% for organisations with a turnover of more than €750m. This is in line with all other jurisdictions, so will have a limited impact on the attractiveness of the jurisdiction. However, it may lead to some complexity for organisations that now need to meet this change.

Despite these increases in complexity, Ireland remains a highly attractive destination for foreign businesses. Following Brexit, it is the only jurisdiction in the EU that has English as the native language and boasts a highly skilled talent base that’s well-adjusted to working with foreign businesses.

Ireland is very open for business compared to other jurisdictions. Ireland has fantastic infrastructure, easy to understand rules and regulations, a skilled talent pool and transparent governance.

Dive into the data for Ireland on the Complexity Insights dashboard.

55. Qatar

Qatar remains a relatively straightforward and attractive place to do business. The jurisdiction is made up of only three regions, which make it less complex than others in the Middle East, such as in UAE, where there are approximately 40 regions with varying rules and regulations. Additionally, there is a low rate of corporation tax in Qatar (10%) and no VAT.

As a result of the Covid-19 pandemic, the Qatar government has increased investment in digital processes, which has led to reduced complexity due to more streamlined and efficient processes. However, as we observe in other jurisdictions, we can see an initial “hump” of complexity, while businesses work to meet new digital requirements.

In 2022, Qatar is hosting the FIFA World Cup, which will provide a substantial economic boost. However, it is possible that Qatar will look to introduce VAT in 2023, in order to bring it in line with the remaining Gulf Cooperation Council (GCC) jurisdictions. This could add complexity to foreign and local entities operating in Qatar.

The government is keen to promote Qatar as a business hub for the wider Middle East & Africa region, and they have invested substantial amounts of time, effort and money in ensuring that Qatar is a highly attractive business environment.

Dive into the data for Qatar on the Complexity Insights dashboard.

56. The Netherlands

Netherlands is one of the simpler jurisdictions globally. However, there has been an increase in complexity in recent years related to changes in the accounting and tax space. This has also been driven by global changes and at an EU level, directly impacting the Netherlands.

Some changes are related to a focus on increased transparency in the EU. For example, the introduction of ATAD3 announced at the end of 2021 works to reduce tax avoidance. This change in regulation may create additional complexity for businesses incorporating and operating in the Netherlands. However, for businesses operating within Europe, this adaptation should be the same across multiple European jurisdictions making it easier to comply with ATAD3.

The jurisdiction focuses on driving simplicity. For example, the ministry of finance actively works to make the jurisdiction simple and more attractive. The jurisdiction focuses on a simple entity activation process, as well as fast liquidation, giving businesses flexibility. Furthermore, the jurisdiction works to be transparent and supportive and, thanks to its size, logistics within the Netherlands is simpler than in larger jurisdictions.

Dutch corporate law creates flexibility such as incorporation of a new entity within one day. Highly skilled professionals are available to ensure being compliant with (international) laws and regulations.

Dive into the data for the Netherlands on the Complexity Insights dashboard.

57. Luxembourg

Luxembourg is a business-friendly environment that is attractive to foreign businesses looking to invest or operate there. There is a simple accounting framework with the option to use the International Financial Reporting Standards (IFRS). Luxembourg boasts a skilled workforce and infrastructure which also makes it attractive for foreign businesses. It is particularly popular for those with private wealth, with more than 150 banks being based in the jurisdiction that have roots in private banking and wealth management.

In response to Covid-19, Luxembourg introduced various rules which made it less complex to operate. For example, board meetings could be held via video conference, working from home became acceptable for regulated companies, and employees from neighbouring countries were allowed to work more than their normally accepted days from home. In the future many of these changes are likely to stay, such as flexible working and the dependency on technology.

Although Luxembourg is a simple and business-friendly jurisdiction, some aspects, such as opening a bank account, can cause complexities. Foreign businesses and nationals can apply for a bank account in Luxembourg online, however, to complete the process, businesses must present the documents required in person or via post.

