Top European Countries for Freelancers and How to Handle VAT Without a Company 

Introduction  

Freelancing in Europe offers an incredible level of flexibility—whether you’re working with international clients or choosing your hours. However, navigating the intricacies of tax regulations, especially Value Added Tax (VAT), can be challenging. VAT compliance is essential but often complex, especially for freelancers working across borders within the EU. 

In this article, we’ll explore the top European countries for freelancing, provide essential tips on VAT management, and introduce Freeberry—an all-in-one invoicing platform that simplifies VAT calculations and helps you stay tax-compliant without the hassle of running a company. 

Understanding VAT as a Freelancer  

Value Added Tax (VAT) is a tax charged on goods and services within the European Union. As a freelancer, understanding VAT is crucial to ensuring compliance and maximizing your income. 

Key points to remember: 

👉 VAT is collected at each stage of the supply chain. Businesses act as intermediaries, collecting VAT from customers and passing it on to the government. 

👉 VAT compliance is mandatory in most EU countries. Failure to comply can result in penalties and fines. 

👉 Whether VAT applies to you depends on your specific circumstances. Factors such as your location, income, and the nature of your services will determine if you need to register for VAT. 

Calculating VAT in Estonia: A Simple Example 

Let’s say you’ve decided to start a small business in Estonia and want to ensure you’re VAT-compliant. Here’s a basic example to illustrate VAT calculations: 

🟣 Scenario 1: You’re a freelancer selling services to another Estonian business that is also VAT-registered.  

VAT Rate: The standard VAT rate in Estonia is currently 22%. 

Calculation:  

Base Amount: The value of your service (e.g., €500). 

VAT Amount: Base Amount * VAT Rate (€500 * 0.22 = €110). 

Total Invoice Amount: Base Amount + VAT Amount (€500 + €110 = €610). 

In this example, you would include €610 on your invoice, with €500 representing the service fee and €100 representing the VAT.  

Note: VAT rates can change, so it’s always advisable to consult the latest Estonian tax regulations for the most accurate information. 

🟣Scenario 2: You’re a freelancer selling services to another not VAT registered individual:  

In this case, the same logic applies as well as the same tax rate of 22%.  

🟣Scenario 3: Selling Services to a Non-Estonian VAT-Registered Business 

If you’re providing services to a VAT-registered business located outside of Estonia, you typically wouldn’t charge VAT on your invoice. Instead, you would include the following information: 

0% VAT Rate: Indicate that a 0% VAT rate applies to the transaction. 

Recipient’s VAT Number: Provide the VAT number of the business you’re selling services to. 

This approach is known as the reverse charge mechanism, where the recipient of the service is responsible for paying VAT in their own country. 

🟣Scenario 4: Selling Services to a Non-Estonian Non-VAT-Registered Business 

If you’re providing services to a business that is not VAT-registered and located outside of Estonia, you would typically apply the standard Estonian VAT rate of 22% to your invoice. This is because the VAT is paid in the country where the service is provided (Estonia). 

In this scenario, you would include the VAT amount on your invoice and collect it from the customer. 

It’s important to note that specific VAT rules can vary depending on the nature of the services, the countries involved, and other factors. 

🟣Scenario 5: Selling Services to a Non-EU Business 

If you’re providing services to a business located outside of the European Union, your services are considered exports. In this case, you would typically apply a 0% VAT rate to your invoice. The VAT will be paid in the country where the services are consumed. 

By applying a 0% VAT rate, you’re effectively exporting your services and avoiding the need to collect and remit VAT in Estonia. 

🟣Scenario 6: Selling Services to a Non-EU Individual 

If you’re providing services to an individual who is not located within the European Union, you would typically apply the standard Estonian VAT rate of 22% to your invoice. This is because the service is provided within Estonia. 

In this scenario, you would include the VAT amount on your invoice and collect it from the customer. 

The European (EU) Countries VAT rates:  

The Estonian example represents the logic of tax regulations in the European Union. If you are curious about the benefits of running a company in Estonia, consider reading this article where we outline the main benefits and how to do it.  
Now let’s look at the VAT rates in different European countries:  

This table provides a complete list of European countries and their VAT rates. We can say that Hungary, Croatia, Denmark and Sweden have the highest VAT rates: 27% – for Hungary, and 25% for the rest of the countries mentioned above.  

