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How to found a company in Germany: 14 "easy" steps and lots of pain
- bouncing 3y agoNot to brag, but there are so few things to actually feel some civic pride for in America, and business registration is one of them, so I guess we have that. I can get an IRS EIN (tax ID), register an LLC, obtain a sales tax license (only required for selling stuff), and open a business checking account in about 2 hours in Colorado. Someone who knows what they’re doing and doesn’t spend time researching banking options could probably get it all done in 30 minutes. Alternatively, a legal services company will do it all for you for about $500. If you have partners and want multiple shareholders, the price jumps to about $1000, but you can also do that on your own.
- darkclouds 3y ago[dead]
- yau8edq12i 3y agoUnless you're opening companies on a daily basis to evade taxes or whatever, I fail to see why you would need the process to be that fast. Because with such short delays, nobody will have actually checked anything, so the only winners are fraudsters, in the end.
- blackhawkC17 3y agoEase of doing business is one of the top things to look at in any country. It’s on law enforcement and regulators to counter fraudsters. Ordinary citizens should not bear pain because of them.
- _dain_ 3y agoEvery little speed bump you put in the way will deter some people on the margin.
- yau8edq12i 3y agoIf you have 25k€ of capital but get flustered because the state wants to make sure that you are not opening a shell company for someone else and that your articles of incorporation are legally valid, then maybe you need to rethink something.
- _dain_ 3y agoI disagree. 25k euro is simultaneously a large and not a large amount of money. It's big enough to lock out many potential small business founders. But also many ordinary inexperienced people can have that amount of money up front, yet still be deterred by the complexity of a 6 week long incorporation process as described in this article. Especially in the early days of a company when your stress level is already through the roof dealing with the actual problems of your new business. I am generally suspicious of rhetoric like "you're a little well off, so we can heap arbitrary amounts of bullshit on you and you shouldn't complain".
- yau8edq12i 3y ago> It's big enough to lock out many potential small business founders. They can open an Einzelunternehmen (sole proprietorship) instead. You shouldn't (and cannot) go all the way to the complexities of a GmbH (LLC) if your company is that tiny. > But also many ordinary inexperienced people can have that amount of money up front, yet still be deterred by the complexity of a 6 week long incorporation process as described in this article. Back to my point then. If they're not ready to put up with okay-ish bureaucratic friction in the founding phase, they're not ready to open a company. Because if you think opening the company is hard, wait until payroll or tax season is upon you. > I am generally suspicious of rhetoric like "you're a little well off, so we can heap arbitrary amounts of bullshit on you and you shouldn't complain". You're completely mischaracterizing what I said. Don't do that.
- _dain_ 3y ago>They can open an Einzelunternehmen (sole proprietorship) instead. Sole proprietorship doesn't have liability protection. That's not a small thing. >You shouldn't (and cannot) go all the way to the complexities of a GmbH (LLC) if your company is that tiny. "[Thing] is too complex, don't bother with it" is not an argument against making [thing] less complex. It's actually just a restatement of the problem! Other countries make it easy to set up a limited company. UK, US, Singapore, they're all just a token fee and a handful of forms. I see no reason for Germany to make it so difficult as described in the article. A lot of successful companies were started by broke college grads out of their dorms; they would never have gotten off the ground if they had to scrounge together the equivalent 25k euros before even getting started. Hell, I don't have a spare 25k lying around and I've been working full time for 4 years.
- shaism 3y agoI think the time is not necessarily the issue. The issue is that everything is very manual and “analog” in Germany. You have to find a notary, register the “Gewerbe” at the Gewerbeamt, get a tax ID, and so forth. All are different processes with different institutions. In theory, you can do the notarization online, but when I attempted to do it, the first notary did not even reply, and the second one told me: “The system is currently down. I would need to come to the office.” In the US, you can just use Stripe Atlas or similar services, and get everything done for $500 in a nice digital interface within 2 or 3 days. But even if it took 2 weeks, it wouldn’t matter much because one doesn’t have to put time and energy into it whereas in Germany you have to contact people, coordinate, etc…
- yau8edq12i 3y agoThe friction is precisely the point.
- awesomeMilou 3y agoIt is and it isn't. The IHK registration is a sham, since they're a government protected cartel that don't even act in the interests of those they're supposed to guard (like Azubis).
- tverbeure 3y agoThese kind of frictions are typically not an exception. When I read this blog post about the steps to just start a business, I immediately assume that there'll be similar frictions during other steps. And indeed, the comments here talk about the difficulty to own a home when the money was already paid in October, how it can take up to 2 years to close down a company, or how there's a 30% exit tax even if you leave the country only for a few years. The friction that you seem to like has almost certainly cost Germany a good deal of jobs from people who decides that the hassle just wasn't worth it.
