Posted by earcar 6 hours ago
The 25,000 is there to make sure you can cover some liability. If you really wanted "your company and your risk", you could have used the "simplest setup", where you are liable with your own money, but if you think about it that way, it doesn't sound so appealing, does it? So of course the UG which does not (yet) have 25,000 in the bank sounds less serious than the GmbH that has 25,000 in the bank. A company that starts with nothing wouldn't be a GmbH (limited liability company), it would be a GoH (company without liability), and there's a good reason why those don't exist...
Those do exist in other countries. An LLC in the USA does not generally need to have a certain amount of assets. Such a company is more or less without liability until it has some assets; the worst case for its owners when it comes to a routine business debt is shutting down the company. Exceptions are possible in case of serious misconduct of course.
Of course a company like that will find it difficult to borrow money, but it's not rare for its last bills to go unpaid when it goes out of business.
Whether those should exist or not doesn't have a clear answer. Culturally, Germans tend to be pretty uncomfortable with "sometimes shit happens and debts go unpaid", while Americans tend to find a moderate rate of that sort of thing tolerable, especially if it makes starting a new business viable for a greater fraction of the population.
Which is exactly how it should be handled, IMO: Deal with the abuse situations directly.
Forcing new companies to capitalize with an arbitrary amount of money at time of founding penalizes small players who want to start a company. It's also not a hurdle at all for large players who want to commit large frauds.
A construction company that pockets ten million dollars and doesn't build anything probably can't shield its owner this way, but a single-developer software consultancy that pockets ten thousand dollars and delivers buggy code can.
"Computers are hard, yo!". It devalues the profession.
And I thought no liability was bad enough... But no. Now its LLMs and " for entertainment purposes only". I take it management and leadership also read that, and don't give one fuck.
The problem is building software to those standards of reliability is expensive and slow. Consumer software never justifies it. Business software rarely does. If you want me to accept liability for the consequences of bugs in code I write, I'm giving you a schedule five times as long and a price twenty times as high.
Is this a joke? There's a major outage effecting flights at least yearly. The Delta one is from May...
[1] https://en.wikipedia.org/wiki/2022_Southwest_Airlines_schedu... [2] https://www.usatoday.com/story/travel/airline-news/2026/05/0...
They should have said aircraft manufacturers, not airlines, but it’s clear what they meant.
If you mean why not register in your state, then Delaware has some tax benefits I believe. Not sure they will apply in MA though, maybe somewhere else?
American LLC taxation is as simple as or even simpler than Anlage EÜR. And you don't need a tax advisor to do it.
What’s wild is that this is pre-debt. The banks will have their own risk math for you so it’ll be a completely separate set of hoops before you get to be in debt as a company. Most will not even talk to you if you have 0€ in the business account. I don’t feel like a company with no assets or income can do that much damage to their societies.
Also as a small company in the EU I have to have liability insurance for the company for any major clients so the insurance company also will make you jump through further hoops.
Keep in mind that those companies will almost always own some debit to their employees when they blow up.
IMO, $25k is a ridiculous amount of capital to require from a company before they can operate. But capital requirements are good, and they should be proportional to employment, not company existence.
I don't get the "seriousness" memes in Germany, which sound more about gatekeeping than anything else. Why not require 1M€? This is serious! More serious! Meanwhile, they have companies likes Wirecard that went under in a day after it discovered a "hole" of 2 billion (magic!).
Why not just allow people to create a Gmbh with 2k€, and then publicise the amount of share capital so clients can make their mind? It's how it's done in France for instance, allows some flexibility (I know, a swear word in Germany), and sounds less like a social punition (something Germans love).
The hack anyway is to create an Estonian e-company, with almost no maintenance/creation costs. Germans are the largest funder demographic for this reason.
I would suggest that this idea of a GmbH does not actually work the way you think it does. Maybe it once did, but not any more. For instance:
Wirecard Technologies GmbH
Wirecard Sales International Holding GmbH
Wirecard Acquiring & Issuing GmbH
Wirecard Acceptance Technologies GmbH
Spoiler: the bad guys don't care about the rules!
