Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Ask HN: Where would you incorporate your European startup?

news.ycombinator.com

Post reply on HN
Print view View original

61–70 of 75 posts

Re: Ask HN: Where would you incorporate your European startup?

#61

Post by ProblemFactory »

siscia wrote: post #45
mikkom wrote: post #36

Earlier quoted context omitted.

You need more than a physical address, you need to live in estonia if you don't want to pay extra taxes. This is true for at least Finland, I have consulted tax lawyers about this.

I have explored quite a bit the idea of opening a company in Estonia via e-residency and this particular point of extra taxes never showed up. I am sure is not something that they would put on the first page, however I am a little surprise. Do you care to elaborate ?

They are not listed because the extra taxes are not levied by Estonia.

Almost every country in the world taxes their residents' income, even if it arrives from a company abroad. And US (in)famously taxes their citizens' income, even if they do not live in US.

So if you run a company remotely, you still have to check with your local tax rules to see how much tax you may need to pay if this company pays you salary or dividend.

Re: Ask HN: Where would you incorporate your European startup?

#62

Post by lazyjones »

phillc73 wrote: post #44
lazyjones wrote: post #26

Earlier quoted context omitted.

Hopefully that'll pass some day. It's the same in Austria, however recently there's been new legislation for LLC companies with very low starting capital almost all over Europe, so you can have shady-looking businesses anywhere (e.g. 1-Euro-LLC in Germany).

Do you have some more information about that, specifically in the Austrian context? I'm currently living in Austria, but operating out of my UK Ltd company. While it does work, there are a few pain points around banking, currency exchange and my residency in Austria (am I exercising my EU rights, living in Austria but still officially consulting for and being paid by a UK Ltd company?). It would make my life a bit ea…

In Austria there were some initiatives to introduce a cheaper Ltd, called "GmbH light", but this was changed again. Currently there's a way to pay EUR 5000 immediately and EUR 17500 (total) share capital after 10 years ("Gründungsprivilegierte GmbH" - http://www.wirtschaftsanwaelte.at/gmbh-light-durch-die-gmbh-...) , but in your situation I'd be looking at setting up a german Ltd to get rid of some of the problems at least: http://www.ug-ltd.de/limited.html

Re: Ask HN: Where would you incorporate your European startup?

#63

Post by SixSigma »

r2dnb wrote: post #53
SixSigma wrote: post #37

Earlier quoted context omitted.

I'm a UK citizen. I am more shocked that the information you are uncomfortable in disclosing is not shared by a US incorporation. Creating a Limited Company is in order to protect company owners from the debts of the company. For me to expose my company to the liability of doing business with your company, e.g. give you credit terms, I would rather like to know your financial soundness. Society agrees to waive your d…

I understand your point of view, at the same time when I read that : >For me to expose my company to the liability of doing business with your company, e.g. give you credit terms, I would rather like to know your financial soundness. I'm thinking : then we can enter into a bilateral agreement and choose an independent auditor that will certify my accounts. (Which is the idea behind the american legislation). I really…

> Even at the time I'll be making 10M profit a year, I'm sorry but this is privacy, I should be free to choose with who I share this information.

Too bad. If you want our money, that's the deal.

Re: Ask HN: Where would you incorporate your European startup?

#64

Post by siscia »

ProblemFactory wrote: post #61
siscia wrote: post #45

Earlier quoted context omitted.

I have explored quite a bit the idea of opening a company in Estonia via e-residency and this particular point of extra taxes never showed up. I am sure is not something that they would put on the first page, however I am a little surprise. Do you care to elaborate ?

They are not listed because the extra taxes are not levied by Estonia. Almost every country in the world taxes their residents' income, even if it arrives from a company abroad. And US (in)famously taxes their citizens' income, even if they do not live in US. So if you run a company remotely, you still have to check with your local tax rules to see how much tax you may need to pay if this company pays you salary or d…

Well of course, but I would pay those tax even if I were working for Google in California or for Ferrari in Italy, at different government, with slightly different rates, but I would still pay...

Those are not "extra" taxes, those are regular taxes on your income...

Re: Ask HN: Where would you incorporate your European startup?

#65

Post by dotcoma »

aharonovich wrote: post #7
dotcoma wrote: post #3

I would have listed Lisbon as one of the places I'd choose. Guess not. Taxes? What about Tallinn?

Why did you change your mind about Lisbon?

Just because I read the poster in based in Portugal, and is looking for an alternative.

Re: Ask HN: Where would you incorporate your European startup?

#66

Post by throwaway41597 »

SixSigma wrote: post #37
r2dnb wrote: post #17

I've incorporated in the UK but I kind of wonder if I made the right choice. It's a fantastic country, but one thing that bothers me and that I discovered too late - only a few weeks ago - is privacy. This is a real one, pay attention to it. Basically, private companies are as public as american public companies. It's ok to have disclosures to make to the government, but here you also have to disclose your financials…

I'm a UK citizen. I am more shocked that the information you are uncomfortable in disclosing is not shared by a US incorporation. Creating a Limited Company is in order to protect company owners from the debts of the company. For me to expose my company to the liability of doing business with your company, e.g. give you credit terms, I would rather like to know your financial soundness. Society agrees to waive your d…

In France, you'll get some of your information (name, address and line of business; financials are optional) published even if you hold personal liability. And as others have said, the public financial data is not very relevant if someone is trying to assess a company. It's also too complex for the consumer.

