Ask HN: Where within Europe should we incorporate?

16 points by jpdpeters 4 years ago | 22 comments

My co-founder and I are based in Germany and are currently evaluating in which European country we should incorporate. Maybe someone here can weigh in. We are not super happy with the process in Germany (having to go to the notary, long waiting times etc.) and taxes are so-so. Do alternatives like Ireland (low taxes) or Estonia (easy process) make sense when we would never actually move to those countries? Especially considering we might scale up, have employees etc.?

I am curious about incorporating in the UK, but I assume that Brexit made operating there a lot more difficult.

Any shared experiences would be much appreciated!

captainmuon 4 years ago |

Disclaimer, I'm not an expert and I have only second-hand knowledge of founding. But from what I've seen, the local authorities are quite willing to do some hand-holding and answer questions. Registering a basic business (Gewerbe / Gbr / Selbstständiger) with the Finanzamt is easy, I think you also have to register with the chamber of commerce (Industrie und Handelskammer) and pay a small fee, but they also offer support for founders.

No matter where you incorporate, you'll likely have to pay some taxes in Germany if you are based here. You'll also have to pay social insurances for your employees, which are quite high. In any case, I'd recommend to get an accountant even before a lawyer. They can take care of the payroll accouting (even if it is just for yourself and your co-founder), social insurances, and taxes, and are not too expensive.

So if you are just setting up a business entity, I would just do it where you are based, since you have the paperwork anyway and doing it here gives you the ability to just walk up to the local offices if needed. However, I don't know what the answer is if you want to found a limited corporation (GmBH). There is not the universal "Delaware company" in Europe as far as I know. Some of our multinational customers incorporated in Ireland for tax savings, but I don't know at which scale that would make sense.

jpdpeters 4 years ago | |

Thank you!

fxtentacle 4 years ago |

Go with Germany. Ask the local IHK and equivalents of WTSH to introduce "de minimis" grants and partnership opportunities to you. The tax gifts and free introductions will be worth much more than the slight inconvenience of having to pay €80 and spending an evening to visit the notary office.

I've been running mid sized privately owned companies in Germany for 13 years now. It was a learning curve, but by now I fully understand why there's so much "Mittelstand" where other countries just have a glaring hole between rich and poor.

In my opinion, the only true alternative better than Germany is to incorporate in the US for easier access to their market. But with Stripe and SaaS, almost nobody cares. It's all credit cards on the web anyway.

jpdpeters 4 years ago | |

Thank you!

fxtentacle 4 years ago | | |

Forgot one thing: "go-inno" is the Google keyword for vouchers where the government pays for an independent consulting company to advise you on which government grants you can apply to. If you incorporate shortly after university, the go-inno consultants can even sign you up for EXIST, which will pay your living expenses for 1-3 years.

cjbenedikt 4 years ago |

Brexit made it more difficult to do business in EU. Otherwise it us fairly easy to incorporate and get a startup visa. But the Netherlands are very business friendly and low tax. Go for a BV structure ( similar to Ltd. in UK or GmbH in Germany) but lower capital requirements ( EUR 100). Just my tuppence.

qnsi 4 years ago |

I doubt you will find a good answer here, you should probably ask local community in Berlin or find good startup lawyers

One thing, comming from Poland, that would actually be tax evasion here to incorporate in other country with no reason, so its not discussed here that often.

jpdpeters 4 years ago | |

Fair enough! Thanks for the feedback, I'll try to find a good lawyer :)

odshoifsdhfs 4 years ago | | |

Not going over Poland, as they may have special laws, but in general in the EU, it is ok if you are a EU citizen and open a company in another country within EU. If outside the EU many (each?) countries have a 'list' of some countries they consider 'low tax' and you are forced to be taxed at home (basically, they tax you like you are a local company and have to supply all paperwork to your country of residence).

The problem is when you want to pay yourself from that company, where in general, you have to register with the tax offices in both countries (company country and your residence country and then you may be able to pay more taxes on your home country depending on many things).

Not a tax attorney or the likes, but my cousin is and deals with a lot of this as she works with some small seed funds and helps them incorporate in other countries.

andrejguran 4 years ago |

Hi, I have experience with 2 startups in Germany and recently incorporated in the UK and I have to say UK is much better option (no notary requirement, everything online, more options for 3rd party support i.e. seedlegals). We have also raised some capital in an EU country and brexit wasn't problem at all. Look also into EIS/SEIS for tax relief in the UK which makes it easier to find angel/early investors. Also there much more money in the UK than anywhere else in the Europe. As my old colleague used to say: that's my 50 cents ;)

jpdpeters 4 years ago | |

Thank you! :)

aakswe 4 years ago |

If you want to build a strong engineering team, consider Sweden. Loads of engineers from all over the world, major tech companies have their offices here and in general, very startup friendly.

ipaddr 4 years ago |

You should use a virtual notary if you want to use Germany.

You have to decide what is important. A non-resident business in Ireland can be setup in 3 days for 300 / 12.5 corporate tax rate.

Easy for Doing Business: Denmark, Sweden and Lithuania.

Starting a Business: Greece, Estonia and Ireland.

Paying Taxes: Ireland, Denmark and Finland.

brtkdotse 4 years ago | |

A friend and I both run our own independant consulting business. I incorporated in Sweden, he incorporated in Germany. I had to follow a simple webform wizard, sign electronically and start a bank account with 2500€, he had to get a lawyer invovled and show up in person and start a bank account with 25000€.

Kaotique 4 years ago |

Wouldn't it be much more complicated to incorporate abroad and deal with taxes and foreign law?

browningstreet 4 years ago | |

Apparently OP really hates visiting notaries.

pyb 4 years ago |

If you are a German resident and incorporate elsewhere, you'll probably be subject to Controlled Foreign Corporation rules. Study this topic before you go any further down that route.

mongol 4 years ago |

Consider where your customers are, first and foremost. When you know that, you are ready to evaluate.

s-xyz 4 years ago |

Luxembourg, since you are neighbors

dazamarquez 4 years ago |

The Netherlands

dazamarquez 4 years ago |

The netherlands

throwawayvibes 4 years ago |

You have to go to a notary everywhere, for everything in Europe if you are above sole trader level.