The 25k are intended to ensure liability coverage for very small and young companies, not giant corporate networks with billions in backing (well, theoretically anyway... hah)
Running a business in Germany is for a closed inner circle. The apparatus is not meant for broke college students turning their weekend project into a company.
Now wherever that's an issue with the 25k admission fee OR with the fact that wages have stagnated for about 25 years in Germany, consequently mostly wiping out the middle class ... That's debatable.
German median household wealth is 4x that.
This estimate includes things like a car, a partially paid off house and other assets.
Most of that wealth cannot easily be converted to cash which you'd need to start a company.
Also that's median. Germany is a country with a median age of 45. So yeah, someone who likely worked for 20+ years will likely have saved around 100k, I don't think you realize how that's an argument in favor of what I just stated...
Depends on your product and expectations of your customers.
B2C: I don't care what company structure you are.
Depending on who you ask, one system is wildly better than the other, but at the end of they day they are just different systems with different tradeoffs.
I disagree: the EU system broadly is there to support _the incumbants_
"Regulatory capture" is the less kind way to put it.
This probably also has a lot to do with it's much tighter market integration than the EU, although they seem to be finally addressing that issue with the 28th regime.
A popular theory of Europe's historic economic outperformance relative to the rest of the world, leading up to the industrial revolution, relies on competitive market theory: constant warfare spurring innovation, as well as relatively free movement of the best and brightest to seek greener pastures elsewhere on the continent. These days, the most ambitious Europeans tend to move to America to raise money and find talent, and it seems many EU countries are finally waking up to the fact that they need to do better to support entrepreneurship.
I would characterize it rather that the US is pro-business and pro-consumer, but somewhat anti-average worker.
It's not word choice, you are just making the wrong argument.
I was briefly subscribed to the NYT from Germany. To my surprise, I couldn't cancel online, but had to call. (The EU has a law which requires that if you can subscribe online, you must be able to cancel online.)
They have national numbers for many countries, but they're just forwarders to the same call center, with notably mangled audio quality presumably due to multiple lossy compression algorithms applied at each hop of the call.
Additionally, there was lots of background noise when I got connected to a rep. Over this barely usable line, I was now asked to spell out my email address, which naturally took multiple attempts of painfully slow spelling before the rep was able to locate my account. (My very limited knowledge of the NATO alphabet didn't help.)
Of course, I then had to go through the spiel of declining alternative offers and providing a reason for my cancellation (all of which I never had to do in Germany before) before they finally confirmed it. Yeah, I'm glad about consumer protection law in the EU.
I would be fine with waiving my right to returns but this is not possible on purpose, so my only options are to shop somewhere else (often not possible) or found a company (not possible because it would be Liebhaberei - "Running a company without intent to make profits").
The customer almost always wins those. And the merchant always has to pay a fee for the chargeback, even when they win, so they're incentivized to avoid them.
The merchant agreement isn't as effective as a well enforced law, but it's pretty close.
Apple is another good example. Their base warranty is two years in the EU versus one year in the US, and there’s additional protection on top in many EU countries that extends it to the expected life of the product, in some cases as long as 5-6 years.
And again, all of these are backed up by the law, not just a policy that the company can revoke or decide not to enforce.
In general though, culturally, the US is much more "the customer is always right", whereas in the EU, it's considered a hassle to cater to customers that much. This mentality translates across the economy as a whole.
At least that's in my experience of being American and living in the EU for the last 10 years.
We can argue about the consumer friendliness of the regulations in the EU but they also add demonstrably to the cost of tech products (and likely other categories).
Nope, they don't. You'd have to compare with some countries that are 1. Not the US 2. Have less consumer protections than the EU. And guess what? Apple products are also significantly more expensive than the US there. But hey, half your comments on here are this kind of EU bashing based on grade school reasoning.
It's surprising to see on HN of all places people unaware that Apple products (and almost all other tech products) have been a lot cheaper in the US than elsewhere for decades.
So much FUD here, same for the Bunny thread. It doesn't feel organic anymore.
Maybe the ones voluntarily offered by companies, but not the legal ones.
