How I would start my next startup in Germany without a GmbH (2020) • Hacker News Board

Re: How I would start my next startup in Germany without a GmbH (2020)

#181

Post by hef19898 » Sat, Jun 04, 2022, 4:42 PM UTC

codethief wrote: post #178

hef19898 wrote: post #164

Earlier quoted context omitted.

Well, no initial balance sheet required. Taxes are filed, of course. VAT had to be decleared, in theory, every month. You get reminders, so it can also be done for multiple months. Now, due to lack of revenue, I have to file a zero VAT declaration quarterly. And your deadlines are longer than if you eork with a registered tax advisor. That's why I said so far, I'll have to do all that this year, the 2021 balance shee…

> Well, no initial balance sheet required The law very clearly disagrees with you: https://www.gesetze-im-internet.de/hgb/__242.html > And your deadlines are longer than if you eork with a registered tax advisor. True. If you're paying a tax advisor, you don't really care about the deadlines and all the paperwork, anyway, though. You just pay people to do all that for you.

I had two companies, GmbH (no merged and disolved) and a dormant UG. Never filed an initial balance sheet for either.

Re: How I would start my next startup in Germany without a GmbH (2020)

#182

Post by codethief » Sat, Jun 04, 2022, 4:45 PM UTC

ng55QPSK wrote: post #177

codethief wrote: post #170

Earlier quoted context omitted.

I would have to look up the exact details but I was basically following the standard "Musterprotokoll" to found my company, with one tiny difference/change somewhere. Well-established court rulings said that this change didn't make a difference regarding the notary fees. The notary still charged me for it. When I pointed out the court rulings to them, their response was basically "Right, sorry, we forgot". I have hea…

I see. But this sounds like his/her office made a mistake in calculating the fee, but let's say this far away from "ripping off" and can be cleared in one telephone call.

That was not my impression. I asked them about the fee, they claimed that it's legal/required by law. Then I asked them again (in a more detailed manner, i.e. explaining my thinking why there shouldn't be a fee), they still upheld that it's legal, and then I send them the court rulings and suddenly they had "forgotten" about that.

Re: How I would start my next startup in Germany without a GmbH (2020)

#183

Post by hef19898 » Sat, Jun 04, 2022, 4:45 PM UTC

ant6n wrote: post #155

hef19898 wrote: post #12

Earlier quoted context omitted.

Or keep the GmbH / UG and create a sperarate entity in an other country that has full or partial ownership. Either way, paying some tax law expert, even if expensive is the best advice. And not having a limited liability entity is actually pretty stupid, for a full catalogue of reasons.

I keep hearing about the concept of a Lichtenstein Stiftung, some sort of trust that “owns” itself but that you can still control indirectly using a trustee. But it feels like one doesn’t actually “own” whatever is in the trust, and it’s unclear how distributions are taxed in North America.

If you have the means to set one those up properly, you create GmbHs multiple times a week.

Re: How I would start my next startup in Germany without a GmbH (2020)

#184

Post by cameronh90 » Sat, Jun 04, 2022, 4:54 PM UTC

hef19898 wrote: post #173

cameronh90 wrote: post #159

Earlier quoted context omitted.

Yeah but in the modern world you often don't have any of that except a laptop or two, and even they are often personal devices in a small start-up. I founded a start-up with a friend and we had zero assets - just Office 365, AWS, managed office and personal devices.

But you do see why, geneally speaking, incorporating a business is necessary and required, do you? Because otherwise this discussion is kind of pointless.

Of course, but not why it needs 25k in reserves/assets.

In many other countries it's very cheap and simple. In the UK where we did it, it took half an hour, we did it online in an hour and we needed about £20 all-in to get incorporated and set up a business bank account.

Re: How I would start my next startup in Germany without a GmbH (2020)

#185

Post by hef19898 » Sat, Jun 04, 2022, 4:58 PM UTC

cameronh90 wrote: post #184

hef19898 wrote: post #173

Earlier quoted context omitted.

But you do see why, geneally speaking, incorporating a business is necessary and required, do you? Because otherwise this discussion is kind of pointless.

Of course, but not why it needs 25k in reserves/assets. In many other countries it's very cheap and simple. In the UK where we did it, it took half an hour, we did it online in an hour and we needed about £20 all-in to get incorporated and set up a business bank account.

As it was pointed out multiple times, 25k are not needed in capital.

Re: How I would start my next startup in Germany without a GmbH (2020)

#186

Post by mishaker » Sat, Jun 04, 2022, 5:00 PM UTC

SkyAndSand wrote: post #90

mishaker wrote: post #41

great post! having been through it I can confirm that it is a really bad idea to start your startup business in Germany with a GmbH. You end up doing more paperwork than your own business. However I have one question in your proposed schema. Germany Holding UG ... it owns the Delaware C-Corp right ? how would you deal with the paperwork and taxes of that Holding UG ? isn't it also time consuming and painful ?

