4 ms·

> What does the US do right that we do wrong here? Besides paying our devs worse. The reason there is really no cool tech firms in the EU is because the EU eco

> What does the US do right that we do wrong here? Besides paying our devs worse. The reason there is really no cool tech firms in the EU is because the EU economic policies make them impossible. Working for a startup is an extremely risky decision. As a top engineer, you get shitty pay, and a really good options package that in most cases ends up being worth nothing because most startups fail. In the US, however, if your startup cashes out, you end up rich. This is not only a life changing experience, some of these rich top tech engineers end up creating their own startups afterwards with the money they make, which perpetuates the cycle. In Europe, if as a top engineer your startup cashes out, you only end up marginally better than if you had had an 8-5 job at BigTech (Google, Apple, Microsoft). Almost 50% of your cashout goes away in taxes, and the rest barely compensates the bad paid you got the last 5-10 years of your life, and if you take "worked hours/week" into account, quality of life, and risk taken, the value proposition is just a joke. Startups already have a very hard time flourishing with top talent. Europe makes it almost impossible for these to attract top talent, so that's why you don't see as many unicorns here as you do in the US. This doesn't mean there aren't any startups in Europe. There are. There are just much fewer than in the US, have an even lower success rate, and a less qualified and risk-friendlier employee base. Source: my own personal experience job hunting in Germany, for many US startups operating here, where most of them actually try to offer BigTech salaries without option packages because they know option packages do not make sense here. Source 2: https://notoptional.eu/ https://notoptional.eu/ Techcrunch: https://techcrunch.com/2018/11/27/30-european-startup-ceos-call-for-better-stock-option-policies/ https://techcrunch.com/2018/11/27/30-european-startup-ceos-c...

bromuro 6y ago
Opening a startup in Germany, Italy or Spain means enter a world full of bureaucracy and complicated rules: you need enough money to start and an accountant hopefully knowing their stuff. Taxes are so high that you will likely struggle (or just close) the first two years and you will eventually start accumulating tax debts. Errors On the other side, some european countries came to rescue with some smart solutions — like the Estonian e-residency program.
- toohotatopic 6y ago
  >you need enough money to start That's true everywhere, isn't it? >Taxes are so high that you will likely struggle (or just close) the first two years You pay taxes on profits. Especially during the first years you should have so many expenses that taxes shouldn't be a problem.
  - fluffything 6y ago
    In Germany you need 20k Euros cash, and an accountant, and to pay all the "bureaucracy costs" of registering a new company. That's something you have to pay independently of whether your startup is making money or not.
    - toohotatopic 6y ago
      That's for a GmbH [1] where you create an independent legal entity. Actually it's 25k and almost 1k in legal fees. Though, you only need an accountant if you have millions in assets or plenty of employees. [3] However, that's for an independent legal entity. If you want to start a business, you can simply register a business, even online [2] for about 25 to 100 euros. If you don't have wealth to protect you don't need a legal entity anyway. [1] https://en.wikipedia.org/wiki/Gesellschaft_mit_beschr%C3%A4nkter_Haftung https://en.wikipedia.org/wiki/Gesellschaft_mit_beschr%C3%A4n... [2] https://www.freistaat.bayern/dokumente/onlineservice/7333142412 https://www.freistaat.bayern/dokumente/onlineservice/7333142... [3] Actually you can buy an old, empty, GmbH for about 5k but then you lose those 5k instead of having them on your balance sheet like you do when you start your GmbH with 25k.
      - fluffything 6y ago
        > However, that's for an independent legal entity. If you want to start a business, you can simply register a business, even online [2] for about 25 to 100 euros. If you don't have wealth to protect you don't need a legal entity anyway. I'm not sure I follow. If your startup isn't even an independent legal entity, AFAICT you can't pay your employees with equity (e.g. stock options). If you could, the risk would be super high. If the startup is an independent entity and the CEO screws up (e.g. goes to jail), you can replace it. But if it is a completely private business owned by one single person and that person doesn't want to be replaced, then whatever equity you had is now worthless.
toohotatopic 6y ago
>Working for a startup is an extremely risky decision. As a top engineer, you get shitty pay, and a really good options package that in most cases ends up being worth nothing because most startups fail. How about structuring it differently? If you e.g. don't receive options but actual shares? Hold those shares not by yourself but via a shell company. Then you never pay income taxes. Since you are in Europe, look up the successors of the current Double Irish. [1] https://en.wikipedia.org/wiki/Double_Irish_arrangement https://en.wikipedia.org/wiki/Double_Irish_arrangement
- fluffything 6y ago
  > If you e.g. don't receive options but actual shares? Everything your employer gives you as part of your salary is subject to the salary tax. Whether your employee gives you options or shares, doesn't matter, you need to taxate them, and that requires assigning them a value. If your employer gives you options, you can only exercise them when the shares you buy have a value (via an IPO, acquisition, etc.), so you pay taxes on the value when you exercise them - verifying this value is trivial for the tax office (check purchase price of shares, IPO share value, etc.). For publicly traded companies, if your employee gives you shares, you pay taxes when you get the shares on the value of the shares on the day that you got them. If your employee gives you shares from a private hold company, those shares have no value until the company gets public or acquired. You'll taxate them not on the share price that the share had when you got them, but the one it has when it went public.
  - fluffything 6y ago
    > You'll taxate them not on the share price that the share had when you got them, but the one it has when it went public. Imagine getting 1 million euros in shares, that you want to hold on for a couple of years because you believe they will be worth 10 million euros then. Well, to do that, you need to first pay 500k Euros in taxes (where you get them from is not the tax office problem). Then, if the stock goes from 1 to ten million, you need to again pay taxes on the 9 million win that you made (25%).

