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I've observed that a number of Austrian and some German Startups have actually incorporated as UK Limited Companies, which just happen to be headquartered in Au

I've observed that a number of Austrian and some German Startups have actually incorporated as UK Limited Companies, which just happen to be headquartered in Austria/Germany. German courts have confirmed that this is fine. FWIW, forming an Austrian GmbH requires €35,000 in starting capital, half of which must be an initial cash deposit, in addition to all the legal/bureaucratic hoops you need to jump through. (It's not clear to me where the other €17,500 come from.) I'd be interested in people's experience with incorporating in Europe, especially regarding whether it affects international investment, and how much of a problem it is for day-to-day operation if you're a UK Limited Company but not located in the UK.

mseebach 17y ago
> (It's not clear to me where the other €17,500 come from.) I would guess assets such as inventory, shares of other companies, real estate and IP.
- Luc 17y ago
  Hmmm... If it's anything like the Belgian Ltd. company, it's probably shares issued but not paid. The amounts in Belgium are lower, but here also half the shares can be unpaid. If the company goes bust, the shareholders are still in it for the remaining amount! Also, as a company director your first act can be to transfer that 17,5k back to your personal account (of course you'll need to book it as wages or a loan by the end of the accounting year). So in effect you just need to scrounge together the 17,5k for one week, then during the year you'll be paing taxes etc. on it to wash it through the system, but you would probably be out about half of this amount.
wheels 17y ago
Yes, indeed there is an EU law which mandates that all other EU incorporation forms must be respected in other EU countries and may have their primary place of business there. The UK Ltd is the most popular of those as it's very easy to set up and the most recognized incorporation form in Europe. It does however add a significant amount of overhead in terms of accounting, tax and payroll. Our lawyer advised against doing such saying that the new UG (mini-GmbH, or literally "entrepreneur company") is a preferable form within Germany since it's very similar to the usual GmbH's structure and the authorities, accountants, etc. are familiar with such. That said, there have been a number of successful German startups that were founded as UK Ltds, so it's obviously something that can be made to work. What will be telling is seeing how many of those continue to emerge in the coming years now that the UG exists. For investors, a UK Ltd is the safest bet because it's a form that virtually all investors and startup lawyers in Europe are familiar with. Regional incorporation forms tend to limit interest to investors in those regions.
- pmjordan 17y ago
  Thanks. There was talk of introducing some kind of equivalent to the German UG in Austria a while back, but that project appears to have died for now. (The government are presumably too busy with the current round of raising taxes) There were also some kind of plans for a "mini" version of the EU-wide SE a while back, I'm not sure what happened to that.
  - roel_v 17y ago
    The SPE is still under consideration by the European Parliament.
DeusExMachina 17y ago
I am italian and I opened a UK Ltd to go around these problems in Italy. But it has been a pain nonetheless. Opening an Ltd in the UK is cheap as long as you have a location there and you can do it all by yourself. This was not my case. If you have to rely on another company, like me, costs grow a lot. You have to pay people to do these things, to advise you and to give you a legal location for your company. This cost me a lot to setup and is always a pain to communicate. So the problem persists, if you are not able of making money to cover your expenses. Now I have relocated to the Netherlands. I don't know what the situation is here, but I know that my Ltd is costing me too much to mantain (paying people that opened my Ltd and then did almost nothing more), so I'm closing it and I will try to convert it in something cheaper here. I did never seek investments, so I'm not able to relate on that part.
- pmjordan 17y ago
  Interesting, thank you. Is the presence you need to maintain in the UK essentially a glorified P.O. box, or is there more? What order of magnitude in fees are we talking about (if you don't mind)?
  - DeusExMachina 17y ago
    I think you need a real location, but I'm not really sure. That is what they are providing to me. You also need two distinct people, one director and one secretary. They are providing me the secretary. The rates were: 4000 euros for the setup (one year ago), including the place, the secretary and accounting for one year. They took me an appointment with a bank to open a bank account, but I was the one who opened it. For subsequent years they told me it would be around 800 pounds, but now the bill is 3300 pounds (that is nearly the same price I paid the first year). That's why I decided to close it. Their service really sucks. But if you look on the internet prices really vary and you can find cheaper ones. They try to scare you telling you that if you don't do everything right there might be consequences. In my opinion the best solution is to go there for some time and do some researches in the city, or at least have someone there. Because if you don't need all these "services" it really a lot cheaper, in the range of the 300-400 euros. Also, we are speaking about London, not the entire UK. London has special laws regarding this and it's much easier than in the rest of the country.

mseebach 17y ago

> (It's not clear to me where the other €17,500 come from.) I would guess assets such as inventory, shares of other companies, real estate and IP.

