Expanding Your Business in Europe in 2025: Trends & Best Practices

Introduction

Europe has long been a beacon for global business expansion, offering diverse markets, skilled talent pools, and a robust regulatory framework. The European business landscape continues to evolve, making it a prime destination for companies planning to scale their operations internationally.

From the steady recovery post-pandemic to new opportunities driven by digitalisation and sustainability initiatives, businesses are navigating a dynamic environment. The key lies in understanding emerging trends, addressing regulatory challenges, and implementing strategies that align with local markets while leveraging global efficiencies.

Emerging Trends in the European Business Landscape

Source: drobotdean on Freepik

1. Remote Work vs. Return to Office Dynamics

While remote work remains a strong preference for many employees, 2025 is seeing a balanced shift toward hybrid models. BCG’s Decoding Global Talent 2024 Report indicates that 42% of European job seekers would turn down a job offer if the employer does not offer options to work remotely. Thus, companies are investing in creating flexible yet engaging workplace experiences to attract and retain top talent.

For example, Deutsche Bank has implemented stricter office attendance policies in Germany, requiring employees to work on-site at least three days a week. This reflects a shift towards more structured hybrid work policies while still offering employees some degree of flexibility in their work arrangements.

2. The Rise of Digital Nomad Visas

Several European countries, including Spain and Estonia, have embraced digital nomad visas, catering to the growing demand for location-independent work. This trend underscores Europe’s openness to attracting global talent and fostering innovation. With nine of the world’s top 10 best countries for remote work located in Europe, the region is at the forefront of offering digital nomad visa opportunities.

3. Sustainability and Green Business Practices

Sustainability is no longer optional. European markets are leading in green initiatives, with consumers and businesses prioritising eco-friendly products, services, and operations. Compliance with sustainability regulations can also open doors to incentives and partnerships.

Navigating Regulatory and Compliance Challenges

Source: stockexpert on Freepik

Europe’s diverse regulatory landscape can be daunting for businesses, but staying informed and prepared ensures smoother operations. Key areas to consider include:

1. New and Existing Labour Regulations

Most countries in Europe like Spain, Germany, and the Netherlands frequently update labour laws and tax policies. For example, Germany’s new tax framework emphasises transparency, while Spain’s labour reforms aim to improve worker protections. Staying ahead of changes, such as those listed below helps business prepare for the year(s) ahead:

• • Spain has recently enforced Digital Time Tracking with effect from 2025. This is mandatory for all companies in Spain, replacing manual timekeeping methods. This new regulation aims to increase transparency and efficiency in tracking working hours, and companies must adopt digital systems to avoid penalties. Robust cloud-based HR Management Systems like BIPO HRMS offer companies a seamless way to comply with these requirements by automating time tracking and ensuring accuracy while staying compliant with labour laws.
  • In the UK, The Employment Rights Bill was proposed in October 2024 and signals one of the most significant employment reforms in a century for the UK. The bill indicates a broader trend toward prioritising employee well-being, reinforcing employee rights, and fostering positive workplace cultures, with increased focus on flexibility, fairness, and well-being. While it is not expected to come into effect until at least 2026, several key provisions currently in the parliamentary process may offer insights into the future direction of employment law and HR practices in the UK, allowing companies to plan and develop strategies to stay compliant.
  • Updates to the Minimum Wage in other European countries include:
    

    The Netherlands

    Germany

    Minimum hourly wage for employees aged 21 and older will increase by 2.75%, rising from €13.68 to €14.06 per hour. Minimum wages for youth (ages 15 to 21) will also be adjusted accordingly and are available on the Dutch government’s website.

    Statutory minimum wage will increase to €12.82 gross per hour, representing a 41 cent increase from 2024. Mini-job earnings cap will increase from €538 to €556 gross, with the lower limit for midi-jobs set at €556.01. Upper threshold for the transitional earnings range will remain fixed at €2,000 gross per month, allowing employees within this bracket to continue enjoying reduced social security contributions.

    For a more detailed breakdown of labour regulations updates across Europe, click here.

2. Managing GDPR and Data Protection

• Data privacy remains a cornerstone of European compliance. Adhering to the General Data Protection Regulation (GDPR) guidelines is not only mandatory but also critical for building trust with local customers and stakeholders. Implemented in 2018, GDPR is a global benchmark for data protection, mandating how businesses manage personal data transparently and securely. Though an EU law, GDPR applies to any organisation handling EU citizens’ data, regardless of location.
• Non-compliance risks severe fines (up to €20 million or 4% of global turnover) and reputational damage.
• Key principles include transparency, data protection by design, and upholding individual rights like access, erasure, and data portability. For non-EU entities, obligations extend to appointing EU representatives and meeting strict international data transfer standards, per the Schrems II ruling.
• Using Spain as an example, the Agencia Española de Protección de Datos (AEPD), Spain’s data protection authority, enforces GDPR alongside national laws like Organic Law 3/2018, which enhances digital privacy.

Key Considerations for Global Business Expansion in Europe

Source: Freepik

Expanding into Europe requires a mix of strategic planning and operational readiness. Here are the key factors to address:

1. Compliance

Navigating local labour laws, tax regulations, and employee rights ensures smooth business operations. Non-compliance can lead to hefty fines and reputational damage.

2. In-House vs. Outsourcing

Deciding whether to build an in-house team or outsource functions is critical. Outsourcing payroll, HR, and compliance to a vendor like BIPO can significantly reduce administrative burdens while ensuring adherence to local laws.

3. Payroll Systems: Centralised vs. Decentralised

A centralised payroll system offers consistency, while decentralised models allow for localised flexibility. Assess your business’s needs to choose the right approach.

4. Simplifying Onboarding

Managing talent across multiple countries can be complex. Leveraging technology like BIPO HRMS – Personnel Hub – streamlines onboarding, ensuring a seamless experience for both employees and employers.

5. Building Strong Partnerships

Local partnerships can accelerate your market entry. Collaborate with trusted vendors, government agencies, and industry associations to establish a strong foothold.

6. Overcoming Cultural and Operational Barriers

Cultural differences can impact communication, decision-making, and workplace dynamics. Invest in cultural training and localised strategies to build strong, cohesive teams.

Source: peoplecreations on Freepik

Stay ahead of the curve with BIPO! Connect with our in-country experts to learn how our HR Management System, global payroll outsourcing, and Employer of Record (EOR) service can simplify workforce management and position your organisation for success in Europe.