The better policies given by US companies is also likely driven by competition, so by definition they wouldn't be something that a government regulation could accomplish (other than to incentivize more competition.)
Although, this is rapidly changing. Places like California are putting in similar regulatory barriers and excessive minimum taxation.
The issue in question is a Germanic system, not an EU one. Outside of Germany, Austria, Luxembourg, most EU countries are far more sensible with capitalization requirements.
1. Any debt the business needs will require your personal guarantee. Even something as simple as getting a business cellphone.
2. They don’t protect you from liability for your own negligence. If you’re a very small company with no employees, almost everything someone would sue you for (for which you aren’t already personal guarantor) will arguably be down to personal negligence on your part.
It’s different if you have employees or other members because an LLC protects your personal assets against liability caused by their negligence.
But I constantly hear the advice that people operating as freelance devs should start an LLC as the very first thing they do and that’s silly in most cases.
What most people who start a single member LLC are really looking for is liability insurance.
In Finland forming a non listed stock company is 240€ in fees without any requirement for capital/assets.
I think Estonia is even cheaper.
Public limited liability company (Oyj) still has 80 000€ capital requirement.
It had got us "more credibility" with our clients, and 12,500EUR less in each other's bank accounts.
Thanks for your insults.
But yeah, obviously, the more capital you pay in, the more “credible” your company looks. The whole concept of limited liability means that if your company capital is X €, the creditors can only get the X € (unless you do something stupid, see https://en.wikipedia.org/wiki/Piercing_the_corporate_veil).
The fact that the minimum capital amount is so high in Germany is bonkers to me.
The intended path for the upgrade from UG to GmbH is that once the UG makes a profit, this should be used to save up the 25k€ and convert to a GmbH once it's reached.
So why not to the same here, instead of going with this more complicated setup?
The combination of "no personal risk whatsoever, minimal funds/risk coverage, maximal profit extraction" doesn't lend itself well to places with basic regulations.
Capital investments in Europe are definitely not as easy to obtain as in the US for various economic, cultural, and historic reasons, which all led to some pretty weird laws here and there, but the extra week it takes to set up a business isn't the cause.
The reason this all took so long and was so expensive is simple. As the author states:
> I wanted real limited liability
They wanted two different companies with different setups to get out of having to save up the funds or find investors while also paying the least amount of tax possible. They set up a two-company system with all the risk in one and all the earnings in the other. It's like one of those tax dodging schemes the multinationals like, except within a single country. That comes with overhead.
Funnily enough, they then end with:
> Which leaves the only real question. Why 25,000 at all? It is my company and my risk.
Weird to think it would be their own risk if they spend so much time, money, and effort setting up a system that explicitly removes all the risk from them.
All of this feels like it was based on a business plan generated by some over-eager AI that tried to optimize to tick as many boxes as possible, ignoring the real-world consequences of those choices.
Is realistic in the Netherlands to try and fulfill all formal paperwork requirements?
In my native Belgian city, outsourcing that be from ~3k€ excluding VAT/year for the very simplest CIT liable structure. That's excluding 409.3€ corporate social security contribution and 148€ provincial tax. That makes for about 300€ ex. VAT before you can start to earn anything at all. Unless you can fulfill all accounting yourself.
If you want to start a business and you don't need to pay for an office or whatever (because you can actually use those 25k for something), you can literally start over night. If you need a proper company that limits your liability, you can literally start in 2 weeks.
[1] https://service.wirtschaft.nrw/unternehmensgruendung/gewerbe...
The 25.000€ hasn't been raised since the early 1980s. (50.000 DM back then) So to have the same liability today, you would have to put down 65.000€.
So it has gotten increasingly cheaper to start a GmbH in Germany.
Not sure about Germany, but e.g. in Estonia it’s essentially public info (albeit unaudited, usually), as part of the annual report. The company has to maintain at least the declared capital amount in their bank accounts (or other assets), but the amount can be pretty much any number, so the business owner can decide what sum makes sense in their case.
25k € is way too much for most small businesses, yeah.
(IANAL)
The €25k are not a liability insurance or anything like that. It's a starting capital to make sure that the company can honor its bills. Liability is covered via separate insurances.