Luc 17y ago
Hmmm... If it's anything like the Belgian Ltd. company, it's probably shares issued but not paid. The amounts in Belgium are lower, but here also half the shares can be unpaid. If the company goes bust, the shareholders are still in it for the remaining amount! Also, as a company director your first act can be to transfer that 17,5k back to your personal account (of course you'll need to book it as wages or a loan by the end of the accounting year). So in effect you just need to scrounge together the 17,5k for one week, then during the year you'll be paing taxes etc. on it to wash it through the system, but you would probably be out about half of this amount.

wheels 17y ago

Yes, indeed there is an EU law which mandates that all other EU incorporation forms must be respected in other EU countries and may have their primary place of business there. The UK Ltd is the most popular of those as it's very easy to set up and the most recognized incorporation form in Europe. It does however add a significant amount of overhead in terms of accounting, tax and payroll. Our lawyer advised against doing such saying that the new UG (mini-GmbH, or literally "entrepreneur company") is a preferable form within Germany since it's very similar to the usual GmbH's structure and the authorities, accountants, etc. are familiar with such. That said, there have been a number of successful German startups that were founded as UK Ltds, so it's obviously something that can be made to work. What will be telling is seeing how many of those continue to emerge in the coming years now that the UG exists. For investors, a UK Ltd is the safest bet because it's a form that virtually all investors and startup lawyers in Europe are familiar with. Regional incorporation forms tend to limit interest to investors in those regions.

pmjordan 17y ago
Thanks. There was talk of introducing some kind of equivalent to the German UG in Austria a while back, but that project appears to have died for now. (The government are presumably too busy with the current round of raising taxes) There were also some kind of plans for a "mini" version of the EU-wide SE a while back, I'm not sure what happened to that.
- roel_v 17y ago
  The SPE is still under consideration by the European Parliament.

DeusExMachina 17y ago

I am italian and I opened a UK Ltd to go around these problems in Italy. But it has been a pain nonetheless. Opening an Ltd in the UK is cheap as long as you have a location there and you can do it all by yourself. This was not my case. If you have to rely on another company, like me, costs grow a lot. You have to pay people to do these things, to advise you and to give you a legal location for your company. This cost me a lot to setup and is always a pain to communicate. So the problem persists, if you are not able of making money to cover your expenses. Now I have relocated to the Netherlands. I don't know what the situation is here, but I know that my Ltd is costing me too much to mantain (paying people that opened my Ltd and then did almost nothing more), so I'm closing it and I will try to convert it in something cheaper here. I did never seek investments, so I'm not able to relate on that part.

pmjordan 17y ago
Interesting, thank you. Is the presence you need to maintain in the UK essentially a glorified P.O. box, or is there more? What order of magnitude in fees are we talking about (if you don't mind)?
- DeusExMachina 17y ago
  I think you need a real location, but I'm not really sure. That is what they are providing to me. You also need two distinct people, one director and one secretary. They are providing me the secretary. The rates were: 4000 euros for the setup (one year ago), including the place, the secretary and accounting for one year. They took me an appointment with a bank to open a bank account, but I was the one who opened it. For subsequent years they told me it would be around 800 pounds, but now the bill is 3300 pounds (that is nearly the same price I paid the first year). That's why I decided to close it. Their service really sucks. But if you look on the internet prices really vary and you can find cheaper ones. They try to scare you telling you that if you don't do everything right there might be consequences. In my opinion the best solution is to go there for some time and do some researches in the city, or at least have someone there. Because if you don't need all these "services" it really a lot cheaper, in the range of the 300-400 euros. Also, we are speaking about London, not the entire UK. London has special laws regarding this and it's much easier than in the rest of the country.