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How to found a company in Germany: 14 "easy" steps and lots of pain

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Re: How to found a company in Germany: 14 "easy" steps and lots of pain

#101

Post by lutoma »

RicoElectrico wrote: post #20

I wonder: why EU did not try to somewhat harmonize company law? I can understand that things like tax code, penal code would not benefit from unification across disparate societies, but companies seem like a ripe target. This should have begun 20 or so years ago.

They did try. There's the Societas Europaea, a standardized type of corporation largely governed by EU law. It's primarily used by large multinational companies (Think BASF, SAP, Airbus): https://en.wikipedia.org/wiki/Societas_Europaea

That was part of a push to introduce standardized EU-wide legal forms for other types of businesses as well, but the process stalled and never really went anywhere after that.

Re: How to found a company in Germany: 14 "easy" steps and lots of pain

#102

Post by johnloeber »

intelVISA wrote: post #19
bradhe wrote: post #12

Earlier quoted context omitted.

Bingo. I live in Berlin. I know loads of folks who found Delaware corporations, use deel.com to work for them, and eventually found a GmbH when they need to.

Nice strategy, isn't it tough to get an LLC's bank setup without residency?

Not anymore. Online banks like Mercury will do it entirely remotely without any residency requirements, IIRC.

Re: How to found a company in Germany: 14 "easy" steps and lots of pain

#103

Post by fl7305 »

alphager wrote: post #79
xxmarkuski wrote: post #18

To be honest, I don't think much of notaries and believe that they stifle innovation and harm the German economy, especially SMEs, but also clubs and citizens. For example, the purchase or sale of a property can only be carried out with a notary who reads the purchase contract for both parties. For this service, he charges a fee of around 1.5% of the sale price. The entire profession is strictly protected by law and…

The Notar does much more than just read the contract; he is liable for the correct administration of the transfer of ownership (done by a three phase process which guarantees that the seller cannot get the money without transferring the property and the buyer cannot get the property without selling the money). The concept of title insurance doesn't exist in Germany as the Notar eliminates the risk.

> The concept of title insurance doesn't exist in Germany

(Title insurance is where you must buy insurance when buying a house to guard against the risk that the house may have unknown liabilities or owners)

It doesn't exist in Sweden either, because the ownership of houses is in a central register. You can't make a claim against a house if it is not registered.

Funnily enough, there's no such register for condos in Sweden. So you can end up with a nasty surprise if it turns out you bought a condo that there were unknown bank loans against. But it doesn't happen often enough that there is title insurance against it.

Re: How to found a company in Germany: 14 "easy" steps and lots of pain

#104

Post by hnhg »

There is also a brutal and inflexible exit tax. Should you decide to leave Germany, even temporarily, you will be faced with a tax of ~30% of the current valuation of your worldwide shareholdings (in companies in which you have >1% ownership). I commented on this in more detail in another post a while back:

https://news.ycombinator.com/item?id=39786934#39788110

In the author's case, because he is using a holding company, his exit tax burden will be doubled!

Re: How to found a company in Germany: 14 "easy" steps and lots of pain

#105

Post by Slartie »

StefanWestfal wrote: post #95
alphager wrote: post #79

Earlier quoted context omitted.

The Notar does much more than just read the contract; he is liable for the correct administration of the transfer of ownership (done by a three phase process which guarantees that the seller cannot get the money without transferring the property and the buyer cannot get the property without selling the money). The concept of title insurance doesn't exist in Germany as the Notar eliminates the risk.

There are ways to ensure the correct transfer of ownership without involving a third party. You can see these principles at work on some trading platforms already, be it for Magic cards or something else where parties cannot trust each other because they do not know each other. Next, you would expect that the notary would educate participants and act as a source of trust, an actor in your best interest, but that is n…

> There are ways to ensure the correct transfer of ownership without involving a third party. You can see these principles at work on some trading platforms already, be it for Magic cards or something else where parties cannot trust each other because they do not know each other.

So what else is that "trading platform" then, if not a "third party"?

The way in which this problem is solved is by introducing a third party that is trusted by both, seller and buyer. There's nothing wrong with this principle. What's wrong specifically with regard to notarys as a third party in property sales in Germany is that the amount of work involved in being this third party does not really scale linearly with the value of the thing to be transferred, but the system by which the price of the notaries' work is determined assumes that a property transfer is twice as laborious (and thus must be twice as expensive) if the property is twice as expensive as some other property. Which is BS.

