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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

#111

Post by arp242 »

yau8edq12i wrote: post #4
bouncing wrote: post #2

Not to brag, but there are so few things to actually feel some civic pride for in America, and business registration is one of them, so I guess we have that. I can get an IRS EIN (tax ID), register an LLC, obtain a sales tax license (only required for selling stuff), and open a business checking account in about 2 hours in Colorado. Someone who knows what they’re doing and doesn’t spend time researching banking optio…

Unless you're opening companies on a daily basis to evade taxes or whatever, I fail to see why you would need the process to be that fast. Because with such short delays, nobody will have actually checked anything, so the only winners are fraudsters, in the end.

It doesn't need to be that fast, but the process in some (or maybe even many?) EU countries is rather ridiculous, as described here.

Anyone should be able to start a business, reasonably easily and cheaply – I feel it's a matter of basic freedom and liberty: you should be able to do what you bloody well want with your life, including starting a business. Basic protections to prevent the most egregious of abuse is fine, but mostly it's just about registration and paperwork.

Having to pay tens of thousands of euros for limited liability so you don't risk getting completely assraped if your business fails is how you keep the poor plebs in their place. All of this is classic "one set of rules for the poor, another set of rules for the rich" type of stuff.

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

#112

Post by _Microft »

hnhg wrote: post #104

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 comp…

If this reply [0] to a comment of yours is true, then you’re allowed to „temporarily“ leave Germany for 7-12 years before being affected by this.

[0] https://news.ycombinator.com/item?id=39790138

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

#113

Post by StefanWestfal »

Slartie wrote: post #105
StefanWestfal wrote: post #95

Earlier quoted context omitted.

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 par…

Indeed, my mistake and agree. Here, I wanted to refer to the fact that the transfer of ownership could likely be done even without involving a notary or a human in a properly digitalized system.

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

#114

Post by nicbou »

I document German bureaucracy for a living,[0] and everything is like that. Every life event - immigrating, getting a job, getting married, having a child, buying a car - is mired in slow, paper-based bureaucracy. It is a constant, significant impediment to life in the country.

Just last week, I was telling people that the best way to get married in Germany is to get married in Denmark.

I cannot overstate how terrible German bureaucracy is, and how defeating it is to deal with it. A lot of people give up and leave the country over it.

[0] https://allaboutberlin.com

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

#115

Post by hnhg »

_Microft wrote: post #112
hnhg wrote: post #104

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 comp…

If this reply [0] to a comment of yours is true, then you’re allowed to „temporarily“ leave Germany for 7-12 years before being affected by this. [0] https://news.ycombinator.com/item?id=39790138

I answered later in the thread: "Unfortunately, so far that deferral will most likely come with the requirement for a security, typically cash. That is the prevailing view of tax specialists right now, but will depend on each individual's experience with their local tax authorities."

Sadly, you cannot just leave and think it would be automatically deferred. You must apply for the deferral before you leave and the local tax authorities can ask for a security in cash for the entire amount owed. It is absolutely kafkaesque.

As with many German corporate tax matters, if you think you are affected by this, you should really speak with a tax advisor who has strong experience working with people in your particular situation. You cannot just read the rules and figure it out.

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

#116

Post by tverbeure »

yau8edq12i wrote: post #41
shaism wrote: post #14

Earlier quoted context omitted.

I think the time is not necessarily the issue. The issue is that everything is very manual and “analog” in Germany. You have to find a notary, register the “Gewerbe” at the Gewerbeamt, get a tax ID, and so forth. All are different processes with different institutions. In theory, you can do the notarization online, but when I attempted to do it, the first notary did not even reply, and the second one told me: “The sy…

The friction is precisely the point.

These kind of frictions are typically not an exception. When I read this blog post about the steps to just start a business, I immediately assume that there'll be similar frictions during other steps. And indeed, the comments here talk about the difficulty to own a home when the money was already paid in October, how it can take up to 2 years to close down a company, or how there's a 30% exit tax even if you leave the country only for a few years.

The friction that you seem to like has almost certainly cost Germany a good deal of jobs from people who decides that the hassle just wasn't worth it.

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

#117

Post by nicbou »

jkaplowitz wrote: post #84
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.

Tangential question for third-country nationals in Berlin (like me right now): Does the Berlin immigration office readily give EU Blue Cards to people in that arrangement, or do they say it's really a form of self-employment because you own the company you're working for? And do the public health insurance funds treat this as employment or self-employment for purposes of qualifying for public health insurance, for pe…

The freelance visa requires a local economic interest (a reason to live here), usually in the form of German customers. There is nothing mentioned about where the company is registered and it should not matter.

Practically though, the immigration office's bureaucrats are by definition as far removed from entrepreneurship as they can be, and might struggle to reconcile the documents you have with the list of documents they are told to ask for.

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

#118

Post by toast0 »

hnhg wrote: post #104

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 comp…

From the article you linked in that comment[1], it seems like this exit tax only applied to companies where you own 1% or more? and it's structured as the capital gains tax, but due now, so on the current value minus your cost basis.

The US has an exit tax if you renounce citizenship, and it's assessed on your entire net worth. If the article you linked is accurate, this german tax seems much more reasonable.

EDIT: actually, I reviewed, and I think it's broadly similar --- treat all assets as if sold at market value on the date of exit. Thus, any deferred taxes from unrealized capital gains need to be paid when you exit the taxing jurisdiction. Although, again, if the linked article is correct, it only happens to assets where you own >= 1% of the company when exiting Germany, and all capital assets if you qualify in the US.

[1] https://www.winheller.com/en/tax-law-tax-advisory/internatio...

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

#119

Post by freyfogle »

nicbou wrote: post #114

I document German bureaucracy for a living,[0] and everything is like that. Every life event - immigrating, getting a job, getting married, having a child, buying a car - is mired in slow, paper-based bureaucracy. It is a constant, significant impediment to life in the country. Just last week, I was telling people that the best way to get married in Germany is to get married in Denmark. I cannot overstate how terribl…

Really I think this is overdone. I fully appreciate Berlin is disfunctional, but in other regions (I live in Thüringen) things go quite quickly.

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

#120

Post by calvinmorrison »

twixfel wrote: post #87
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.

OK but how is it that other countries get by without them for founding LLCs? Are there countless scams going on in the UK surrounding limited company for example since you don't need a notary there? There's often lots of post hoc justifications in Germany for "why it is that way" (and has to be that way). But nobody ever seems to stop and think: ok but the rest of the world seems to get by OK without these reams and…

My assumption of the bureaucracy is that it stems out of the German empires professional service
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