You are now limited in liability for what the company does, to no more than the capital you put into it.
You then have to supply yearly accounts, may have to register for corporation tax, VAT, register as an employer for paying national insurance, you'll probably need business insurance, etc.
- https://assets.publishing.service.gov.uk/media/5a7da236e5274...
- https://www.gov.uk/guidance/model-articles-of-association-fo...
Edit: And these days you don't even need two people - used to be that you needed two directors or director and company secretary.
You can also declare that you’ve paid the capital in, without any proof required for small amounts (up to 50k € IIRC). If you lie about it, I suppose you’ll be personally liable for everything, so definitely not worth risking it. Just put in like 500 €, set it aside on the business account, and don’t touch it.
(IANAL)
You could put in 2500 € in capital – then your personal exposure will be zero. In practice, I don’t think it’s a meaningful difference, you will just have to keep the whole 2500 € on the company balance by the end of each FY. (Unless you wanna deal with non-monetary contributions!)
If you put in 500 €, you’re liable for 2000 € personally, but you don’t have to keep them for your annual report. (It also means your company looks a bit riskier, since you might not have the 2000 € personally, so you might have trouble getting credit or whatever, but otherwise I don’t think it’s a big deal.)
---
Edit: to the author: you should really look into Estonia (or any other sane jurisdiction mentioned elsewhere in the thread). You can still set up a KG (or a sole proprietorship), then put an Estonian OÜ in front of it. Costs something like 300 €, can be done online (you’ll probably need an e-residency card, an Estonian e-signature thing for foreigners, which is another ~150 €). Annual reports are fairly easy if you keep your books properly. And you’ll need an address in Estonea which is also like 125 €/yr. No additional taxes most likely (but check with a real accountant).
Why would I otherwise pay 66% in taxes in Belgium when I could just set up an Estonian ltd, get limited liability and pay 0 until I take anything out?
Edit: I'm not a lawyer either!
Also: I've always used a ZZP structure (one man company - Dutch version) for mine, not a BV (LLC), because there's a thing called Professional Liability Insurance. But maybe it's different in Germany? I can't imagine that doesn't exist there though.
And reading the article, he does found a UG! This isn’t even about GmbH!
Is this actually true?
Can't the company just loan out the 25k immediately?
What's the good reason? In the UK I can started a Ltd with £1 of share capital, about £100 of fees, and filling out a form online. I will be shielded from personal liability if it goes tits up unless I've broken the law, knowingly traded insolvent, or otherwise been an idiot.
The wider thread appears to be Germans commenting that it's unthinkable that such a thing could exist, and thus it's all the author's fault.
That's what Germany calls an "UG". Which is what OP actually ends up doing.
If you're a startup, you won't be making a profit anyway.
Once you make a profit, 25k€ on the books (not necessarily cash) isn't a lot, especially as it doesn't have to remain in the company, you can use it to pay wages once converted to a GmbH.
In the end, this is a question about whether you need something to be exactly the same for some ideological reason, or whether it's enough that two things are practically the same for all intents and purposes.
And while in this case the German system requires a codified workarounds, in many other cases the US/UK/Commonwealth systems use significantly more complicated workarounds than the German system.
Apparently the author -- and every none-German in this thread -- thinks so.
If you just want to start a business, without any associated shell companies or liability transfers, it costs $0 and requires filing one sheet of paper. It is very easy!
https://www.formulare-bfinv.de/ffw/form/display.do?%24contex...
And the EU knows, hopefully it will improve the situation: https://www.euronews.com/my-europe/2026/03/18/48-hours-and-1...
- There is no double taxation if you just pay yourself a salary (since it’s a normal business expense). If you want to take money out of the company flexibly, a GmbH is the wrong structure.
- I’ve never heard of anybody doing an UG/GmbH + KG to get started. This is highly unusual. Most people either do just a simple UG or maybe they set up a holding structure with two separate GmbH / UG entities.
- Related to the above: if you go with a simple, standard structure you will incur minimal legal fees. You don’t need a lawyer, you just directly task a notary and tell them you want a standard setup.
