Methodology and Data

Model Company

We are examining a fictitious company Gateway to Heaven Ltd. It manufactures iron gates, fences and other blacksmith and locksmith products. It has four employees; during one year one employee would be fired and one would be hired. Annual turnover is 300 000 EUR, pre-tax profit 15 000 EUR (sector average in Slovakia – may be replaced by sector averages in other countries). The company is a VAT payer, accepts cash, does not import or export goods and materials outside of EU. The company produces waste including chemicals and electronics. The company owns one delivery truck with a 100kW engine with one dedicated driver from staff members. The company resides in its own building.


To calculate the index, we examined all the relevant administrative of the model company duties: administration of taxes (but not accounting as such), waste management, health and safety and more. As for the time estimates, we used expert opinion of various professionals (accountants, managers, waste managers, etc.). For all activities we assume that they are carried out internally by the company and not outsourced. Where this is not possible (requires certified contractor – for example revision of electrical devices), we used price lists available on the Internet. Financial expenses were calculated as time multiplied by the super-gross average hourly wage (total expenses including employer contributions) in the national the economy (currently Q1 2016) according to the Statistical Office. Any other added other fees (certificate costs etc.) were added to this sum. Frequency of actions is is based on the frequency required by law. Unique operations (for example new vehicle registration) are considered to happen once in four years as a part of natural business life of a company. Tasks associated solely with establishment of a business are treated separately, outside the main Index. We rounded the result to the nearest half-hour and 50 cents.

Bureaucratic Index in practice cannot fall to zero, in this case State would have to cease to collect income tax or VAT. Even if the index dropped to zero that does not mean that the entrepreneur would save all the costs. For example, preventive technical checks of power tools may have added value to the entrepreneur, and many would pay it even without legal coercion. However only companies finding benefits of such action would decide to go for it. This is a fundamental problem with the regulations which are not looking at differences between companies and do not have specific information which the entrepreneurs have naturally at hand.


XLS files with the underlying data can be downloaded here:

Slovakia xls Bulgaria xls Czechia xls