French tax on startups • Hacker News Board

Re: French tax on startups

#11

Post by yummyfajitas » Sat, Oct 20, 2012, 1:57 PM UTC

snippyhollow wrote: post #3

I'm tired of this BS being spread by ppl who didn't even read the finances law in question (at least bullet points). It's not true, the 60% tax rate comes from the creation of a new bracket in the income tax and the treatment of selling your startup as income. To attain 60% you 1) need to sell for more than 150k 2) count all the acquisition money as instant revenue 3) do not intend to invest. And in fact, you have de…

VCs make nearly all their returns off a few big hits. So on the big hit, they will certainly:

1) make > 150k.

2) Sell out instantly, or at the very least in chunks considerably bigger than 150k. Even if they do sell out in 150k chunks, that will drastically reduce their returns - returns = log(outcome/investment)/t, so increasing t will lower returns.

3) Return the funds to investors.

Sounds like this law will, in fact, cut returns by roughly 50%. Or maybe 30% if the exit takes a long time.

Re: French tax on startups

#12

Post by VSerge » Sat, Oct 20, 2012, 1:58 PM UTC

davidw wrote: post #10

martinced wrote: post #6

France is destroying its future wealth and its destroying it fast. It's already one of the country with the most obstacles when you want to create a business: there are laws at basically every "level of power" and because it's one of the most socialist country of the planet (despite them always saying neo-liberal are supposedly in power) there are a great many level of powers. It's mad. Consider yourself lucky if you…

Don't the Nordic countries have a lot of taxes? They seem to do ok in the startup scene. My wild guess - I don't know how things are 'on the ground' in either France or the Nordic countries - is that France tends to have more bureaucracy like here in Italy. So that it's not just a matter of "make some money, pay X in taxes" which is pretty easy to reason about, and somewhat "fair" (even if we all have different opini…

Ha! On the ground in France, it's not really hostility, it's more indifference and rigidity. Some are hostile indeed, but some are helpful as well so it balances out. It's still a general pain in the backside though, and boy do they know about not communicating between services, losing papers you sent, and asking you 5 times for the same stuff... But to our problem it is the actual tax rate increase. From 30 to 60% overnight on investors' exits. Not neutral for business.

Re: French tax on startups

#13

Post by yummyfajitas » Sat, Oct 20, 2012, 2:01 PM UTC

davidw wrote: post #10

martinced wrote: post #6

France is destroying its future wealth and its destroying it fast. It's already one of the country with the most obstacles when you want to create a business: there are laws at basically every "level of power" and because it's one of the most socialist country of the planet (despite them always saying neo-liberal are supposedly in power) there are a great many level of powers. It's mad. Consider yourself lucky if you…

Don't the Nordic countries have a lot of taxes? They seem to do ok in the startup scene. My wild guess - I don't know how things are 'on the ground' in either France or the Nordic countries - is that France tends to have more bureaucracy like here in Italy. So that it's not just a matter of "make some money, pay X in taxes" which is pretty easy to reason about, and somewhat "fair" (even if we all have different opini…

Don't the Nordic countries have a lot of taxes?

Not on corporations. They do tend to have rather high taxes on middle class individuals, however.

http://blogs-images.forbes.com/kenrapoza/files/2011/09/Corpo...

http://www.forbes.com/sites/kenrapoza/2011/09/09/a-cross-cou...

Re: French tax on startups

#14

Post by btb » Sat, Oct 20, 2012, 2:03 PM UTC

flyinglizard wrote: post #9

France is doing us foreigners a big favor by taking on an experience in wealth redistribution through extreme taxation. It takes some balls to do something that may destroy your economy to this extent. We should all thank the French voters who took on the risk to put this government in control. (I think it'll end in tears, but it will serve to deter the voters in other countries the next time they think of starting a…

Yeah the new 75% income tax bracket in France really is putting the Laffer curve theory to the test. Will be very interesting to see how it pans out. I'm sure socialist governments elsewhere in Europe is following this grand experiment closely.

Re: French tax on startups

#15

Post by anonymouz » Sat, Oct 20, 2012, 2:05 PM UTC

martinced wrote: post #6

France is destroying its future wealth and its destroying it fast. It's already one of the country with the most obstacles when you want to create a business: there are laws at basically every "level of power" and because it's one of the most socialist country of the planet (despite them always saying neo-liberal are supposedly in power) there are a great many level of powers. It's mad. Consider yourself lucky if you…

Are you proposing that the socialist nanny-state in Spain has caused the Spanish financial crisis? or its crazy real estate boom?

