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Bootstrapping a SaaS Business in Germany: How I did it

lukashermann.dev

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Re: Bootstrapping a SaaS Business in Germany: How I did it

#41

Post by Makanantaa »

muhaaa wrote: post #11

Why a GmbH in Germany? Sorry, that was not a good idea and will costs you money and nerves to fix that. Now you are locked into Germany even if your business can be operated from everywhere around the globe. If you move the GmbH out of Germany you have to pay GmbH fair value ; fair value according to German Tax Authority! Do a Holding GmbH + Operative GmbH to accumulate wealth tax efficiently. You could have your com…

Leave that person alone.

I also createda GmbH in germany and i tell you a thing: I don't care to optimize every single shit for the optimum. If i would, i would go to USA and accept that the social scissor is so crazy wide that not every USA citizen can't just go to a dentist.

I live in germany, thats how it is and i'm fine with it.

Your moral and ethics don't stop at the law.

Re: Bootstrapping a SaaS Business in Germany: How I did it

#42

Post by Makanantaa »

mtmail wrote: post #7
1231112315123 wrote: post #6

Earlier quoted context omitted.

Serious question: who would I hire for these kind of stuff? In a couple of situations, I decided to give software away for free to avoid the hassle. If there's a simple solution to get advice, I'd really appreciate that.

An accountant can walk you though the steps. The author writes "The best approach is to start as an “Einzelunternehmer” (sole proprietor). You can register this at your local town hall for a nominal fee, and you’ll typically receive confirmation within a few days." When I did it the cost was 35 Euro, I think it depends on city. One can argue why this step can't be done online but until 2023 it wasn't possible to regi…

The difference is that a GmbH projects your personal assets. The risk for a software engineere is small, much smaller than for a lot of other business but still it protects you.

It also makes you a better business partner (in theory) as you have crossed a certain amount of effort to create a GmbH

Re: Bootstrapping a SaaS Business in Germany: How I did it

#43

Post by slow_typist »

throwaway60722 wrote: post #31
LeanderK wrote: post #27

Earlier quoted context omitted.

why is this even the first thing that comes to mind when thinking about the legal form? This is highly unethical in general and really just super selfish. F*k you if you avoid taxes, especially in a country like Germany where society paid for your university studies etc.

There are states with much lower taxes that also pay for education. Why should Germans pay so much? There are people who didn't go to university doing business too.

In the eighties, income tax in Germany could go up to 56%. It is much lower know. Taxes are somewhat relative in space and time.

Re: Bootstrapping a SaaS Business in Germany: How I did it

#44

Post by anonyfox »

urduntupu wrote: post #35
LeanderK wrote: post #26

Earlier quoted context omitted.

I don't know how to judge this comment? Is this essentially recommending dodging the taxes via a more complicated holding situation and the "do vacation in Germany", so essentially operate from germany? If so, I think this is highly unethical. Corporations have to pair their share to keep the society functioning...not just "normal" peoples with their salaries while all the profits get sucked into a foreign black hole…

Nothing against paying some taxes. But keep in mind that Germany is among the top ranking highest tax paying countries. And there are better "society functioning" countries than Germany, at much lower tax rate. Not every tax rate is fair. Some tax rates are unethically high b/c due to a overloaded govt. apparatus.

Not OP but I understand the point.

Still for me building up a company is not only for maximizing personal profit by any means, it’s also a social construct that should be valuable for the society. Paying taxes on economic activity, provide jobs and therefore a living for people, and ideally by producing something actually valuable for society itself (not just exploiting natural resources or siphoning off money from other players).

Also every country has tradeoffs one way or another. And by far not everyone has the same ideal of solidarity or wants to give back to the society that invested quite a lot in the person before he/she got into the situation of making a lot of money. Still some people (like me) notice it and it’s much more respectable than any billionaire.

Re: Bootstrapping a SaaS Business in Germany: How I did it

#45

Post by Roritharr »

muhaaa wrote: post #11

Why a GmbH in Germany? Sorry, that was not a good idea and will costs you money and nerves to fix that. Now you are locked into Germany even if your business can be operated from everywhere around the globe. If you move the GmbH out of Germany you have to pay GmbH fair value ; fair value according to German Tax Authority! Do a Holding GmbH + Operative GmbH to accumulate wealth tax efficiently. You could have your com…

What most people do not understand about muhaaa's comment is the dry-income problem.

How to bankrupt yourself in 3 easy steps:

1. Incorporate a UG (small limited liablity entity, sometimes called baby GmbH) with 100€ capital base and you owning 100% of stock.

2. Raise Venture Capital, let's say 1M€ for 10%, making your company worth 10M€.

3. Move out of Germany.

4. Receive a letter from the Tax Authority that you are liable for Exit Tax (Wegzugsbesteuerung) and irregardless of your lack of revenues because of your recent capital raise your company is estimated at 10M€, making your personal holdings in the company 9M€ worth, of which the Tax Authority wants 60% of your personal income tax on, which varies but to be optimistic let's say you get taxed 30%, which is among the lower bound.

Now you owe the German Tax Authority 2,7M€ without having made a single € and your company only having 1M€ in liquid cash.

It's literally the reason why I will never incorporate a company in Germany again.

Re: Bootstrapping a SaaS Business in Germany: How I did it

#46

Post by mqus »

urduntupu wrote: post #35
LeanderK wrote: post #26

Earlier quoted context omitted.

