Comparing low-cost European countries with Portugal and Spain

Written By Luísa Amorim

Europe is a goldmine for tech companies looking to expand, relocate, or establish new hubs––and even for employing remotely. The continent offers endless possibilities, from vibrant startup ecosystems (like Lisbon’s) to a diverse pool of talented professionals. 

But not all countries are the same.

Some have unbeatable costs, while others are perfect for accessing global markets. We must also consider details like the cost of living and the number of business and job opportunities.

That’s why we’ll compare Portugal and Spain (two rising stars in the tech world) with other low-cost European locations like Poland, Bulgaria, and Romania—plus established players like Ireland, Germany, and the Netherlands.

If you're weighing your options for expanding your tech company, congrats. You’re in the right place.

What you’ll learn:

  • Low-cost European countries vs. Portugal and Spain: an overview

    Portugal: the Atlantic gateway
    Spain: vibrant and versatile
    Eastern Europe: affordable, tech-savvy, but less stable
    Western Europe: the established players
    United Kingdom: the post-Brexit instability

  • Cost of living and salaries

    Living costs
    Salaries for tech talent

  • The tech scene and startup ecosystems

    Portugal: it just keeps working wonders
    Spain: the bigger neighbor
    Eastern Europe: the tech outsourcing champions
    Western Europe: experience comes with a price

  • The talent pool

    Portugal: a skilled and affordable workforce
    Spain: universities play a crucial role
    Western Europe: a premium talent market

  • So, what’s the final take?

Boat crossing the river Tejo at sunset

Low-cost European countries vs. Portugal and Spain: an overview

When choosing a location for your tech business, Europe has an exciting mix of options. On the one hand, you find destinations like Portugal and Spain, known for their sunny vibes, friendly people, and booming tech scenes. On the other hand, countries like Poland, Romania, and Bulgaria promise competitive costs and highly skilled professionals— so they remain in the top choices for some time now. 

Let’s go through them one by one.

Portugal: the Atlantic gateway

Portugal is a small yet dynamic country in southern Europe, packed with history, innovation, and opportunity. Lisbon and Porto are key tech hubs. At the same time, the Algarve and Madeira are attracting an increasing number of remote workers and digital nomads every year. 

But why does this happen? Because Portugal combines:

  • A strategic location connecting Europe and the Americas

  • A booming startup ecosystem hosting global events like the Web Summit

  • Affordable living costs compared to Western Europe

Portugal also ranks 7th as the safest and most peaceful country in the world, making it a favorite among digital nomads, expats, and tech companies, such as Alten, BMW, Hitachi Vantara, Springer Nature, CI&T, Cloudflare, Salsify, Dashlane, Bose, and Google.

Spain: vibrant and versatile

Next door to Portugal, Spain offers a mix of cultural richness and tech innovation. Barcelona, Bilbao, Valencia, Madrid, and Malaga lead the way with their thriving ecosystems—which is no surprise given the benefits the Startup Law guarantees foreign businesses.

But there’s more setting Spain apart:

  • Access to talent: Spanish universities produce super-skilled engineers and developers, and 3 of them are set to qualify as among the top 200 universities in the world by 2025.

  • A lifestyle that’s hard to resist: You can’t say no to the Mediterranean weather, delicious tapas, and buzzing nightlife, can you?

  • Competitive salaries: Especially when compared to countries like Ireland or Germany (where the average annual wage doubles), making it a must-watch country for tech companies.

Spain is also a top choice for remote workers and companies seeking European access. Something backing that up is the Beckham Law, which grants tax benefits to foreigners.

Eastern Europe: affordable, tech-savvy, but less stable

Countries like Poland, Bulgaria, and Romania are known for their low costs and strong tech talent. These countries have become the go-to destinations for IT outsourcing and software development:

Eastern Europe is ideal for companies focused on cost-efficiency without compromising quality. However, we can’t forget where these countries are: close to war zones—which means that betting on those may seem a good choice but only in a (very) short term, as you never know what can happen the next day.

Western Europe: the established players

In contrast, countries like Ireland, Germany, France, and the Netherlands are pricier but offer unmatched infrastructure and access to global markets. The competition is real and gets tighter as years go by:

  • Ireland: Its most common corporate tax rate (12.5%) is highly competitive. Not to mention, it’s a thriving tech hub that attracts global giants like Google and Facebook.