VAT is a sufficient tool for the government to raise its revenue. VAT is considered regressive because low-income households tend to spend a larger portion of their income on consumption, meaning they may bear a higher tax burden relative to their income compared to wealthier individuals. However, wealthier individuals still typically pay more in absolute terms because they spend more overall. It’s not that the wealthiest pay “less taxes” in absolute terms but rather that the tax impacts their income proportionally less. 

However, EU countries often apply reduced VAT rates or exempt certain goods/services for reasons like: 

🔹Helping lower-income households, since they spend more on essentials (like food or public transport). 

🔹Encouraging the use of beneficial products like books or clean energy. 

🔹Supporting local industries like tourism. 

Are you finding VAT invoicing calculations as a freelancer overwhelming? 

We get it—managing your creative work, time, and bookkeeping all on your own can be quite a challenge. That’s why we developed Freeberry—a service designed to simplify your freelancing experience.  

Whether you want to establish a company or avoid the hassle altogether, Freeberry streamlines the invoicing process, automatically calculating VAT for you. It keeps all your invoices in one organized space, helps you track payments, and even reminds you when it’s time to follow up with clients. 

If you’re offering services to clients in different EU countries, Freeberry simplifies the process by identifying the company and automatically calculating the correct VAT. If the company is VAT-registered in their country, Freeberry adjusts the rate to 0% automatically. 

Once payment is received, Freeberry transfers the funds to your account within 12 hours, meaning you could receive the payment the same day or within 1-2 business days, depending on your bank’s policies. 

The platform also stores your client information, making it easy to generate future invoices instantly. 

TOP Countries for Freelancing in Europe in 2024 

Europe offers numerous destinations that are ideal for freelancers based on personal income tax, corporate tax, and social security contributions. Let’s take a look at the top countries for freelancing: 

1. Hungary 

Hungary offers a vibrant culture, a low cost of living, and attractive tax benefits. Its income tax is one of the lowest in Europe, making it an appealing destination for freelancers. 

• Personal income tax: 15% 

• Corporate tax: 9% 

• Social security tax: 13% 

2. Estonia 

Known for its digital government services and tech-friendly environment, Estonia is perfect for freelancers seeking efficiency. With an advanced digital infrastructure, freelancers can manage everything from VAT to invoicing online. 

• Personal income tax: 20% 

• Corporate tax: 20% 

• Social security tax: 33% 

3. Czech Republic 

The Czech Republic offers a central European location, making it ideal for freelancers who want access to multiple markets. With relatively low tax rates, it’s an appealing option for digital nomads. 

• Personal income tax: 23% 

• Corporate tax: 19% 

• Social security tax: 24.8% 

4. Cyprus 

Cyprus attracts many freelancers with its warm climate, affordable living costs, and scenic landscapes. The island’s tax policies are designed to appeal to both individuals and businesses. 

• Personal income tax: 35% 

• Corporate tax: 12.5% 

• Social security tax: 17.6% 

5. Croatia 

Croatia’s blend of rich history, beautiful coastlines, and modern infrastructure has made it an increasingly popular destination for freelancers. Though personal income taxes can be high, the country’s overall quality of life is a major draw. 

• Personal income tax: 35.4% 

• Corporate tax: 18% 

• Social security tax: 16.5% 

Conclusion: Simplify Your Freelancing Journey with Freeberry 

Managing VAT, invoicing, and taxes as a freelancer can feel overwhelming, but it doesn’t have to be. Freeberry is here to simplify the process. Whether you’re a freelancer working with international clients or local businesses, Freeberry automates VAT calculations, ensures compliance, and organizes your invoices in one place. 

With Freeberry, you’ll spend less time on paperwork and more time doing what you love—whether it’s working on creative projects or growing your freelance business. Say goodbye to the hassle of managing VAT and hello to an easier, more efficient way to manage your freelance career. 

Ready to simplify your freelancing experience? Try Freeberry today and enjoy stress-free invoicing, automated VAT calculations, and more. Sign up now absolutely free of charge!