Re: French tax on startups

#16

Post by caretu » Sat, Oct 20, 2012, 2:13 PM UTC

davidw wrote: post #10

martinced wrote: post #6

France is destroying its future wealth and its destroying it fast. It's already one of the country with the most obstacles when you want to create a business: there are laws at basically every "level of power" and because it's one of the most socialist country of the planet (despite them always saying neo-liberal are supposedly in power) there are a great many level of powers. It's mad. Consider yourself lucky if you…

Don't the Nordic countries have a lot of taxes? They seem to do ok in the startup scene. My wild guess - I don't know how things are 'on the ground' in either France or the Nordic countries - is that France tends to have more bureaucracy like here in Italy. So that it's not just a matter of "make some money, pay X in taxes" which is pretty easy to reason about, and somewhat "fair" (even if we all have different opini…

The Nordic countries do have a lot of taxes, and Norway most of all. And that means Norway is not the easiest country to do business in, unless you're into oil, gas or fish. The one big killer in Norway, is taxation of working capital. Which is why a Norwegian Facebook or Twitter would be impossible at this moment. If you have a company valued at say $100 million, but you're losing money at a rate of $200k per year, you'd think you just need to raise those $200k somehow, which shouldn't be too hard. But guess what, since you're valued at $100 million, you'd have to somehow raise another $2 million each and every year, just to pay your taxes.

Re: French tax on startups

#17

Post by shasta » Sat, Oct 20, 2012, 2:33 PM UTC

caretu wrote: post #16

davidw wrote: post #10

Earlier quoted context omitted.

Don't the Nordic countries have a lot of taxes? They seem to do ok in the startup scene. My wild guess - I don't know how things are 'on the ground' in either France or the Nordic countries - is that France tends to have more bureaucracy like here in Italy. So that it's not just a matter of "make some money, pay X in taxes" which is pretty easy to reason about, and somewhat "fair" (even if we all have different opini…

The Nordic countries do have a lot of taxes, and Norway most of all. And that means Norway is not the easiest country to do business in, unless you're into oil, gas or fish. The one big killer in Norway, is taxation of working capital. Which is why a Norwegian Facebook or Twitter would be impossible at this moment. If you have a company valued at say $100 million, but you're losing money at a rate of $200k per year,…

Rather than trying to tax companies based on some valuation, why doesn't the government just collect a small percentage of stock each year?

Re: French tax on startups

#18

Post by Rexxar » Sat, Oct 20, 2012, 2:38 PM UTC

martinced wrote: post #6

France is destroying its future wealth and its destroying it fast. It's already one of the country with the most obstacles when you want to create a business: there are laws at basically every "level of power" and because it's one of the most socialist country of the planet (despite them always saying neo-liberal are supposedly in power) there are a great many level of powers. It's mad. Consider yourself lucky if you…

Please stop this political propaganda on HN. There are valid reason to criticize this law without trying to damage France ("Flee France" as you say ...)

Don't call everything you don't like "socialist". It's as ridiculous as when French left-wing socialists call everything they don't like "libéral".

And don't mix Spain and Greece :

- Greece has a completely corrupt government for years (and not only socialist governments)

- Spain had budget surplus for years before the crises and was reducing its debt more than other EU countries (cf http://imgur.com/s1jVu , you can have more stats on http://epp.eurostat.ec.europa.eu/tgm/graph.do?tab=graph&...)

Re: French tax on startups

#19

Post by spindritf » Sat, Oct 20, 2012, 2:45 PM UTC

> Talking about what other measures the government put in place, or what tweaks the government made to lower taxes for entrepreneurs is besides the point, as NO FUNDING MEANS THERE WILL NO LONGER BE SUCCESSFUL FUNDED STARTUPS from which to exit.

It doesn't matter because you cannot show a start-up that never came into existence on TV, so there is no way to hold politicians responsible for that. Nothing has changed since Frédéric Bastiat wrote "What is Seen and What is Unseen"[1].

[1] http://www.econlib.org/library/Bastiat/basEss1.html

Re: French tax on startups

#20

Post by mc32 » Sat, Oct 20, 2012, 3:01 PM UTC

martinced wrote: post #6

France is destroying its future wealth and its destroying it fast. It's already one of the country with the most obstacles when you want to create a business: there are laws at basically every "level of power" and because it's one of the most socialist country of the planet (despite them always saying neo-liberal are supposedly in power) there are a great many level of powers. It's mad. Consider yourself lucky if you…

I recall a friend of a friend opening a hair salon, and from what I recall, it was a near-nightmare. Rules for illumination, taxes for how many lights you had outside the establishment. It's hard starting a business anywhere (the risk) but in France you have the added bonus of needing everything, permits, premises, etc to be ship shape before you open --even if it's not food, or drink. It seemed daunting.