  • Germany: Berlin and Munich boast robust economies and world-class talent but high living costs. The German capital is 31.7% more expensive than Lisbon, while Munich ranks even higher—43.7% when compared to the Portuguese capital.

  • France: The country strongly focuses on research and innovation, particularly in AI and fintech, but labor laws can be restrictive, and English proficiency isn’t the best.

  • Netherlands: Amsterdam leads the way with its multicultural workforce and ease of business. “There are approximately 1,700 start-ups and scale-ups in Amsterdam, and the tech industry accounts for around 250,000 jobs in the country, which is about 13% of the Dutch economy” as Diversity in Tech states.

These countries appeal to companies looking for scale and stability rather than staying on a budget.

United Kingdom: the post-Brexit instability

Is that what’s going on in the UK? Or is it just the perception people and businesses get in Europe? 

The post-Brexit UK still holds its place as a major tech player, especially in London. However, costs remain high, and navigating immigration policies can be a nightmare. Still, the UK offers:

Each country has its strengths and weaknesses, and any decision to expand must rely on your business goals. The truth is Portugal and Spain shine for lifestyle, security, and cost-effectiveness; Eastern Europe for affordability and tech talent, while Western Europe is ideal for scaling and market access. The ultimate choice will depend on what matters most to your business: cost, talent, or proximity to important markets.

Cost of living and salaries

Regarding costs, Portugal and Spain strike a sweet balance. They’re affordable enough to keep budgets under control but with the perks of a Western European lifestyle. To see how they stack up against other countries, we’ll look at 2 key factors: living expenses and salaries for tech talent.

Living costs

Living costs can make or break a company's decision to relocate or expand––not only because of its founders but also because of the team they want to build in the country. Here's how Portugal, Spain, and other European countries compare essential factors like housing, food, monthly rent, and transport (according to Numbeo and Expatistan):

  • Portugal: Lower rents and food prices make it one of the most affordable Western European countries, not to mention the competitive salaries in the tech area.

  • Spain: Slightly pricier than Portugal, especially in Madrid or Barcelona, but still cheaper than Germany or the Netherlands.

  • Eastern Europe (e.g., Poland, Bulgaria): The go-to choice for cost efficiency, with rents and meals often half the price of Western Europe.

Salaries for tech talent

Salaries are where the differences between countries get interesting. Based on Robert Walters' reports, here’s how tech roles compare across Europe for mid-level professionals (3-7 years of experience):

So, what can we conclude from these numbers?

  1. Portugal and Spain: Salaries are competitive for Western Europe but lower than tech hubs like Germany or Ireland, making them attractive for saving costs.

  2. Ireland, Germany, and the UK: Among the highest salary ranges in Europe, reflecting higher living costs and mature markets.

All in all, Portugal and Spain stand out as cost-effective alternatives for Western Europe, offering a solid talent pool at salaries far below Germany or Ireland. Eastern Europe, though cheaper, might lack the lifestyle and safety that Iberian countries can guarantee—and the truth is some professionals value that a lot.

The tech scene and startup ecosystems

The tech landscape across Europe is as diverse as the countries themselves. Opening a company in Portugal is becoming easier, and Spain keeps simplifying procedures for branches and subsidiaries. However, other countries, like Poland, Ireland, and Germany, though more complex in their processes, bring other unique strengths to the game. 

Keep reading to know how they compare.

Portugal: it just keeps working wonders

Portugal has been quietly building an impressive startup ecosystem. As proof of that, Lisbon has been hosting the Web Summit since 2016 (the world's largest tech event, attracting over 70,000 attendees every year). Portugal is also home to 7 unicorns, including OutSystems and TalkDesk.

But why are so many businesses picking this country over others to expand?

Spain: the bigger neighbor

Spain’s startup scene thrives in Barcelona and Madrid, seen throughout Europe as hosting some of the best tech hubs. Spain is also a strong player in gaming, fintech, and green tech.

Here’s what makes Spain a strong competitor:

  • Connectivity: Barcelona’s 22@ district has become a hub for innovation, attracting tech giants like Amazon and Microsoft.

