I would like to start a business somewhere in the EU (I'm an EU citizen) but I am concerned about potential legal restrictions.<p>Which countries would be most favorable or least unfavorable to starting a business?
Byzantine red-tape, corruption, a legal framework that makes the Talmud look like a minor collection of one-liners, add to that a somewhat xenophobic business environment and an economy that's moribund and you've got the least favorable place to start a business : Greece. (I speak from experience. I'm sure Kafka was Greek.)
The easiest, in my experience, is The Netherlands.
London appears to be a fairly popular place to start a startup. A limited company can be started in the UK with 1 pound in capital, plus a few hundred in various fees. Several countries offer more favorable tax climates and there are also benefits for starting a business in specific (typically underdeveloped) regions in a number of EU countries, so you might want to check that, but it appears that the UK is the go-to jurisdiction for EU startups. Note that you can run your company from any EU country and register in any EU country (though some countries require more solid legal presence in the country to be registered there).
You might try this <a href="http://www.heritage.org/index/ranking.aspx" rel="nofollow">http://www.heritage.org/index/ranking.aspx</a> ; besides the table, if you click on a country name you get (slightly) more detailed information about the country. There are also other country rankings out there, this is the only <i>recent</i> one I have a link to.
Can you be more specific as to the types of legal restrictions you are concerned about? Or is this just a general question on what countries are more/less supportive of start-up businesses?