Top 5 Countries for IT Startup Expansion in 2025

How to choose the right country for the registration of a company? It`s one of the most critical decisions that an IT startup`s CEO can make. We`re going to answer all your questions and speak up about your concerns, so stay tuned!

The jurisdiction determines the legal, financial, and operational environment in which a business operates, directly impacting its ability to scale, attract investors, and comply with local and international regulations. For IT startups, where intellectual property protection, access to markets, and tax efficiency are key factors, this decision becomes even more pivotal. 

2025 brings new opportunities and challenges, so the importance of strategic jurisdiction selection becomes even more pronounced. The right jurisdiction is not just a compliance issue, but a critical factor in achieving long-term growth and sustainability. 

In this article, we will explore 5 key jurisdictions that are particularly favorable for IT startups in 2025. Each of these jurisdictions offers unique advantages in terms of tax structures, regulatory environments, and business-friendly policies, making them attractive destinations for startups looking to establish or expand their operations.

Cyprus

Cyprus, a member of the European Union, serves as a gateway to the European market, offering IT startups significant opportunities for expansion and growth. With a corporate tax rate of 12.5%, one of the lowest in Europe, Cyprus is particularly attractive for businesses seeking tax efficiency.

A Cyprus company may also be attractive due to the absence of withholding tax on dividends, interest or royalties paid to non-residents. However, while dividends are not taxed at the corporate level, they are subject to personal taxation.

Cyprus provides additional tax benefits through its IP Box Regime, which allows up to 80% of qualifying profits from intellectual property to be exempt from taxation. This can reduce the effective tax rate to as low as 2.5%, making the jurisdiction highly advantageous for IT companies involved in research, development, and intellectual property management.

Confidentiality is another key benefit of establishing a company in Cyprus. The names of ultimate beneficial owners and shareholders are not publicly accessible, which provides a higher degree of privacy compared to other EU jurisdictions.

Additionally, all official correspondence and business operations in Cyprus are conducted in English.

Cyprus’s extensive network of double taxation treaties (DTTs) with numerous countries minimizes tax liabilities for cross-border operations, further reinforcing its position as a strategic hub for international companies.

Estonia

Estonia, another member of the European Union, offers IT startups unparalleled access to the EU single market, a significant advantage for businesses aiming to expand within Europe. What sets Estonia apart, however, is its pioneering approach to digital governance and business operations. 

Estonia’s reputation as a digital leader is reflected in its e-Residency program, which allows individuals from around the world to register and manage businesses entirely online. By obtaining an e-Residency digital ID, entrepreneurs can access a suite of secure online services, including company registration, banking, and tax filing. The fastest company registration achieved is an impressive 15 minutes and 33 seconds. For those without e-Residency, company registration can still be completed relatively easily through local notaries or legal representatives.

The Estonian tax system is another standout feature, designed to encourage reinvestment and business growth. Corporate income tax (CIT) is levied only on distributed profits, such as dividends or fringe benefits, while reinvested profits remain untaxed. Starting from January 1, 2025, the CIT rate will increase to 22%.

Notably, there is no WHT on dividends. For royalties paid to non-residents, the WHT rate is generally 10%, but reduced rates or exemptions may apply under Estonia’s extensive network of DTTs. Payments to associated companies within the EU and Switzerland that meet specific criteria are exempt from WHT on royalties altogether.

Moreover, as an EU member, Estonia adheres to stringent regulatory standards, ensuring compliance with international norms and fostering a stable business environment.

United States of America (Delaware state)

The US offers great opportunities for businesses, thanks to its sheer market size and diversity. Each state operates under its own regulations and incentives, allowing businesses to select a location that aligns with their specific needs. Among the states, Delaware has emerged as a leading choice for corporations and LLCs due to its business-friendly legal framework and other notable advantages.

Delaware is home to over 2 million registered businesses, including 67.6% of Fortune 500 companies. Its reputation as a corporate haven provides a level of credibility and trust that is invaluable for startups. Investors, particularly angel investors and venture capital funds, often prefer companies incorporated in Delaware.

Companies registered in Delaware but not conducting business within the state are not subject to state corporate income tax. Instead, LLCs in Delaware pay a fixed annual franchise tax. However, federal tax obligations still apply, as all companies in the U.S. must adhere to federal tax regulations. The federal corporate income tax rate in the United States is a flat 21%. However, it does not apply to pass-through entities, such as LLCs, partnerships, and sole proprietorships. In such a case, the income «passes through» to the owners or members, who report it on their individual tax returns.

Delaware does not require the disclosure of beneficial owners during the company registration process, which ensures a higher level of privacy and anonymity for business owners.

Moreover, Delaware is renowned for its advanced legal system tailored to corporate law. The state's Court of Chancery specializes in resolving corporate disputes, providing efficient and transparent resolutions. This specialized court, coupled with an extensive database of legal precedents, ensures that business disagreements are addressed swiftly and effectively.

United Arab Emirates

The UAE has emerged as a global hub for business, particularly appealing to IT startups due to its favorable tax policies and strategic location. The UAE's robust infrastructure, access to global markets, and business-friendly environment make it a highly attractive jurisdiction for companies seeking expansion opportunities in 2025. As a robust business hub for the Middle East and beyond, the UAE offers opportunities for opening local bank accounts and accessing global markets. The removal of the UAE from the FATF grey list in February 2024 underscores the country's commitment to improving financial transparency. 