- Aerbil313 3y agoSecurity through friction is not an ideal security model at all.
- bouncing 3y agoYour individual identity is tied to the EIN, LLC, and bank account. I doubt it’s that useful for tax evasion. Each little step of friction discourages some entrepreneurs and adds barriers to entry for incumbents to prevent competition. And just in general, not doing something very often is not a valid reason for making it needlessly expensive and time consuming.
- logicchains 3y agoWhen you have hundreds of millions of people in a country, there's a lot of companies being opened on a daily basis, and the time wasted on bureaucracy quickly adds up to a dent in overall national productivity.
- arp242 3y agoIt doesn't need to be that fast, but the process in some (or maybe even many?) EU countries is rather ridiculous, as described here. Anyone should be able to start a business, reasonably easily and cheaply – I feel it's a matter of basic freedom and liberty: you should be able to do what you bloody well want with your life, including starting a business. Basic protections to prevent the most egregious of abuse is fine, but mostly it's just about registration and paperwork. Having to pay tens of thousands of euros for limited liability so you don't risk getting completely assraped if your business fails is how you keep the poor plebs in their place. All of this is classic "one set of rules for the poor, another set of rules for the rich" type of stuff.
- anaidenov 3y agoA seasoned fraudster or tax evader have all the experience, time, and resources to navigate and exploit the system regardless of the measures in place. On the other hand, an ordinary individual considering starting a new business, perhaps only a few times in their lifetime, may indeed be dissuaded from pursuing this venture. This issue mirrors the inefficacy of anti-money laundering policies, which, while intended to curb criminal activities, have a negligible impact estimated at merely 0.1%; but the global cost of implementing these policies exceeds their benefits of two orders of magnitude (see DOI:10.1080/25741292.2020.1725366 for details).
- nickpsecurity 3y agoFor anyone reading, here’s a URL for the paper they are taking about: https://www.tandfonline.com/doi/full/10.1080/25741292.2020.1725366 https://www.tandfonline.com/doi/full/10.1080/25741292.2020.1...
- redrove 3y agoExcellently put, I couldn’t agree more! If you’re an entrepreneur AML will cause you nothing but harm while the rich avoid it through the caribbean, Luxembourg, Monaco, Switzerland, etc.
- paulddraper 3y agoDo you actually need to do it in 2 hours? No, of course not. And you probably won't do it that fast anyway. But that figure demonstrates the small amount of red tape.
- nickpsecurity 3y agoWhat you are actually saying is that speed is only for criminals and anything honest must drag out for a long time. Neither are true. Starting this process should only require that they know their responsibilities, have identified themselves, and have fulfilled any obligations like payment. With government having our ID’s and login/sig/payment tech, each step should be done in seconds. Then, some fraud prevention spotting obvious issues might add a bit more time. It should still be quick.
- matchbok 3y agoThere is not less fraud in Germany. Time does not equal quality or validity. It just means time.
- benced 3y agoI don’t like this mindset that just because an individual can see why something needs to be better, it shouldn’t be.
- data_maan 3y agoProcess is too fast... Are you a German? :D :D
- rad_gruchalski 3y agoWireCard GmbH AG, thanks commenter from below.
- nolist_policy 3y agoCome on. WireCard AG
- rad_gruchalski 3y agoEven better heh.
- mNovak 3y agoJust because something is important doesn't mean it has to be inconvenient. A lot of people conflate opening a business with a major life event and embarking on a career, where a few weeks of admin is some kind of minimum commitment. But the whole idea is that we should allow for small organic "side hustles" and growth. Here in the US (at least in entrepreneurial circles) it's common advice to wrap an LLC around anything that involves money. Hobby website starting to get some traffic? LLC. Selling earrings at the craft fair? LLC. I own a small building with my brother--you bet there's an LLC there. I started a $0 capital consulting company while a post-doc, just to try. It's not a daily occurrence, but often enough that I don't want to waste time.
- geraldhh 3y agosome ppl want to have good data, others are scrambling to get anything
- cgh 3y agoCanada is a little slower. It takes one day and $200 to incorporate: https://ised-isde.canada.ca/site/corporations-canada/en/services-fees-and-processing-times#t18 https://ised-isde.canada.ca/site/corporations-canada/en/serv... For an extra $100, there’s a four hour express service.
- tdullien 3y agoImportant to realize: A GmbH is much closer to a Delaware C-Corp than to an LLC.
- nwellnhof 3y agoYes, a GmbH is a corporation and mostly dissimilar to an LLC. In Germany, there's no such thing as an LLC, except for some professions. So if you want limited liability, you're only option is to incorporate.
- ufocia 3y agoWhy this fascination with Delaware? How are Delaware corps different from other states' corps?