Re: How to found a company in Germany: 14 "easy" steps and lots of pain

#106

Post by badpun »

OtherShrezzing wrote: post #92
awesomeMilou wrote: post #34

Earlier quoted context omitted.

> It must put limited liability out of reach of so many people. That's the entire point. The concept that any idiot can start an LLC with no collateral (which the 25k are) is completely, absolutely, mind bogglingly bonkers to us Germans. Sounds like a scam imo.

I don't fully understand the comment you've made. Why do you believe it to be bonkers or a scam to allow no-capital limited liability firms? It effectively puts the entire country into a position where unless a citizen is born relatively wealthy, they have to perform labour for someone else for several years while they save up enough to start their own business. Who does the system benefit? What is it preventing? Why…

There are plenty of other forms of companies than LLC which people can use.

With an LLC, the company is only liable with the capital that it has, and if it has none, then it can scam people with impunity (there can be criminal charges if there's outright fraud, but you won't win any money in a civil case against a company that scammed you, if the company has no money).

Re: How to found a company in Germany: 14 "easy" steps and lots of pain

#107

Post by fl7305 »

awesomeMilou wrote: post #34
OtherShrezzing wrote: post #15

Minimum initial share capital of €12,500 to found a company where liability is limited to the firm seems like a very regressive impediment to business. For comparison in the UK, there's a £12 registration fee, and a £1 (one pound) minimum initial share capital. It must put limited liability out of reach of so many people.

> It must put limited liability out of reach of so many people. That's the entire point. The concept that any idiot can start an LLC with no collateral (which the 25k are) is completely, absolutely, mind bogglingly bonkers to us Germans. Sounds like a scam imo.

> The concept that any idiot can start an LLC with no collateral (which the 25k are) is completely, absolutely, mind bogglingly bonkers to us Germans.

Uhh, what? Have you never heard of UGs? That is, 1 Euro GmbHs.

Re: How to found a company in Germany: 14 "easy" steps and lots of pain

#108

Post by mk89 »

robert_foss wrote: post #67
TillE wrote: post #62

Earlier quoted context omitted.

Germany loves endless bureaucratic paperwork which absolutely must be done in person (and good luck getting an appointment in Berlin), despite the many years of bleating about Digitalisierung which has apparently amounted to nothing.

From what I heard the cut the public funding for Digitalization by 90% last year. It truly is like going into a a -20yr time machine living here. Soon you'll be able to use a credit card in most shops even!

> Soon you'll be able to use a credit card in most shops even!

Not sure where you people live, but this myth has to stop, eventually. I can literally count on one hand the n. of shops NOT accepting cards - it's most of the times shops which, I guess, use cash to have flexibility in their accountings :)

Re: How to found a company in Germany: 14 "easy" steps and lots of pain

#109

Post by mk89 »

lttlrck wrote: post #83
robert_foss wrote: post #67

Earlier quoted context omitted.

From what I heard the cut the public funding for Digitalization by 90% last year. It truly is like going into a a -20yr time machine living here. Soon you'll be able to use a credit card in most shops even!

I moved from the UK to Germany in 1996 and back then the banking & payment was just sooo backwards. Some stores were incredibly anachronistic (Lerche springs to mind - since closed down) Sorry to hear it's still the same.

Germany and "digital" payments have a history due to old reasons.

We don't appreciate its meaning anymore, but cash is literally the only anonymous payment method you can have in this lifetime, and people in Germany tend NOT to trust any entity/company/government holding your data for no particular purpose.

The downside of this is the split brain problem that you have with distributed systems: a state knows something about you that another state maybe doesn't, which leads to "interesting" things like illegal people having multiple identities in several states, etc. Weird s**.

Re: How to found a company in Germany: 14 "easy" steps and lots of pain

#110

Post by Rutjjt »

RicoElectrico wrote: post #20

I wonder: why EU did not try to somewhat harmonize company law? I can understand that things like tax code, penal code would not benefit from unification across disparate societies, but companies seem like a ripe target. This should have begun 20 or so years ago.

Why? It would export German "efficiency" into other states.
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