bromuro 6y ago

Opening a startup in Germany, Italy or Spain means enter a world full of bureaucracy and complicated rules: you need enough money to start and an accountant hopefully knowing their stuff. Taxes are so high that you will likely struggle (or just close) the first two years and you will eventually start accumulating tax debts. Errors On the other side, some european countries came to rescue with some smart solutions — like the Estonian e-residency program.

toohotatopic 6y ago
>you need enough money to start That's true everywhere, isn't it? >Taxes are so high that you will likely struggle (or just close) the first two years You pay taxes on profits. Especially during the first years you should have so many expenses that taxes shouldn't be a problem.
- fluffything 6y ago
  In Germany you need 20k Euros cash, and an accountant, and to pay all the "bureaucracy costs" of registering a new company. That's something you have to pay independently of whether your startup is making money or not.
  - toohotatopic 6y ago
    That's for a GmbH [1] where you create an independent legal entity. Actually it's 25k and almost 1k in legal fees. Though, you only need an accountant if you have millions in assets or plenty of employees. [3] However, that's for an independent legal entity. If you want to start a business, you can simply register a business, even online [2] for about 25 to 100 euros. If you don't have wealth to protect you don't need a legal entity anyway. [1] https://en.wikipedia.org/wiki/Gesellschaft_mit_beschr%C3%A4nkter_Haftung https://en.wikipedia.org/wiki/Gesellschaft_mit_beschr%C3%A4n... [2] https://www.freistaat.bayern/dokumente/onlineservice/7333142412 https://www.freistaat.bayern/dokumente/onlineservice/7333142... [3] Actually you can buy an old, empty, GmbH for about 5k but then you lose those 5k instead of having them on your balance sheet like you do when you start your GmbH with 25k.
    - fluffything 6y ago
      > However, that's for an independent legal entity. If you want to start a business, you can simply register a business, even online [2] for about 25 to 100 euros. If you don't have wealth to protect you don't need a legal entity anyway. I'm not sure I follow. If your startup isn't even an independent legal entity, AFAICT you can't pay your employees with equity (e.g. stock options). If you could, the risk would be super high. If the startup is an independent entity and the CEO screws up (e.g. goes to jail), you can replace it. But if it is a completely private business owned by one single person and that person doesn't want to be replaced, then whatever equity you had is now worthless.

toohotatopic 6y ago

>Working for a startup is an extremely risky decision. As a top engineer, you get shitty pay, and a really good options package that in most cases ends up being worth nothing because most startups fail. How about structuring it differently? If you e.g. don't receive options but actual shares? Hold those shares not by yourself but via a shell company. Then you never pay income taxes. Since you are in Europe, look up the successors of the current Double Irish. [1] https://en.wikipedia.org/wiki/Double_Irish_arrangement https://en.wikipedia.org/wiki/Double_Irish_arrangement

fluffything 6y ago
> If you e.g. don't receive options but actual shares? Everything your employer gives you as part of your salary is subject to the salary tax. Whether your employee gives you options or shares, doesn't matter, you need to taxate them, and that requires assigning them a value. If your employer gives you options, you can only exercise them when the shares you buy have a value (via an IPO, acquisition, etc.), so you pay taxes on the value when you exercise them - verifying this value is trivial for the tax office (check purchase price of shares, IPO share value, etc.). For publicly traded companies, if your employee gives you shares, you pay taxes when you get the shares on the value of the shares on the day that you got them. If your employee gives you shares from a private hold company, those shares have no value until the company gets public or acquired. You'll taxate them not on the share price that the share had when you got them, but the one it has when it went public.
- fluffything 6y ago
  > You'll taxate them not on the share price that the share had when you got them, but the one it has when it went public. Imagine getting 1 million euros in shares, that you want to hold on for a couple of years because you believe they will be worth 10 million euros then. Well, to do that, you need to first pay 500k Euros in taxes (where you get them from is not the tax office problem). Then, if the stock goes from 1 to ten million, you need to again pay taxes on the 9 million win that you made (25%).