I am asking myself the same question - how would you actually solve this issue? https://news.ycombinator.com/item?id=31620700

The thing is: even if your company is abroad, if you live in Germany then that constitutes "Permanent Establishment". So that means that Germany considers that the company is in its own juridiction so german laws would apply.

This also should be true about the holding (although I am not sure). You cannot simply have a German holding which contains foreign operating companies and not get involved with German bureaucracy. Logically you should report operations of those foreign companies (thus declaring taxes) in Germany. That would be an even more painful headache ...

Re: How I would start my next startup in Germany without a GmbH (2020)

#187

Post by SkyAndSand » Sat, Jun 04, 2022, 5:08 PM UTC

ant6n wrote: post #155

hef19898 wrote: post #12

Earlier quoted context omitted.

Or keep the GmbH / UG and create a sperarate entity in an other country that has full or partial ownership. Either way, paying some tax law expert, even if expensive is the best advice. And not having a limited liability entity is actually pretty stupid, for a full catalogue of reasons.

I keep hearing about the concept of a Lichtenstein Stiftung, some sort of trust that “owns” itself but that you can still control indirectly using a trustee. But it feels like one doesn’t actually “own” whatever is in the trust, and it’s unclear how distributions are taxed in North America.

Careful, many countries (especially in the EU) look “through” the trust if there is only the slightest notion of you controlling it.

Generally, in order for the trust to be fully recognized all assets have to be irrevocably owned by the trust and you can’t exercise any control over them as soon as they are transferred.

Re: How I would start my next startup in Germany without a GmbH (2020)

#188

Post by SkyAndSand » Sat, Jun 04, 2022, 5:11 PM UTC

mishaker wrote: post #186

SkyAndSand wrote: post #90

Earlier quoted context omitted.

I am asking myself the same question - how would you actually solve this issue? https://news.ycombinator.com/item?id=31620700

The thing is: even if your company is abroad, if you live in Germany then that constitutes "Permanent Establishment". So that means that Germany considers that the company is in its own juridiction so german laws would apply. This also should be true about the holding (although I am not sure). You cannot simply have a German holding which contains foreign operating companies and not get involved with German bureaucra…

While I generally agree I am wondering if this still applies if you have multiple founders in multiple countries.

Eg the founders are living in Germany, Australia and the US. The company is a German GmbH. You’d probably not automatically create PEs in Australia and the US just some of the founders living there?

Re: How I would start my next startup in Germany without a GmbH (2020)

#189

Post by SkyAndSand » Sat, Jun 04, 2022, 5:14 PM UTC

secondcoming wrote: post #21

Here's[0] how you set up a Ltd company in the UK. The hardest part is thinking up the name. [0] https://www.gov.uk/limited-company-formation/register-your-c...

And that it actually won’t be recognized as legal entity after Brexit if it is based in Germany: https://www.ihk-krefeld.de/de/international/aktuelles/brexit...

Re: How I would start my next startup in Germany without a GmbH (2020)

#190

Post by ghufran_syed » Sat, Jun 04, 2022, 5:19 PM UTC

hef19898 wrote: post #94

tobilg wrote: post #82

Earlier quoted context omitted.

That’s not correct. Creating a UG will set you back hundreds of EUR for notary fees, commerce registry entries etc. And you have to prepare your annual accounts, which, if you let a professional handle it, will easily cost you hundreds more

I love how being compliant, taxes, accounting, other regulations seems to be such a hard thing for people looking for millions of VC money while litterally thousands of companies do so every day. I do see a pattern there so, after all ignoring regulations is still a viable business model for SV companies.

"looking for millions of VC money" = "I don't have money" How is that inconsistent with wanting to avoid paying money for regulatory requirements that get in the way of solving your customer's problem?

The point is not that startups shouldn't follow regulations, it's that startups are a uniquely weak type of venture, but with the potential to be tremendously valuable to society. So designing a set of regulations for startups that balances the benefits to society of the regulation with the benefits to society of the potential startups is likely to lead to better outcomes for society.

As an analogy - in the city I live in, no-one is allowed to do any digging around a tree without prior permission from the city tree specialist. That regulation is designed to prevent large construction companies from damaging old and valued trees in the community. But in theory, a child planting an apple seed or small tree without permission would be breaking the regulation - can you see how that might reduce the number of trees being planted? The answer is not to remove the regulation, but to have exemptions or light-weight versions of the regulations for those use cases, and then apply more stringent regulations as the company (or tree) grows and becomes more robust and healthy.