- If you don’t want the complexity of a limited liability company, the standard way to reduce liability risk is to get liability insurance. Many, many people do this instead of having a GmbH.
The valid criticism is the a) lack of digital processes and b) sequential processing of steps that could happen in parallel. For example, I sped up my own GmbH process by driving to the register court and paying in cash on-site. For whatever reason that’s much faster and saves about a week.
Exactly! That's what I do in the Netherlands. It's also common to cover this contractually too - you can negotiate where liability falls for many cases.
Getting a limited liability company for a one-person operation is just overkill.
There are two reasons not to go this way in NL, 1. There are tax discounts for small businesses that only apply to a sole proprietorship kind of structure and 2. Administrative costs for a BV are slightly higher because the legal entity itself needs to file taxes, instead of only the owners having to do so.
But the difference is now very small, #1 has been reduced the past few years and #2 is quite simple. It's an online portal to submit the numbers, if you know what you're doing you don't need an accountant.
And I think this is the key criticism for the German system. They don't seem to have a simple online portal for this and they still require 25k starting capital. That makes it harder for a small business to get started.
My wife works for a notary and most of the time people are really pushing to get an appointment but then fail to register a bank account on time so they have to wait a couple of weeks anyway without anybodies fault but their own.
Also this is not some secret knowledge. Like, these are not some tricks you learn over time this is something you could technically just ask a tax consultant or a notary. In fact the notary even likes it if you do that because if you try to be clever on your own you are most likely going to cause them more work. Like, you can literally go to a notary and say "this is my business. What should I do?" and they are either going to just do an UG with you or sent you to a tax consultant just to be sure.
Like, we have notaries because and they are as expensive as they are because they are supposed to consult you in legal matters and they are required for so many things so that you don't accidentally mess something up that is complicated.
Going to a notary really makes this so easy. You just sit there, dude's gonna read his legalese text and then sums it up in 2 sentences for you. Didn't get something? Ask questions. That's why you are there. That's their job.
It's really only difficult if you need a lil something for the AppStore for a side hustle and then try to get a GmbH straight away without ever consulting anybody that is literally only there to consult you and make it easier for you.
Which you can do online in 20 minutes in more progressive countries.
A sane country would handle this with a handful standardized forms of incorporation with clear rules, so that the majority of use cases that a normie might need is covered. All of this should be a few clicks on a gov webpage at most. Maybe some fee/deposit/whatever.
Lawyers and notaries should only start showing up when people want complicated setups.
(Yes I'm bitter with German notaries because so far they only took my money for some very mid service and couldn't even take two seconds of their time to answer an email with normal German words or clear instructions.)
The problems the post describes are not that. They are barriers that the author created himself by selecting a complex corporate setup.
Everything is unbelievably complicated and over-engineered, and every layer is immune to change. Every rule was rational when it was added, and now everyone has a financial stake in continued complexity. The German notary is the highest-paid notary in the world, and the highest-earning professional in the country.
That said, I think a lot of the frustration comes from a mismatch of expectations. Germany wasn't designed for randos to start companies and thrust change on society. All the bureaucracy is a filter, and what it filters out is change itself.
You were never supposed to incorporate a company. You were supposed to get a job at Volkswagen.
Of course there are some more conservative folks who may be more resistant to those critiques, but the average American will just nod along. If you mention on this website that healthcare in the US can be insanely expensive, you'll mostly see agreement from Americans.
> And the cheap door has a price of its own: to some clients, “UG” reads as “not serious,” and they would rather deal with a GmbH
The post itself explains exactly why the first complaint is a fallacy and the second one is true:
> The simplest setup is a sole proprietorship [...] also makes me personally liable for everything. A client sues? They are not suing a company. They are suing me. My savings, my apartment, my name.
> So I wanted real limited liability, which means a company.
The liabilities of a limited-liability company aren't your risk.
The people who stand to lose out if your company folds are not you but your customers, creditors and anyone else with a claim to more than the company can repay.
The more capital it has, the less likely it is to collapse while having more liabilities than assets.
Also, you can found a GmbH and only pay in 50% of the €25k. My understanding is that you're still personally liable for the rest, but it lowers the hurdle to founding a GmbH at least somewhat.