The Luxembourg financial centre offers a diverse range of financial services connecting investors and markets around the world. Its stability and innovative mindset make it an ideal European hub for global financial institutions.

Dive into the data for Luxembourg on the Complexity Insights dashboard.

60. Switzerland

Key drivers of simplicity in Switzerland include a highly skilled workforce and government actions to encourage foreign and local investment. This facilitates the procedures for incorporating businesses. Another key driver of simplicity is that there are three official languages (French, German, Italian) and English is widely accepted.

The Swiss government is open and understanding of businesses and employees. For example, in response to increased working from home practices following Covid-19, they signed treaties with other adjoining countries to enable home working for cross-border employees. Measures taken early in the pandemic to support business and employees did, however, bring short term complexities.

Switzerland is a progressive jurisdiction and in November 2020, voters opted for the introduction of EU-style ESG reporting and due diligence requirements. Relevant companies will have to apply the new requirements in financial year 2023. However, while an administrational burden, ESG practices are increasingly popular in many sectors, so will make the jurisdiction more attractive in years to come.

Switzerland is not a complex jurisdiction to do business in, with a highly skilled workforce and government actions to encourage foreign and local investments that facilitates the procedures for incorporating companies. However, the country has a high cost of living which goes with the standard of living, and which can be costly.

Dive into the data for Switzerland on the Complexity Insights dashboard.

61. United Arab Emirates (UAE)

UAE’s human resources practices are very simple and straightforward. Incorporating a business is also straightforward, with a process that is considered “user friendly”.

The tax regime in the UAE is very simple as it is limited to only VAT for 99% of companies and all accounts are prepared using the IFRS. This means businesses can focus on their day-to-day activity, rather than meeting complex taxation requirements.

However, the UAE does have some features that create complexity. There are around 40 different regions in the jurisdiction that have slightly different rules and requirements. Furthermore, employee benefits are taken seriously in the jurisdiction. It’s common practice to offer employees various allowances such as housing and school fees support. Such benefits need to be independently administered and end of service gratuity needs to be calculated monthly, which requires retrospective recalculation as salary and seniority change. This can create some complexity but having such attractive benefits in place attracts the best global talent for international businesses.

Overall, the UAE is a very attractive place to do business. From an accounting and HR perspective it is very simple and straightforward. As far as business set up and administration is concerned, this is also very simple, straightforward and user friendly. However, the number of jurisdictions within the UAE means that having some guidance is critical, and this does add some elements of complexity.

Dive into the data for the UAE on the Complexity Insights dashboard.

62. Mauritius

The low ranking achieved by Mauritius is thanks to the business-friendly approach of its government. Its approach has seen the implementation of new legislation, regulations, rules, guidelines and tools.

Public and IT infrastructure have also been significantly improved and upgraded to ensure that Mauritius is as attractive as possible. For example, there is a centralised online platform for reporting monthly annual returns and payments. One aspect of entity activation that can cause complexity for businesses is setting up a bank account. In Mauritius, some of this is avoided thanks to the availability of online banking facilities from major banking institutions.

There are some factors that do drive complexity, such as the criteria for partial tax exemption which is in need of more clarity and certainty. The ambiguity can cause delays, but Mauritius remains a highly attractive jurisdiction for foreign business operation.

The Mauritius government, with the collaboration of all relevant authorities and regulatory bodies, has endeavoured to decrease the complexity of doing business in Mauritius. This has been actioned through the implementation of new legislation, regulations, rules, guidelines and relevant tools to improve the ease of doing.

Dive into the data for Mauritius on the Complexity Insights dashboard.

63. Czech Republic

The Czech Republic is a highly attractive jurisdiction due to its stable political, fiscal and monetary environment and emphasis on cooperation with the European Union.

During Covid-19 simplicity was driven by the removal of certain paper processes and the wider acceptance of electronic signatures. This meant that specific processes involved in business incorporation and operation were able to be more rapid and streamlined for organisations. There was also increased use of online communication.