I don't know how to judge this comment? Is this essentially recommending dodging the taxes via a more complicated holding situation and the "do vacation in Germany", so essentially operate from germany? If so, I think this is highly unethical. Corporations have to pair their share to keep the society functioning...not just "normal" peoples with their salaries while all the profits get sucked into a foreign black hole…

Nothing against paying some taxes. But keep in mind that Germany is among the top ranking highest tax paying countries. And there are better "society functioning" countries than Germany, at much lower tax rate. Not every tax rate is fair. Some tax rates are unethically high b/c due to a overloaded govt. apparatus.

> some taxes

Not just "some taxes", but all of them. Keep in mind the author probably studied in germany and never had to pay any substantial fees to the university, his parents got money during his childhood and he will get money even if he does not immediately find a job after he closes his business.

Taxes do go both ways. And just because you think the government is too big, you don't get to decide how much you pay for it, thats what a social welfare state is. If you want to change things, you have to vote, lobby and/or take part in political processes.

Re: Bootstrapping a SaaS Business in Germany: How I did it

#47

Post by jkaplowitz »

dappermanneke wrote: post #39
throwaway60722 wrote: post #30

Earlier quoted context omitted.

You don't need to go full nomad, just spend half a year + 1 day out of Germany.

the center of life criterion is much more encompassing than that if you get a serious audit

If you're talking about income taxation of individuals and would otherwise be dual resident in Germany and another country with which Germany has a typical set of tax treaty residency tiebreakers, then the top criterion in the list is where you have a permanent home available to you. If you have a permanent home available to you in the other country but not in Germany, you are by treaty a tax non-resident of Germany regardless of days in Germany or center of life.

That does raise the question of what does it mean to have a permanent home available to you. And that's a much harder conversation as applied to the edge cases. But one can certainly construct viable enough scenarios where it would not be a close call even if one spends more than half the year in Germany, and then arrange one's reality to genuinely match the constructed scenario. Explaining to the Finanzamt (tax office) might need a Steuerberater (tax advisor) to argue with them, of course.

Re: Bootstrapping a SaaS Business in Germany: How I did it

#48

Post by jkaplowitz »

Roritharr wrote: post #45
muhaaa wrote: post #11

Why a GmbH in Germany? Sorry, that was not a good idea and will costs you money and nerves to fix that. Now you are locked into Germany even if your business can be operated from everywhere around the globe. If you move the GmbH out of Germany you have to pay GmbH fair value ; fair value according to German Tax Authority! Do a Holding GmbH + Operative GmbH to accumulate wealth tax efficiently. You could have your com…

What most people do not understand about muhaaa's comment is the dry-income problem. How to bankrupt yourself in 3 easy steps: 1. Incorporate a UG (small limited liablity entity, sometimes called baby GmbH) with 100€ capital base and you owning 100% of stock. 2. Raise Venture Capital, let's say 1M€ for 10%, making your company worth 10M€. 3. Move out of Germany. 4. Receive a letter from the Tax Authority that you are…

How would that be different if you did all steps 1-2 with a foreign corporate entity while being personally tax resident in Germany? Step 4 would be the same except if you were hiding the existence of the foreign corporate entity from the German tax authorities - but my understanding is that reporting steps 1 and 2 to the German tax authorities is legally mandatory for any German tax resident.

Re: Bootstrapping a SaaS Business in Germany: How I did it

#49

Post by manmal »

LeanderK wrote: post #26
muhaaa wrote: post #11

Why a GmbH in Germany? Sorry, that was not a good idea and will costs you money and nerves to fix that. Now you are locked into Germany even if your business can be operated from everywhere around the globe. If you move the GmbH out of Germany you have to pay GmbH fair value ; fair value according to German Tax Authority! Do a Holding GmbH + Operative GmbH to accumulate wealth tax efficiently. You could have your com…

I don't know how to judge this comment? Is this essentially recommending dodging the taxes via a more complicated holding situation and the "do vacation in Germany", so essentially operate from germany? If so, I think this is highly unethical. Corporations have to pair their share to keep the society functioning...not just "normal" peoples with their salaries while all the profits get sucked into a foreign black hole…

If you spend 183+ days in Germany „on vacation“ you‘ll likely have to pay income tax there. Authorities are not _that_ dumb.

Re: Bootstrapping a SaaS Business in Germany: How I did it

#50

Post by djoletina »

Roritharr wrote: post #45
muhaaa wrote: post #11

Why a GmbH in Germany? Sorry, that was not a good idea and will costs you money and nerves to fix that. Now you are locked into Germany even if your business can be operated from everywhere around the globe. If you move the GmbH out of Germany you have to pay GmbH fair value ; fair value according to German Tax Authority! Do a Holding GmbH + Operative GmbH to accumulate wealth tax efficiently. You could have your com…

What most people do not understand about muhaaa's comment is the dry-income problem. How to bankrupt yourself in 3 easy steps: 1. Incorporate a UG (small limited liablity entity, sometimes called baby GmbH) with 100€ capital base and you owning 100% of stock. 2. Raise Venture Capital, let's say 1M€ for 10%, making your company worth 10M€. 3. Move out of Germany. 4. Receive a letter from the Tax Authority that you are…

Or don’t move out because you operate a business out of Germany and none of this is relevant. How many businesses do you think ever reach a phase where this is a problem, let alone actually reach it *and* want to move elsewhere.
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