  • Universities: Spain’s education system is known for crafting top-notch engineers and developers.

  • Cultural appeal: A solid work-life balance and appealing lifestyle make it a magnet for international talent.

The downtown of Madrid in Spain

Eastern Europe: the tech outsourcing champions

Countries like Poland, Bulgaria, and Romania have carved niches as outsourcing hubs. Poland is particularly strong in IT services, with Kraków and Warsaw hosting global companies like Google and IBM.

Businesses expand into these countries for cost-efficiency, as tech salaries remain one of the lowest in Europe; skilled workforce, as countries like Poland and Romania lead the EU female STEM graduates; and finally, time zone compatibility, as the Eastern European time overlaps with both Western Europe and the US.

Western Europe: experience comes with a price

Countries like Ireland, Germany, and the Netherlands hold mature ecosystems:

  • Ireland: Dublin is the European headquarters of giants like Google, Facebook, and LinkedIn—thanks to its low corporate tax rates.

  • Germany: Berlin is a global tech hub (housing over 4,500 start-ups) with thriving AI and fintech sectors, though its high costs can become an obstacle.

  • Netherlands: Amsterdam offers an international workforce, ease of doing business, and a strong focus on sustainability (because riding a bike along the canals is more than just a lifestyle).

All in all, Portugal and Spain are quickly catching up to established ecosystems like Germany and Ireland—at a fraction of the cost. Eastern Europe’s outsourcing hubs are unbeatable for cost-efficiency, while Western Europe offers scale and stability.

The talent pool

No tech ecosystem survives without a highly skilled talent pool. So, now is the time to compare professionals in Portugal, Spain, and other European countries, considering education, skills, and availability.

Portugal: a skilled and affordable workforce

In 2021, Portugal had the second-highest rate of engineering graduates in the EU. The country is also ranked 25th globally in talent competitiveness​, as universities collaborate with global research centers to ensure graduates are job-ready.

But there’s something else.

The high proficiency in English scores extra points for Portugal—ranked 6th out of 116 countries in the matter—as Portuguese developers integrate international teams with communication ease. 

And it doesn’t end there.

Portugal hosts a multicultural workforce nowadays and is also strong in Shared and Support Services Centers (where you find big companies’ marketing, sales, finance, and HR areas).

Spain: universities play a crucial role

Spain’s universities produce highly skilled engineers and software developers. Although English proficiency is improving, it’s weaker in rural areas (especially compared to Portugal). However, Spain’s diverse workforce and strong cultural ties to Latin America make it attractive for bilingual roles.

Eastern Europe: deep technical expertise

As you know, countries like Poland and Romania dominate IT and engineering. Poland, for instance, ranks among the top 5 countries for coding skills globally—1st place in Java, 2nd in Algorithms and Python, 4th in Tutorials and Sell, and 5th in Ruby. 

However, English proficiency can vary, making communication a potential challenge in smaller cities (Poland ranks 15th out of 116 countries, and Romania ranks 12th).

Western Europe: a premium talent market

Ireland, Germany, and the UK boast highly skilled workforces but at premium salaries. These markets also attract global talent due to their reputation, infrastructure, and the number of top international companies who’ve chosen to expand there.

All in all, Portugal and Spain strike an outstanding balance between talent quality and cost. Eastern Europe excels in technical skills but may face language barriers. Western Europe remains ideal for premium hires if budgets allow it.

4 women chatting around a table

So, what’s the final take?

When expanding your tech company in Europe, there’s no one-size-fits-all answer—but there’s certainly a standout option depending on your priorities.

Portugal and Spain strike the ideal balance between competitive costs and salaries, vibrant tech ecosystems, a high-quality talent pool, and an unmatched lifestyle. These countries combine affordability with the perks of Western European infrastructure, making them magnets for businesses and talent.

Eastern Europe is hard to beat for cost-efficiency and strong technical expertise, especially if budgets are tight. However, some professionals value lifestyle as much as salaries, which is where Iberia shines.

Western Europe, with its mature markets, offers stability, scale, and premium talent—but often at a much higher price.

In the end, your decision depends on what matters the most: affordability, access to talent, or market positioning. But if you’re looking for a location that checks all the boxes without robbing a bank, Portugal and Spain are the sweet spots.

Luísa Amorim
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