The UAE is home to over 40 free zones, each offering unique advantages tailored to specific industries, such as technology, logistics, and finance. These zones allow 100% foreign ownership, full profit repatriation, and exemption from import and export duties. Businesses can also benefit from streamlined administrative procedures, sector-specific infrastructure, and networking opportunities within these zones.

A standard corporate tax rate of 9% applies to most companies. However, for businesses operating within the UAE's numerous free zones, profits from qualifying activities are generally exempt from corporate tax, allowing startups to maximize their earnings. Moreover, there is no personal income tax, which benefits employees and business owners alike. The absence of VAT on many goods and services also adds to the financial appeal.

The Emirates also maintain confidentiality for business owners, as company registers do not disclose information about beneficial owners or shareholders to the public.

Establishing a company in the UAE can also provide access to capital and funding opportunities. The country boasts a well-developed financial sector, featuring numerous banks and investment firms offering a wide array of financial products and services. Entrepreneurs and businesses can tap into venture capital, private equity, and other financing options, fostering growth and innovation.

United Kingdom

The United Kingdom stands out as another reputable jurisdiction for business incorporation, offering a robust legal and regulatory framework. Rooted in the principles of English law, the UK’s legal system is renowned for its predictability and reliability, providing international businesses with a stable foundation for operations.

Incorporating in the UK enhances a company’s reputation, signaling adherence to high business ethics and global standards. This credibility is especially appealing to international customers, investors, and partners. Additionally, the UK’s stable political and banking systems further solidify its position as a secure and reliable business environment.

The UK offers one of the most straightforward and cost-effective company registration processes globally. Unlike many jurisdictions, there is no need for notarization during incorporation, streamlining the procedure significantly.

The corporate tax regime is designed to be competitive and flexible. The standard corporate tax rate is 25%, but businesses with profits below £50,000 are subject to a reduced rate of 19% (small profits rate). For profits between £50,000 and £250,000, marginal relief applies, resulting in a sliding scale of taxation.

Moreover, most foreign and UK dividends received by UK companies are exempt from corporation tax, provided certain conditions are met. With an extensive network of double taxation treaties, businesses benefit from reduced tax liabilities and enhanced transparency in cross-border transactions.

Bonus for Cryptocurrency Lovers

If you plan to engage in cryptocurrency-related activities, such as issuing your own tokens or mining cryptocurrencies, the British Virgin Islands could be a viable jurisdiction to consider. The BVI currently does not regulate these activities, offering businesses operational flexibility and a less restrictive environment. 

As an offshore jurisdiction, the BVI provides significant tax advantages. Companies registered in the BVI are not subject to corporate tax obligations, making it an appealing option for those seeking a tax-efficient setup. This combination of minimal regulation and favorable tax policies positions the BVI as a strategic choice for businesses in the cryptocurrency sector.

Additional Insights from Lawyers

In today’s interconnected global economy, expanding internationally is no longer just an option but often a necessity for companies aiming to remain competitive. Here are some additional information what to consider while making the decision: 

• Establishing a presence in a foreign jurisdiction can open doors to opportunities that are often inaccessible domestically. Businesses can benefit from preferential trade agreements, easier access to funding, and enhanced credibility with international customers and partners. 

  
  

• A critical aspect of international expansion is building an effective corporate structure. A well-thought-out structure not only optimizes tax efficiency but also supports operational agility and protects against risks. Early decisions in this area can save time and resources down the line.
  

• Countries often tailor tax breaks, subsidies, or grants for companies in high-priority industries. Identifying these opportunities can significantly reduce operating costs and enhance profitability.
  

• Different jurisdictions have varying rules for licensing, reporting, and governance. Ignoring or misunderstanding requirements can lead to penalties, operational delays, or reputational harm. 
  

• As businesses grow, data privacy and security become more critical. With heightened global concerns about data handling, compliance with regulations like the EU’s GDPR is not optional—it’s a necessity.
  

Finally, expansion in 2025 isn’t just about entering new markets — it’s about doing so with a strategy that aligns with global trends, business objectives, and future opportunities.

Unique opportunity for Ukrainian businesses that are eager to expand

Many Ukrainian IT businesses are ambitious, and the process of expansion is challenging, full of risks and concerns. Should you have numerous queries, particularly the fundamental question of "HOW TO DO THAT?", rest assured that we are well-positioned to offer comprehensive assistance and empower you to make informed decisions!

If you are a Ukrainian startup looking to expand in 2025, we are pleased to announce a free webinar  on international business structuring on January 22nd. The main objective of this event is to address all your questions and concerns regarding the tax burden, reputational risks, requirements and pitfalls of the most popular and attractive countries. 

Conclusion

If you are interested in learning about legal insights on choosing a country to grow your business internationally, we invite you to register for our webinar. You can register via the following link, and we`re looking forward to welcoming you on this empowering journey! In 2025, it`s your signal for a successful expansion strategy that considers emerging trends! Build an effective legal framework to transform the global marketplace with your company's presence with us!