I think if we were to redesign the system from the start, it'd look more like Ebay with feedback and escrow. It wouldn't be enough and it'd need other protections, but my point is the current system doesn't work great neither for customers nor for entrepreneurs. And as a consequence, it may be that it stifles commerce and entrepreneurship.

Re: Ask HN: Where would you incorporate your European startup?

#67

Post by patio11 »

pjc50 wrote: post #32
r2dnb wrote: post #17

I've incorporated in the UK but I kind of wonder if I made the right choice. It's a fantastic country, but one thing that bothers me and that I discovered too late - only a few weeks ago - is privacy. This is a real one, pay attention to it. Basically, private companies are as public as american public companies. It's ok to have disclosures to make to the government, but here you also have to disclose your financials…

> your MONEY IN THE BANK There's a huge lag on this information: people can find out how much you claimed to have on your balance sheet at the time you last filed, which could be something like 18 months ago. (Do US LLCs really not require you to file accounts? Why does everyone choose Delaware, anyway?) It basically serves the same purpose as the Experian et al credit scoring system. The purpose is to protect credit…

Do US LLCs really not require you to file accounts

Yep! The standard for US LLCs is you disclose ownership and members, which become public records, but that's about it. A sole proprietor LLC doesn't even file their accounts with the IRS (required to produce them in the event of an audit, but the standard return won't include e.g. money in the bank or anything); a partnership return has some balance sheet items reflected but that information is private between the taxpayers and the IRS.

This contrasts to, e.g., a Japanese tax return, where small businesses have equivalent-to-US recordkeeping requirements for books but also have to submit a complete balance sheet with the return every year (along with a month-to-month revenue statement).

Re: Ask HN: Where would you incorporate your European startup?

#68

Post by rmc »

r2dnb wrote: post #53
SixSigma wrote: post #37

Earlier quoted context omitted.

I'm a UK citizen. I am more shocked that the information you are uncomfortable in disclosing is not shared by a US incorporation. Creating a Limited Company is in order to protect company owners from the debts of the company. For me to expose my company to the liability of doing business with your company, e.g. give you credit terms, I would rather like to know your financial soundness. Society agrees to waive your d…

I understand your point of view, at the same time when I read that : >For me to expose my company to the liability of doing business with your company, e.g. give you credit terms, I would rather like to know your financial soundness. I'm thinking : then we can enter into a bilateral agreement and choose an independent auditor that will certify my accounts. (Which is the idea behind the american legislation). I really…

You are free to have all the privacy you want. As a sole trader. If you want limited liability, it comes with a cost.

Re: Ask HN: Where would you incorporate your European startup?

#69

Post by Loic »

vruiz wrote: post #31
Loic wrote: post #21

Take a good lawyer, accountant. I am French and created two companies in UK (Ltd) and one in Germany (GmbH). In theory, UK was better, in practice, because I live in Germany, the GmbH is more convenient. Also, a lot of your optimisations are dependent on your products. Are you selling software (licenses), consulting or goods? Are you doing import from outside of the EU? Sometimes, depending on your product, a country…

Interesting. What are your obligations in Germany when you have a UK Ltd? How much of a hit do you get on your personal taxes? I've heard of someone with a Ltd operating completely under German tax law, but that sounds like a nightmare.

This is why now I am fully based in Germany and closed my company in UK. It started to be a nightmare. I started the company in UK before being in Germany, I kept it will being in Germany, but as basically a "one man Ltd" the Germans started to make problems (basically behaving like I tried to wash/hide money). Also, having the company now in Germany I was able to shift more expenses on the back of the GmbH, so you get some benefits there.

This is why, the best option is to take a good accountant, you really have no "magic formula". If someone is selling you "package" for a flat fee, you are nearly sure to have problems down the line. Even in good faith, when the tax authorities start to attack you because they consider that they think that maybe you did something wrong, they can make your life a nightmare and this totally legally.

So, handle everything with care, take a good accountant/lawyer and document everything.

Re: Ask HN: Where would you incorporate your European startup?

#70

Post by vruiz »

Loic wrote: post #69
vruiz wrote: post #31

Earlier quoted context omitted.

Interesting. What are your obligations in Germany when you have a UK Ltd? How much of a hit do you get on your personal taxes? I've heard of someone with a Ltd operating completely under German tax law, but that sounds like a nightmare.

This is why now I am fully based in Germany and closed my company in UK. It started to be a nightmare. I started the company in UK before being in Germany, I kept it will being in Germany, but as basically a "one man Ltd" the Germans started to make problems (basically behaving like I tried to wash/hide money). Also, having the company now in Germany I was able to shift more expenses on the back of the GmbH, so you g…

I almost missed your reply, I might end up taking a similar road so thank you for your advise.
Post reply on HN