It's expressed in stronger consumer protection laws, but also these German things where you can't start a GmbH/LLC with zero capital and wish the counterparties good luck suing you if you never pay them.
I can open a company, work for a year, acrue debt, acrue tax debt, close it.
Nothing will happen. Company "estate" will be sold to cover the debt, which can also be nothing.
If in one day answer is NO, you have to immediatelly go and register insolvency. If you do not do it, big issue, and possible jail time.
He wants a company but not put down any assets, but still limited liability, he has to get a UG. But obviously customers don't want to deal with that because there are no assets in case they pay 5.000€ and the company goes belly up.
Customers deal with GmbH, because they know they have at least a little bit of value in assets. So if I buy from you for 5.000€ I know that should be covered by your assets.
The guy is an idiot and has been misconsulted by the law firm and has been pulled over the table by said law firm.
But I know for a fact that these ratings are pure crap. I asked them to fix the entry for Belgium once, and they replied that they trust the officials providing the info even though I sent the references to the legislation.
Although Sweden is a bit strange in the fact that banks have as much equal say as the government authority does in you starting a company, and if they don't want you as a customer, they can simply deny the right for your company to start!
Some years ago a case became quite famous in Spain. Someone wanted to turn a winery into a eco-tourism boutique hotel with a winery tour and experience. Should be simple in theory, in practice they were waiting for authorization to open for more than 4 years.
I’ve been involved with startups and small businesses for more than a decade, and I haven’t still heard of any of them doing things 100% by the book, because it’s just impossible.
People just start and hope the taxman doesn’t come.
Because a agricultural business and a hotel business are two different things, and Spain has, rightfully so, their thumb on the spread of tourism, because it affects local communities negatively.
Otherwise investors could just come in, buy a random agriculture business and then turn it into luxury hotels/lodging.
> I’ve been involved with startups and small businesses for more than a decade, and I haven’t still heard of any of them doing things 100% by the book, because it’s just impossible.
Because entrepreneurs are notoriously bad thinking further than their own interests. It always, "just" something they want to do.
Zoning rules and regulations have their purpose. Are some of those in some places idiotic? Yes. Do most of them still have their reason? Also yes.
Otherwise we can stop protesting datacenters and the trump family building a eco-luxury resort in a nature reserve.
how much would it cost to pay someone "1 hour away by train" to go into that office for you?
However, that does put the company in their name. On paper, they have full control over it. That's a risk to the criminals trying to use the company as a financial asset for laundering money.
The whole premise is nonsense to begin with.
How do you realize anything without being able to send an invoice and collect?
The challenge is if someone makes a software company, and a team of 20 workers on computers create a €10B business, does the state have a fair claim to €5B of it when the company at most with the most generous possible estimate (and then double it for good measure) used €50M of state services?
Yes, it does. Quite simply because that's the law, and it's morally right (in principle) because if your business fails then you don't get a bill for 50 million. If "winners" only paid their exact share then these services wouldn't exist.
So $50m would cover their true societal cost (I'll multiply it by 10 for you, call it $5m) 10x over.
Its extremely difficult to build a clearly logical structure where a company that made a wildly successful product needs to hand half the value to the government. It's very easy to do if we hand wave with ambiguous terms like "right thing to do" and "morally obligated".
Selling a company and paying tax on the profit in tax is a completely different proposition from paying tax on hypothetical profit you haven't made (and might never make) just because you want to move.
Wait, how does that work? Are you saying that if the bank doesn't like me, instead of just denying me a loan, they can convince other banks not to loan to me as well?
You just have to specify it when registering the company, and have an accountant certify the value.
But obviously, it's more annoying and you have to keep track of depreciation.
Same story goes for opening a personal account.
That means you pay German taxes + double amount of compliance ( because you have to file everything in Germany+ Estonia ).
Double taxation is not better.
https://www.e-resident.gov.ee/understanding-cross-border-tax...
Estonian CIT is 0%. If you pay dividends (which is not required), or if you pay director’s salary (optional if you’re a one-man company without a ton of admin), those will be taxed in Estonia. If you only pay yourself for your actual services – no taxes in Estonia.