Certain aspects of Covid-19 did create complexity for businesses. For example, there was a lack of clarity in areas such as state subsidies, local labour code legislation and home office definitions. Some rules to combat Covid-19 in the workplace were communicated with some delay, causing complexity as businesses needed to act quickly to comply.

The Czech Republic is set to remain highly attractive and with the digital focus expected to continue.

The Czech Republic expects a stable political, fiscal and monetary environment in upcoming years with emphasis on cooperation with the EU. Digitalisation is also expected to increase, especially with the government change which happened recently. Digitalisation is one of the new government’s priorities.

Dive into the data for the Czech Republic on the Complexity Insights dashboard.

64. Israel

Israel continues to be a simple place to do business, despite political instability over a number of years. In 2021 the country elected a new president, Isaac Herzog, who aims to calm tensions.

Despite such instability, when it comes to incorporating and operating a business in Israel, processes are usually straightforward. One of the key drivers of simplicity is a standardised incorporation process.

Although foreign businesses operating in Israel have branch or subsidiary status, all businesses follow the same steps towards incorporation. This involves obtaining certain documents, including a registrar form and a description of company objectives. This is then certified by an attorney.

A key factor that keeps the jurisdiction simple for foreign businesses is the ability to submit the majority of necessary incorporation documents in English, as well as Hebrew and Arabic. Certain documents do need to be submitted in Hebrew, however working with a local attorney helps to smooth this process and reduce complexity.

Dive into the data for Israel on the Complexity Insights dashboard.

66. Guernsey

One driver of Guernsey’s ranking as one of the simplest places to do business is its alignment and similarity to Jersey, which ranks 72nd. Like Jersey, there is a focus on investment in the digital sector due to the large number of people working in technology across the Channel Islands.

Guernsey, like Jersey, is a jurisdiction that is of interest to those working in the funds sector. However, in Guernsey there is slightly higher complexity when operating in that space. Funds is a key business area for the island and there are significant ESG regulations in place to combat greenwashing.

For example, in July 2021 the Guernsey Green Fund (GGF) amendment rules came into effect. The GGF aims to reduce cumbersome administrative processes for those working in funds. It also aims to ensure that greenwashing is avoided. The amendments impact the frequency of monitoring of whether a closed-ended fund is meeting the necessary ‘green’ requirements, and how Green Fund status is disclosed on the stock exchange.

Despite some potential complexity created from meeting these ESG regulations, Guernsey remains a highly attractive jurisdiction.

Guernsey offers a tax neutral, stable platform jurisdiction through which investment capital can be efficiently and effectively deployed.

Dive into the data for Guernsey on the Complexity Insights dashboard.

67. Malta

Malta narrowly misses out on a place in the ten least complex jurisdictions in this year’s GBCI. The jurisdiction is extremely business-friendly and is therefore highly attractive for foreign investments.

Limited Liability Companies (LLC) are the most common form of business entity used by foreign investors within Malta. All LLCs are required to have their financial records audited by independent auditors, and financial statements must be prepared in accordance with the IFRS as adopted by the European Union. The transparency provided by these regulated processes does offer security to foreign investors. However, it can add complexity due to the requirement to provide enhanced due diligence.

In 2021, Malta was moved to the Financial Action Task Force (FATF) ‘grey list’, which is made up of countries that have defects in their regimes to counter money laundering, terrorist financing, and proliferation financing. Although Malta remains on the list for now, the FATF recognised that Malta has made commitments to resolve these issues and is expected to be removed from the list. With the FATF ‘grey list’ in mind, the Maltese authorities are extra cautious when dealing with complex structures and require enhanced due diligence from entities.

Despite these challenges, Malta remains a business-friendly jurisdiction, where foreign companies and investors have opportunities for growth in a stable political environment.

Where an unlimited range of opportunities opens up in a global trade market, Malta offers stability, peace of mind and opportunities for growth.

