How Justworks Supports Small Businesses Expanding to Europe

For US small businesses with international ambitions, expanding into Europe offers an economically robust region, highly skilled talent pools, and diverse market opportunities. 

Europe boasts a population of over 740 million across 44 counties. The European Union (EU) alone encompasses 27 member states with a combined GDP exceeding $18 trillion in 2023, making it one of the largest economic blocs globally. 

However, you will want to ensure that you have the right support in your chosen country and crucially, support from a partner that will be vested in your success. Unlike the relatively uniform federal and state laws in the US, Europe comprises multiple countries, each with its own legal framework governing employment. 

With the right expansion strategy and hiring support from experienced EOR partners like Justworks, small businesses can overcome the complex regulatory environment across the region and thrive in Europe’s dynamic and diverse landscape.

Why Choose Europe? 

Europe continues to hold strong appeal for US small businesses looking to establish operations overseas. With easy access to the rest of the world, highly skilled talent pools, and a hub for innovation, there are many benefits to entering the European market for businesses looking to tap into a thriving market and establish a global presence.

• Highly skilled talent pool: Europe has a highly-skilled, diverse workforce with a wide range of backgrounds, perspectives, and experiences. Many European workers  are also proficient in English, which makes them extremely valuable talent and an asset for growing international businesses.  

• Cost-effective hiring: Cost of living in many European countries is relatively low compared to the US, which can help lead to lower operational costs for small businesses. These cost saving benefits can make Europe a very attractive location to maximize budgets while expanding international presence.  

• Access new markets: Expansion into Europe extends your business’ global footprint, helping you deliver your product or services to a large new group of customers. Many European markets benefit from open borders extending your reach throughout the entire continent. This, in turn, allows you to rapidly develop new customer bases. 

• Strong legal and regulatory framework: Across Europe there is a robust legal framework that provides clarity and stability for small businesses, with comprehensive regulations and directives that govern various aspects of business operations. The mandatory ‘General Data Protection Regulation’ (GDPR) is one of the toughest privacy and security laws in the world. 

• Innovation and research: Europe is a hub for innovation, with seven nations (Germany, the Netherlands, Denmark, Sweden, Finland, Austria, and Switzerland) among the world’s ten most innovative economies. Europe is also home to some of the world’s leading research institutions and universities, which contribute significantly to the continent’s innovation landscape.  

• Favorable time zone: Europe spans multiple time zones, so expanding your business to this continent allows you to set up in the middle between Asia and the Americas, ensuring a good overlap with almost every time zone and making it easy for globally-distributed employees to stay connected. 

There are many benefits to hiring talent in Europe, but it also comes with complex employment requirements. European labor laws cover a vast area, from holiday leave and sick pay to employee safety and training. 

Staying compliant with local employment laws can prove challenging for those who are not prepared. Justworks  takes care of all these HR and compliance components, while you retain full control over day-to-day operations and team decisions of your European-based workforce. 

Where in Europe to Expand?

With access to the European Economic Area being a great opportunity for growth, plus with the region being a place of great talent in terms of workforce, choosing the right European country is vital for your business to flourish. Here’s are some of the major countries you should be looking at: 

• Germany: As the largest economy in Europe, Germany should be a key target for anyone expanding their business. Cities like Berlin and Munich host a vibrant start-up scene and are hotbeds of new talent. The country’s skilled workforce and its commitment to innovation ensures that small businesses can thrive in competitive industries.

• France: France’s strategic geographical location and high-quality transport infrastructure allow businesses easy access to many geographical regions, including the Middle East and Africa. Fostering a pro-business environment, a sophisticated market and a highly educated workforce, France is an attractive place for a small business to expand their international workforce.

• Netherlands: The Netherlands collaborative workplace culture, strong legal framework, and diverse talent pool enhances the Netherlands business ecosystem. Over 90% of people in the Netherlands can speak English, creating a secure foundation for establishing a remote work hub for US small businesses.