Germany might tax your Estonian company if they determine the company is a German resident. Check with your accountant.
(IANAL)
If you do business in Germany you are evading taxes just by the fact of doing business. Everything and anything you make belongs to the government. It is an unfortunate loophole in the law that temporarily permits you to steal some of your profit back from the government where it rightfully belongs.
Yeah, this is sarcasm, but not really. The practical reality is that it simply makes no sense to incorporate in Germany. For example, the OP missed six months of opportunity just to please the bureaucracy and it's not even the end of it.
OP missed six months of opportunities because he is an idiot, that has been scammed by a tax consultancy that is interested in his money.
He should have setup a UG, start the business and invest into building a GmbH.
Or change something. But yeah, I agree that leaving a country that you don't like is a good solution. I did that myself.
> There is no justification for tax evasion
The basics of philosophy behind taxation state exactly the opposite: it is an obligation of a business to evade as much tax as possible - as long as it is legal.
I'm sorry, but Germany is democratic country, and citizen of the country can choose by definition.
Leave your motherland because your government is crazy in one way or another? It is nonsense.
In reality, sometimes people need to do it (because it becomes too dangerous to stay), but it should not be this way. In any country.
A lot of the entrepreneurs I meet become tax & social insurance fraudsters as soon as I mention this, because they think they can setup a company somewhere but live in Spain, without paying or registering companies here.
But if you are some noname making maybe up to a few mils per year income, nobody is going to chase you and prove you are avoiding local taxation. You are always "in a short holiday trip" :).
Getting a little bit more annoying year-on-year for maintenance with stuff like identity checks and software requirements for eg tax information, but still trivial to initially create
In practice banks will deny anybody to open an account, for no reason at all, because they are above the law in Sweden. The country has for a long time been owned by a few powerful banker families.
Edit: Down voters might first want to look at Wikipedia for the Wallenberg family. This is as much part of Swedish culture as IKEA or meatballs.
I challenge anybody to find a country in modern history which is more owned and controlled by bankers than Sweden.
The classic European trick: it's one strong union when you want to use counting stats or independence from America , but you can't lump in the duchy 3km away as the same when you want to pick and choose the metrics that make you look good.
Another part is taxation the tax office takes your money really fast but returns can be another slog where the tax office denies legal claims again and again untill you get a lawyer etc. and it generates costs again needlessly because it's really dependent on who works on your tax records and there mood apparently.
Trains, Berlin Brandenburg Airport, this.
It's rules and adherence to rules, more than efficiency, that I've found in my experience.
Comes down to a misrepresentation of history. Germans were never known to be efficient, they were known to be precise with everything, including bureaucracy. This happens to be handy with machinery, but not much else.
Really I think that they just landed on some really successful marketing.
It depends. For some machinery the complexity is inherent, this makes German machines very good at what they do. But this approach does not tend to scale well, which is part of the reason the German economy tends to be fairly specialized with „hidden champion“ SMEs.
Made in Germany has (had?) a very positive connotation to it, but for historic reasons.
The world got faster, but german industries and politics never got the memo.
They laid 600+km of cables wrong ultimately delaying the project by 6 years.
It's a "cover your ass" mentality that resists any changes.
Germans are thorough, not efficient.
Then you have to be compliant in 2 jurisdictions (file forms/balance sheets in both countries etc..) and worst case you could become subject to double taxation (if there is no agreement).
The optimal solution is just to leave Germany .
Just go to one of them Baltic states. They actually have a functioning electronic ids and other necessary infrastructure.
There’s no reason to live in Germany if you’re working with international clients.
Also Polands IP Box(5% tax rate) regime can be very interesting to software engineers right across the border.
Wyoming LLC gives passthrough taxation, and because you're in Germany, you'll be subject to German corporate and personal taxes alone, I presume?
Edit: changed from just personal tax to personal+corporate
e.g. Irish Ltd that is a resident in Germany
you won't have to bother with the naming problems etc. either
Especially as you will have to file tax forms and disclosures for your salary.
You guys might want to take a consultation with a proper accountant/tax advisor for these setups.
