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More money alone won't solve this particular issue. The link that is referenced at the bottom of the article [1] highlights more of these challenges: - Governm

More money alone won't solve this particular issue. The link that is referenced at the bottom of the article [1] highlights more of these challenges: - Government Policies: Taxes and Bureaucracy - Governmental Policies: Support and Relevance - Entrepreneurial Education at School Stage The first is a much bigger issue than missing capital. [1] https://www.gemconsortium.org/country-profile/64 https://www.gemconsortium.org/country-profile/64

raverbashing 8y ago
Everybody complains about taxes but I don't think that's the most important factor tbh Whenever someone discusses corp. taxes in the US and incorporation it seems it's full of gotchas, corner cases and traps. Not to mention every state having its own legislation as well. Taxes might be higher outside of the US (but then again, they're taxes: no profit, no taxes) but they're not necessarily more complex (though Germany ones are probably not the easiest tbh). Startups exist in more tax complex countries. You can't buy culture, customers and financing, the rest is doable.
- thatsaguy 8y ago
  I don't know the exact situation in Germany or US, but in Italy, the "no profit, no taxes" is definitely not true. Depending on the company type you registered, there's a significant cost to just keep the ability to run the company to _do_ business in the first place. By experience, the dead cost of the smallest company you can run is between 5-15k per year. It might not seem much, but I've heard here on HN over and over how to grow a side/passive income, and there's basically no way to do this here. The moment you want to start a side business, the fixed minimal cost is sunk, so unless you start making a significant sum from the start you're just losing money that eats into your primary income. And there's no legal way to do the business below that. That's not how I understood people in the US do this sort of passive income. It sounds like "no money = no tax", but this is not true here. You often have to pay taxes in advance on the projected income of the next year, even if you never had a business first: the projection is based on god-knows-what market estimates you have no control over. The market segmentation, language barrier and tax situation in EU is a huge burden. If you're working on a niche product you want to start with a wide basin of users, at least as large as the EU block. Sounds stupid to start in a single country. It's doable, but don't expect to start with a small capital, and typically not with the wannabe-VC we have here in the EU. The 100k for 3ppl/year is not a joke.. a "100k-300k" ballpark is very common for startups here. I'd consider that just for marketing, or even then. With this money you basically cannot do anything serious, just considering how hard is to penetrate the market. I've yet to see something in the likes of Stripe in the EU. And a decent replacement for Paypal for smaller setups. I'd love to have candidates here. Accepting money is cumbersome if you're small. This is sad. Workforce is a problem. But not because of talent. The extra regulation here implies a strong commitment when hiring. This forces companies to grow very cautiously. You cannot resize the workforce to match the load. If you grow too much, you may doom the company at the first financial difficulty. This causes a lot of sub-contractual work to be done, with a significant decrease in quality and cohesion. Not to mention, this line of working is being limited more and more over time - I was working as an entrepreneur in the beginning of my career but I cannot do that anymore and have to be regularly employed. I could have started something from scratch much more easily 15 years ago compared to now just due to regulations. I could go on for pages...
  - raverbashing 8y ago
    > there's a significant cost to just keep the ability to run the company to _do_ business in the first place Yes, but that's a fixed cost, it's not "taxes". Fixed costs exist in other places as well (though 5k is definitely a lot!) I agree with the other things in your post, and they worry me as well.
  - jashmatthews 8y ago
    > And there's no legal way to do the business below that. Actually, there is. Register an Irish company. All the paperwork is in English, costs are low, and you can operate across the EU.
    - Keats 8y ago
      If you are based in Italy and operate the company from there, you will still have to pay the Italian taxes. But yeah at least you should have easier accounting and no running costs.
      - jashmatthews 8y ago
        > you will still have to pay the Italian taxes. Yup. The company is clearly subject to Italian taxes. This all hinges on whether registering a branch is less hassle and cheaper than opening an Srl. Lots of smaller German startups use either a UK limited or an Irish limited + a German branch.
hef19898 8y ago
It is still in the EU, so there is no resson why you wouldn't incorporate in, say, Estonia and be based out of, say, Berlin. You would still have to pay taxes in Germany. Government support is, as far as I can tell, not a deciding factor in SV. In setting up an start-up friendly ecosystem it can definitely help, France is good example for that.