• Denmark: A socially progressive country with a strong economy, Denmark has a well-educated, skilled, and motivated workforce, making it a great source of top-tier talent. Denmark offers a business-friendly environment, and is renowned for its innovative and creative culture, making it an ideal place to hire forward-thinking talent who can bring fresh ideas to your business. 

• Sweden: Sweden stands out for its high quality of life. Coupled with a highly educated workforce, Sweden presents an attractive landscape for companies looking to expand internationally. Additionally, the country’s commitment to research and development is evident in its investment in education and technology, resulting in a thriving tech scene, particularly in cities like Stockholm.

• Ireland: Ireland has one of the most educated workforces in the world. Thanks to its quality education system, the country has a reputation for developing the talent that businesses need to support their operations. Plus, its location in the Greenwich Mean Time Zone (GMT) means a favourable time zone, and easy access of western and eastern markets during the working day.

• United Kingdom: The UK boasts one of the strongest economies in the world, has a good working relationship with the US, and they share a lot of cultural similarities, so is a great option when looking to expand internationally. You can find our latest blog on expanding into the UK here.

Expanding across borders is no easy task — especially for small business owners. With each country’s unique business landscape, labor laws and compliance obligations, expanding into Europe necessitates careful consideration and strategic planning. Otherwise, you risk sinking valuable investment capital and slowing long-term growth.

There are three ways to hire European-based employees: set up a legal entity in the country, partner with an EOR, or hire independent contractors.

Which Entry Mode Works Best?  

The choice of entry mode depends on various factors such as the level of control you desire, the level of risk you are willing to take, and the level of investment you can afford to put in. You should think about your specific business needs and the resources available to you before deciding on the most appropriate entry mode. 

Opening a subsidiary in Europe can be a challenge. Certain countries require a set amount of capital before opening a branch. You might also need to set up an international bank account to process certain types of payments, such as paying employees and reimbursing expenses.

Businesses in Europe also need to comply with several anti-money laundering laws. This includes implementing Know Your Customer (KYC) and Know Your Business (KYB) protocols. Without these protocols in place, it will be difficult for your business to establish a foothold in Europe.

If your primary goal is to gain access to highly-skilled talent, opening a local entity may not be the most logical and cost efficient way for you to achieve this. For a small business with less than 100 employees or  companies testing out new markets, choosing between establishing a local entity or partnering with an EOR provider is a critical decision that they must make before expanding internationally. 

For small businesses that are looking for speed, cost efficiency, and risk mitigation, partnering with an EOR provider, or maybe first hiring an independent contractor, could be the better choice to test out a new market without making a significant cost and time commitment. 

Grow Your Team in Europe with Justworks EOR

Justworks’ EOR services help small businesses hire, onboard, and pay talent in Europe with high-touch, localized support. We’ll equip you with everything you need to bring on and manage employees across Europe, and you'll save the time and costs of setting up a local entity.

Ready to start hiring talent in Europe with Justworks EOR? Here’s how you can expect the process to look: 

1. You’ve found someone in a European country you’d like to bring into your team.

2. Partner up with Justworks EOR and be assigned a dedicated support team.

3. Begin onboarding employees in your chosen European country.

4. Support your new employee’s onboarding, while Justworks manage the ongoing. payroll, benefits, compliance, and other local HR processes for your growing hub,

Our team of local HR and compliance experts will be there to support your full-time employees in the European region from onboarding to offboarding and everything in between. We handle the day-to-day HR tasks so you can focus on what matters: managing your team and scaling your business.

Ready to learn more about European expansion? 

Justworks’ global EOR is the solution for small businesses looking to easily hire talent in countries where they don’t already have a legal presence. With Justworks, you’ll have a dedicated partner to handle the operational side of international expansion, so you can focus on growing your team and your business. 

Learn more about how you can hire and onboard European-based talent through Justworks. Get started today.