Dive into the data for Malta on the Complexity Insights dashboard.

68. United Kingdom (UK)

The UK has ranked in the ten least complex countries for the first time. One of the key areas is the country’s exit from the EU, or ‘Brexit’. Although at the time this created uncertainty for businesses incorporating and operating in the UK, in 2022 it seems that the dust is settling and the impacts of the UK’s departure are becoming clearer.

Since Brexit, the UK government has been actively working to become more relaxed and straightforward in its approach to business in order to remain attractive. For example, the UK takes a simple approach to business incorporation. There is no requirement for resident directors and set up can be achieved in as little as a day, meaning that international businesses can start full operations with ease. One aspect that can delay operation is setting up a bank account. This is driven by banks and financial institutions themselves and can create complexity for startups from other jurisdictions, such as the US.

Following Covid-19 and Brexit, the UK has been experiencing an inflation crisis and issues related to supply chains which has impacted business operation.

Furthermore, recent events in Russia and Ukraine have created some uncertainty in the UK. The government has been imposing new legislation and sanctions to impact Russia and support Ukraine. For example, the Economic Crime Bill, announced in February 2022, mandates the disclosure of foreign property ownership and aims to reduce the hiding of Russian money and assets in the jurisdiction

The UK is set to remain attractive in the future as the government looks for more ways to compete with its European neighbours following Brexit. One advantage to operating in the jurisdiction is a highly skilled talent base that is accustomed to working internationally and for foreign businesses.

The UK government has signalled that it is going to relax regulations, it is going to take away some of the onerous EU rules. What the method is and how we stay in the market again causes some uncertainty, but I think businesses can probably look forward to things getting a bit easier.

Dive into the data for the UK on the Complexity Insights dashboard.

69. Norway

Norway benefits from a high level of digitalisation and automation. This includes anything from filing reports to completing tax returns, or registering a company.

Incorporating a company within Norway is relatively quick, typically taking a few days. For Norwegian citizens or residents, the entire process can be done online, but foreign parties don’t have the same upfront digital access. What can take the most time for foreign nationals is paying in share capital, which requires the opening of a bank account. The process of opening a bank account is not automated and, as such, has a longer lead time, sometimes taking up to two months. This is mainly due to the internal KYC (Know Your Customer) and AML (Anti-Money Laundering) processes of banks being quite fragmented and involving a lot of back-and-forth correspondence.

Looking at Norway in contrast to other Nordic countries, in Finland an entity can be established without paying in share capital. This means that a bank account isn’t required and doesn’t pose an upfront obstacle.

Within the Nordic environment, agreements exist which allow quick cross-border operations between local businesses, via a Norwegian ID. However, outside of this environment it becomes a little more challenging for non-local parties.

Like most other European countries, Norway is due to implement a UBO register, expected in 2022 or 2023, making it one of the last countries to do so. This extra formality will add a small administrative complexity to companies operating in Norway, as they must annually file the UBO or controlling person.

Larger corporations and those in the financial sector will soon have to comply with ESG reporting. This will initially be a large change for companies as they must report the environmental impact of their assets.

I'm not sure that all the companies are really aware of ESG reporting yet, and how to manage it. Years one and two are a big change for many companies.

During the height of the pandemic, the Norwegian government put incentive plans in place to support the parts of society most affected. There was also a leniency regarding reporting, whether it was annual statements, tax reporting or pre-payment of taxes. All these measures have either already been reversed or soon will be. However, important changes predicted to outlive the pandemic are flexible working arrangements and the use of technology.

Dive into the data for Norway on the Complexity Insights dashboard.

72. Jersey

Despite boasting only 100,000 residents, Jersey has considerable international reach and influence. The jurisdiction tends to be an early adopter, engaging with new and trending areas of doing business such as FinTech and ESG legislation.