By creating a company that requires a special filing status to the German tax office?
This is probably the solution, an EU-wide company that has local offshoots and can handle the bureaucracy for a fee.
> and as you see everything costs a lot
this sounds like a system primed for corruption
if you can pay half the needed amount to do everything 5 times as fast, would you not do it?
are you trying to say "bureaucrat can't speed up" or are you doubting someone physically can't give someone else some cash?
If you want a GmbH quickly there are specialized lawyers that maintain a pool of freshly founded GmbH's for you to buy. Everything is set up for you to start. If you don't like certain things like the company name, you can always change it later.
That being said, I know plenty of people who founded their GmbH themselves and it went smoothly. It's not that it can't be done, it's more that OP chose an overly complicated and untypical scheme and was surprised about the complications.
The fact that this absurd situation exists is a huge proof that the bureaucracy has gotten out of hand and that Germany is unfriendly to starting new businesses.
While this is somewhat true, this is not an indication. You can start a business tomorrow for a fee of 30€. Even a normal UG is somewhat quick to set up and less expensive. Just because you insist on some non standardized company setup is not a good indication for an economy
I makes a lot of sense too. This is a one-time fee for something you gain nothing from and you learn nothing useful from.
It doesn't sound easy nor cheap to buy a company and change the company name.
UG & Co. KG has a couple of advantages and while it did add some money and time to the table, it doesn't change the story.
Notaries in the US are the price of a dinner. Many people have waited up to 6 months to receive their VAT ID from Berlin.
That's your problem right there. If you live in Berlin, take the 2 hours and go to Hamburg or Leipzig before doing anything that needs a working bureaucracy.
[ed.: a tiny office in Leipzig is pretty cheap too, but you'd need to ensure mail doesn't pile up there unchecked.]
Unfortunately I'm not joking about this entire thing. Berlin's underfunded, overstressed bureaucracy is to be avoided like the plague.
[ed.2: to be clear, it'll still not be great. Just less bad.]
But also, yes, this is one of the reasons you can hire lawyer's offices to do this, they know how to spin it such that they're regarded as administrating the company in their location (which is arguably true at that point).
And just to note, there's the concept of "field offices" (Betriebsstätte) which would need to be set up. That does still involve Berlin bureaucracy, but only for a Gewerbeanmeldung.
(Really: ask a lawyer. I hope nobody is taking legal advice from a HN thread.)
Again this is very straightforward and routine in the UK: https://paramountformations.com/product-category/off-the-she... ; a similar experience to buying a domain and spinning up a website on it. In organizations like investment banks they will have shells ready to go in the way you would have kubernetes pods.
So, the story is really that it takes a couple of weeks for a freshly founded company to be ready to invoice customers outside of Germany, which I agree, is a sad state.
That. It's possible to go even simpler if no limited liability is needed.
Just Gewerbeanmeldung costs maybe 30€ and takes less than a month normally. Large cities even have online forms for this.
Also the reporting duties are much simplified. ChatGPT and some accounting software are very helpful. Although a tax consultant and probably a liability insurance are recommended to avoid bad surprises.
And of course, lawyers being lawyers, answered you need to wear both a belt and suspenders. This is the answer you'd expect from a lawyer. It is your responsibility as a founder to do the risk assessment. The fact that almost no one wears both a belt and suspenders might have been a hint.
They studied AI and are building an AI company. I doubt the idea for the business structure come from a lawyer, to be honest. Especially such an overcomplicated setup with so many real-world issues that they're running into right now.
But it was his call. As the author has already pointed out, he could have started a sole proprietorship, but he did not want to take on that risk. The 25'000 is because it's not his risk if he starts a GmbH, it's the GmbH's risk.
Also, the 25'000 are not a toll, it's the company's Stammkapital. The GmbH owns that money. And afaik, in Germany you only have to pay in half of the 25k.
However, it has to be actual wages, i.e., the founder has to do work in return for a salary, and the salary has to be reasonable. You can't just have the GmbH pay you back the money you put into the company. There are also other limitations (https://dejure.org/gesetze/GmbHG/30.html), but that's the main one.