5 ms·

The loophole I've successfully used in the past in Austria was to incorporate a Ltd in the UK and operate it in Austria (similarly to how, in the U.S. The fre

by gyulai 4y ago

The loophole I've successfully used in the past in Austria was to incorporate a Ltd in the UK and operate it in Austria (similarly to how, in the U.S. The free movement provision, which is one of the central pilhars of the E.U., extends to free movement of legal persons, and does not end with free movement of natural persons. The UK is no longer in the EU, but you could go with the Republic of Ireland or Malta.

manmal 4y ago
Don’t you need to operate branches in each country if you do that?
- hef19898 4y ago
  You do, you don't need a local legal entity but having one makes a lot of things easier. E.g. employment and profit allocation. The latter has serious tax implications.
  - manmal 4y ago
    Sure, but now you spend a nontrivial amount of time and attention on logistics. Costs can be a couple k Euro per branch per year, depending on what deals you can strike with accountants. You also need to make sure you always respond to mail from authorities in both countries, in time.
    - hef19898 4y ago
      And if you don't you face an investigation by authorities. And they will reclaim due social security and taxes. And you face a potential court case. All of which is a lot more expensive. Not to mention that managers and directors already went to jail for stuff like that. And all that to safe a couple of bucks because smart start-up founders can't wrap their head around the simplest legal principles and requirements.
jokethrowaway 4y ago
Couldn't Austria come after you and say you're running an Austrian company, given you're an Austrian business with no ties to the UK? I'd recommend talking to an accountant. In Italy or Spain this wouldn't fly 100%, it would even be a criminal charge (foreign dressed companies).
- gyulai 4y ago
  > Couldn't Austria come after you and say you're running an Austrian company They would, and you would indeed have to do accounting according to Austrian rules and pay taxes in Austria, etc. ...so you wouldn't do it for that reason.
ChuckNorris89 4y ago
>The loophole I've successfully used in the past in Austria was to incorporate a Ltd in the UK and operate it in Austria Do you have any more details on the benefits of this operation? AFAIk, operating any business in Austria subjects you to Austrian labor and tax laws, negating any advantage. I was thinking about opening a LTH in a cheap Eastern RU country instead of the UK, and operate it in Austria but that last part seems to throw a wrench in my idea.
- gyulai 4y ago
  > Do you have any more details on the benefits of this operation? You'd mostly do this if you're Austrian and want to stay in Austria. The benefits are relative to starting a GmbH under Austrian law. * You won't need to put up the €35k in capital. * You'd have freely transferable shares. In that sense a Ltd is more comparable to an AG under Austrian law than to a GmbH, but much lighter in overhead. You'll need to play by the rules of the country you're incorporated in, where share transfers are concerned, though. * I've read of companies in Germany using related constructs to try to get around provisions mandating employee co-determination ("Betriebsrat") for larger companies. Air Berlin used to be a Plc & Co KG for that reason, but I may be mistaken.
SkyAndSand 4y ago
You could go with Ireland and Malta, but US investors would probably not be too happy to invest in you then (https://news.ycombinator.com/item?id=31620700 https://news.ycombinator.com/item?id=31620700).
gyulai 4y ago
Just noticed that I didn't finish my sentence there: Should read: "...incorporate a Ltd in the UK and operate it in Austria (similarly to how, in the U.S. you might incorporate in Delaware and do business in California) ..."

by gyulai 4y ago

manmal 4y ago

Don’t you need to operate branches in each country if you do that?

hef19898 4y ago
You do, you don't need a local legal entity but having one makes a lot of things easier. E.g. employment and profit allocation. The latter has serious tax implications.
- manmal 4y ago
  Sure, but now you spend a nontrivial amount of time and attention on logistics. Costs can be a couple k Euro per branch per year, depending on what deals you can strike with accountants. You also need to make sure you always respond to mail from authorities in both countries, in time.
  - hef19898 4y ago
    And if you don't you face an investigation by authorities. And they will reclaim due social security and taxes. And you face a potential court case. All of which is a lot more expensive. Not to mention that managers and directors already went to jail for stuff like that. And all that to safe a couple of bucks because smart start-up founders can't wrap their head around the simplest legal principles and requirements.

jokethrowaway 4y ago

Couldn't Austria come after you and say you're running an Austrian company, given you're an Austrian business with no ties to the UK? I'd recommend talking to an accountant. In Italy or Spain this wouldn't fly 100%, it would even be a criminal charge (foreign dressed companies).

gyulai 4y ago
> Couldn't Austria come after you and say you're running an Austrian company They would, and you would indeed have to do accounting according to Austrian rules and pay taxes in Austria, etc. ...so you wouldn't do it for that reason.

ChuckNorris89 4y ago

>The loophole I've successfully used in the past in Austria was to incorporate a Ltd in the UK and operate it in Austria Do you have any more details on the benefits of this operation? AFAIk, operating any business in Austria subjects you to Austrian labor and tax laws, negating any advantage. I was thinking about opening a LTH in a cheap Eastern RU country instead of the UK, and operate it in Austria but that last part seems to throw a wrench in my idea.

gyulai 4y ago
> Do you have any more details on the benefits of this operation? You'd mostly do this if you're Austrian and want to stay in Austria. The benefits are relative to starting a GmbH under Austrian law. * You won't need to put up the €35k in capital. * You'd have freely transferable shares. In that sense a Ltd is more comparable to an AG under Austrian law than to a GmbH, but much lighter in overhead. You'll need to play by the rules of the country you're incorporated in, where share transfers are concerned, though. * I've read of companies in Germany using related constructs to try to get around provisions mandating employee co-determination ("Betriebsrat") for larger companies. Air Berlin used to be a Plc & Co KG for that reason, but I may be mistaken.

SkyAndSand 4y ago

You could go with Ireland and Malta, but US investors would probably not be too happy to invest in you then (https://news.ycombinator.com/item?id=31620700 https://news.ycombinator.com/item?id=31620700).

gyulai 4y ago

Just noticed that I didn't finish my sentence there: Should read: "...incorporate a Ltd in the UK and operate it in Austria (similarly to how, in the U.S. you might incorporate in Delaware and do business in California) ..."