A key reason for the jurisdiction’s simplicity is the focus on digital processes during Covid-19. It’s now easier to contact relevant regulatory bodies and government organisations. Companies can incorporate in as little as two hours and there was a move away from ‘wet-ink’ signatures during the pandemic, as well as improvements to due diligence requirements. Before the pandemic, it was necessary to take a photocopy of a passport to a lawyer or accountant to certify the identity of owners and controller, which would then need to be mailed to Jersey. New technologies allow this to be performed remotely and digitally. The move towards digital marries with a focus on the technology industry, with more than 5,000 people employed in the digital sector.

Jersey has a well-established funds industry with great infrastructure in place. It makes up a significant, thriving part of the local financial services market - attaining a 20% growth in 2021. The popular ‘Expert Fund’ and ‘Private Fund’ regimes make it extremely easy to launch and run funds on the island.

Jersey has ESG disclosure rules in place and is a key jurisdiction in this space. Led by the Jersey Financial Services Commission, it’s also forged by investors and businesses seeking a more sustainable and ethical manner of doing business.

Despite all this there are still some complexities. For example, travel to the islands can be time consuming, with direct flights limited. Furthermore, due to low direct taxation, indirect duty can make the cost of living quite expensive, with property prices matching those of central London.

With its move towards digitalisation and ESG, Jersey is set to remain one of the most simple and attractive jurisdictions globally.

The jurisdiction has weathered the last couple of years exceptionally well. Significant investment by government, the regulator and industry has seen Jersey’s position on the global stage increase notably. It provides families, funds and corporates what they want: a safe, secure and responsive platform through which to invest and operate.

Dive into the data for Jersey on the Complexity Insights dashboard.

75. Denmark

Denmark is in the top three simplest jurisdictions again in 2022, with digitalisation a key factor.

Towards the end of 2020 Denmark created a digital ‘one stop shop’, with paperless incorporation and operation. This means that businesses now only require one login and portal to access various services. The tax authority also updated its homepage interface to make it more user friendly. With Denmark positioning itself ahead of the curve when it comes to digitalisation, it is now adjusting to drive simplicity, while some jurisdictions are only just beginning their digital journey.

Complexity in the jurisdiction is limited, but snags such as understanding rudimentary setup processes and Danish language barriers can occur. However, the government is focusing on adding more and more information in English, so this may shift towards greater simplicity in future. Contractual business operation that requires short-term set up can create some complexity as this requires a considerable amount of administration, despite the short operation time.

During the pandemic the government put support packages in place that included shorter time to qualify for reimbursements for employees who became sick due to Covid-19, salary compensation and compensation to help cover fixed costs for companies. It was helpful but did place an administrative burden on businesses to complete the necessary paperwork. There were also fines for incorrect completion of forms.

Emerging from the pandemic, there has been discussion about the possible postponement of annual reports. This would lead to more flexibility as previously there has been a hard deadline. This mirrors steps taken during the pandemic, such as postponing deadlines, loans and reimbursements.

Given this flexibility, Denmark has been able to make a strong recovery following the pandemic and is set to remain one of the simplest jurisdictions for years to come.

Where the government can, they will digitalise. They started putting all the authorities' access into one place, so when you go in, you don't need to have five different logins. On the tax authority's homepage, the interface has changed to make it more friendly. They're also starting to have more and more information in English. It's a slow process but we can see the changes.

Dive into the data for Denmark on the Complexity Insights dashboard.

The Global Business Complexity Index

The GBCI 2022 provides an authoritative overview of the complexity of establishing and operating businesses around the world. It explores factors driving the success or failure of international business, with a focus on operating in foreign markets, and outlines key themes emerging globally as well as local intricacies across 77 jurisdictions.

Explore the GBCI rankings, analysis and global trends to help you find your path to growth, amid the complexity of corporate compliance.

To download and read the report in full, visit the Global Business Complexity Hub today.

To find out more about the drivers of business complexity in the jurisdictions that matter to you, why not explore our Complexity Insights Dashboard?

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