raverbashing 8y ago

Everybody complains about taxes but I don't think that's the most important factor tbh Whenever someone discusses corp. taxes in the US and incorporation it seems it's full of gotchas, corner cases and traps. Not to mention every state having its own legislation as well. Taxes might be higher outside of the US (but then again, they're taxes: no profit, no taxes) but they're not necessarily more complex (though Germany ones are probably not the easiest tbh). Startups exist in more tax complex countries. You can't buy culture, customers and financing, the rest is doable.

thatsaguy 8y ago
I don't know the exact situation in Germany or US, but in Italy, the "no profit, no taxes" is definitely not true. Depending on the company type you registered, there's a significant cost to just keep the ability to run the company to _do_ business in the first place. By experience, the dead cost of the smallest company you can run is between 5-15k per year. It might not seem much, but I've heard here on HN over and over how to grow a side/passive income, and there's basically no way to do this here. The moment you want to start a side business, the fixed minimal cost is sunk, so unless you start making a significant sum from the start you're just losing money that eats into your primary income. And there's no legal way to do the business below that. That's not how I understood people in the US do this sort of passive income. It sounds like "no money = no tax", but this is not true here. You often have to pay taxes in advance on the projected income of the next year, even if you never had a business first: the projection is based on god-knows-what market estimates you have no control over. The market segmentation, language barrier and tax situation in EU is a huge burden. If you're working on a niche product you want to start with a wide basin of users, at least as large as the EU block. Sounds stupid to start in a single country. It's doable, but don't expect to start with a small capital, and typically not with the wannabe-VC we have here in the EU. The 100k for 3ppl/year is not a joke.. a "100k-300k" ballpark is very common for startups here. I'd consider that just for marketing, or even then. With this money you basically cannot do anything serious, just considering how hard is to penetrate the market. I've yet to see something in the likes of Stripe in the EU. And a decent replacement for Paypal for smaller setups. I'd love to have candidates here. Accepting money is cumbersome if you're small. This is sad. Workforce is a problem. But not because of talent. The extra regulation here implies a strong commitment when hiring. This forces companies to grow very cautiously. You cannot resize the workforce to match the load. If you grow too much, you may doom the company at the first financial difficulty. This causes a lot of sub-contractual work to be done, with a significant decrease in quality and cohesion. Not to mention, this line of working is being limited more and more over time - I was working as an entrepreneur in the beginning of my career but I cannot do that anymore and have to be regularly employed. I could have started something from scratch much more easily 15 years ago compared to now just due to regulations. I could go on for pages...
- raverbashing 8y ago
  > there's a significant cost to just keep the ability to run the company to _do_ business in the first place Yes, but that's a fixed cost, it's not "taxes". Fixed costs exist in other places as well (though 5k is definitely a lot!) I agree with the other things in your post, and they worry me as well.
- jashmatthews 8y ago
  > And there's no legal way to do the business below that. Actually, there is. Register an Irish company. All the paperwork is in English, costs are low, and you can operate across the EU.
  - Keats 8y ago
    If you are based in Italy and operate the company from there, you will still have to pay the Italian taxes. But yeah at least you should have easier accounting and no running costs.
    - jashmatthews 8y ago
      > you will still have to pay the Italian taxes. Yup. The company is clearly subject to Italian taxes. This all hinges on whether registering a branch is less hassle and cheaper than opening an Srl. Lots of smaller German startups use either a UK limited or an Irish limited + a German branch.

hef19898 8y ago

It is still in the EU, so there is no resson why you wouldn't incorporate in, say, Estonia and be based out of, say, Berlin. You would still have to pay taxes in Germany. Government support is, as far as I can tell, not a deciding factor in SV. In setting up an start-up friendly ecosystem it can definitely help, France is good example for that.