Ask HN: Where would you incorporate your European startup? • Hacker News Board

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

#71

Post by mikkom » Wed, Feb 10, 2016, 10:14 AM UTC

siscia wrote: post #64

ProblemFactory wrote: post #61

Earlier quoted context omitted.

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...

This was about Finnish tax authority taxing company income as personal income (another possibility) or taxing the company as it would be finnish based on location of your operation/management location, not the basic taxes based on your location. I'll check if I can find some information about this online.

edit: Here is article about it in finnish http://www.yrittajat.fi/fi-FI/uutisarkisto/a/uutisarkisto/vi...

Translation of key point (by me)

– Jos liiketoiminta tapahtuu Suomessa ja omistajat ja päätöksentekijät asuvat Suomessa, myös verotus tapahtuu Suomessa, vaikka yritys olisi perustettu Viroon. Jos yritys harkitsee toimivansa Virossa, pitää aidosti mennä lahden taakse, asua siellä, pitää kiinteää toimipaikkaa ja harjoittaa liiketoimintaa, Akselin sanoo.

"If business operations are conducted in Finland and decision makers live in Finland the taxation also happens in finland even if the company has been founded in Estonia. If company thinks of operating in Estonia, you have to actually go over the sea and live there, have actual business location and operate your business there Akselin states. (this is a guy from finnish Accounting firm)"

(my note: it doesn't have to have all of the above meaning operations and management, it could be one of the above for example just management living in Finland)

(Poor) Google translation of the article

https://translate.google.com/translate?sl=auto&tl=en&js=y&pr...

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

#72

Post by mikkom » Wed, Feb 10, 2016, 10:21 AM UTC

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 ?

Sorry this took so long, see my other reply.

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

#73

Post by ForeignEntrepre » Wed, Feb 10, 2016, 1:42 PM UTC

mpswardle wrote: post #16

hengheng wrote: post #13

Earlier quoted context omitted.

Germany does have the UG (haftungsbeschränkt) for this very reason.

Annoyingly though UG doesn't have the same respect as GMBH amongst German corporate, so if you do a lot of business in Germany it often worth capitalising it anyhow.

I've only heard similar comment from accountants. I am not sure whether providers/customers really care about that. In fact I think accounts say that just because it was something new (so more work for them to learn).

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

#74

Post by ForeignEntrepre » Wed, Feb 10, 2016, 2:03 PM UTC

cmenge wrote: post #40

For those suggesting the German UG, be aware that dissolving and operating it can be quite expensive. Fine if you have a solid business, problematic if it's more of a test and you simply needed some 'real' company for that stripe account... Yearly filing must be done by a tax accountant and you have to pay for the 'services' of the Handelskammer, which is around 800 and 200 EUR at least, respectively, per year. Disso…

Thanks for the hints. I am planning to dissolve and I am one of those "tests". How can it take one year to dissolve? could you elaborate on that?

Why I am leaving?: - My experience is that (my) accountants are bureaucrats, which may be necessary because. They only know about filling up forms and hours to charge you more and no advising. I am in a small city but the company is very big (BDO). Still the country encourages you to have an accountant (Even in the FinanzAmt, even in cases that in other countries you would do it yourself) - Taxes are huge (for a netto salary of "only" 2000€/m, so 24k year, is about 50-60k for the company). - Mentality is oposite to that of startup's. "You can feel it in the air" which means in everything you do, from lawyers, accountants, banks, even investors. - There is no benefit for investors (although I think there is some on work). However the for Handelskammer you only have to pay if revenue (or profit) is over a minimum, but I think it depends on the state. The first year that shouldn't be a big issue. Moreover, I would not start again in Germany because: - It is costly (500 min for standard basic in notary fees) - and long. No matter what they say in the official sites: is not 8 days; they don't count that you need to set (that means in advance) appointments with bank, notary, finance-amt,... usually several with each, It took me over a month to have the tax-number and wanting the VAT-number to operate internationally all was about 4 months. There is no one-stop company like in many other countries.

Sorry Germany, but in this situation it is a no-go.

Estonia, Irland, Luxemburg, I have hear about Bulgaria for low taxes too (10%). Spain, also problematic: you need to live there 50% of the year, you pay taxes even if you don't have income (this is crazy and it has been like that for... ever). Good thing, is not that high taxes and salaries are low for a very skilled people.

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

#75

Post by ForeignEntrepre » Wed, Feb 10, 2016, 2:06 PM UTC

mpswardle wrote: post #15

I think a major factor in this decision that should not be forgotten is language. We have a German UG that is a wholly owned subsidiary of a UK Ltd. My co-founder speaks German but without this it would have been extremely complicated to setup and operate the German company.

Good point! Everybody thinks in Germany everyone speaks English. Well, they normally don't.