- dragonwriter 3y agoMostly, it’s that Delaware’s corporate law is more developed so investors have more certainty of what they are getting; this is also a self-reinforcing condition, since the preference for Delaware corps means more corporate issues get resolved under Delaware law.
- JumpCrisscross 3y ago> Delaware’s corporate law is more developed so investors have more certainty of what they are getting Delaware courts are also efficient, which makes litigation less likely to turn into a multi-year and multi-million dollar affair.
- mbs159 3y agoIt's also super easy to open a business in the Baltics. Due to digitalization you can do it online in a few hours.
- fl7305 3y agoWhat does the opposite look like in Germany? Meaning, shutting down a Gmbh? In Sweden, you can get this done in a matter of days, where you sell the shares of your corporation for the net value minus a fee of about $1000.
- jFriedensreich 3y agoits one to 2 years of pain. my gmbh shut down also cost 15 000 and ultimately led to me leaving the country.
- fl7305 3y agoThat sucks. I can see how it costs thousands of euros per year to do the annual financial statements, but 15 000? Is that common, or were there special circumstances?
- jFriedensreich 3y agonothing special i think this is on the cheap side, does not even include lawyers or any huge fights, just a "normal" shut down. Remember you have to include work time of founders that would be spend earning money otherwise. If germany forces you to do 2 hours filling out forms for bullshit you have to include your hourly wage to get the total costs. Usually everything in germany assumes "work to deal with government bs" is free and does not exist, which is of course absurd.
- fl7305 3y agoThanks. How much of the 15 000 was external costs to an accountant, public notaries, authorities, etc, and how much was the internal wages? The numbers I have seen for external costs range in the low thousands, but maybe that is wrong?
- jFriedensreich 3y agoit was nearly 100h of work for me, took ~2 years and the pure cash cost was nearly 10k. i dont remember what was for accounting, notary etc. but i think its really fair to simplify this as saying it cost 15k.
- jFriedensreich 3y agoi could not find the most important question while skim reading: does it have to be germany. i would rather sit in boiling water than found a company there again. you don't always have to move away completely to have a non germany company though i can also recommend that final step.
- bradhe 3y agoBingo. I live in Berlin. I know loads of folks who found Delaware corporations, use deel.com to work for them, and eventually found a GmbH when they need to.
- intelVISA 3y agoNice strategy, isn't it tough to get an LLC's bank setup without residency?
- vidarh 3y agoIt might be tough, but even 25 years ago, my worst case (in Norway) to get a US bank account was to find one that'd let me have the paperwork notarized at the US consulate. The next step up in difficulty was flying to the US and open it in person. It still limits your choice, but last time I was involved in it it was easier (we found a bank that had a branch in the country my then cofounder was in)
- johnloeber 3y agoNot anymore. Online banks like Mercury will do it entirely remotely without any residency requirements, IIRC.
- ufocia 3y agoYou still need to put up with various levels of KYC.
- johnloeber 3y ago
- OtherShrezzing 3y agoMinimum initial share capital of €12,500 to found a company where liability is limited to the firm seems like a very regressive impediment to business. For comparison in the UK, there's a £12 registration fee, and a £1 (one pound) minimum initial share capital. It must put limited liability out of reach of so many people.
- davidw 3y agoIt's extremely regressive. I started an effort to reform things in Italy and... it kinda sorta got some actual results, although not quite as much as I'd hoped https://blog.therealitaly.com/2015/04/16/fixing-italy-a-little-bit-at-a-time/ https://blog.therealitaly.com/2015/04/16/fixing-italy-a-litt... How many days of wages is 12,500 for the average worker? In the US, even for someone making minimum wage, you could pretty quickly cover the costs of forming an LLC, let alone someone making more.
- manuelmoreale 3y agoIsn’t that already an option in Italy with the SRL Semplificata and initial capital starting at 1€?
- _dain_ 3y agoI think that guy's campaign is what resulted in SRL Semplificata in the first place
- davidw 3y agoYes, that's correct. Other people did the real, heavy lifting to get things done, but my idea caught their attention.
- davidw 3y agoYes, I lit the fuse on that. I took a look at your site and the first thing I saw was about a guy who lives here in Bend, Oregon, where we moved from Padova. Small world!
- xxmarkuski 3y agoTo be honest, I don't think much of notaries and believe that they stifle innovation and harm the German economy, especially SMEs, but also clubs and citizens. For example, the purchase or sale of a property can only be carried out with a notary who reads the purchase contract for both parties. For this service, he charges a fee of around 1.5% of the sale price. The entire profession is strictly protected by law and there is no competition.
- morkalork 3y agoWow and I thought realtors getting a % cut on sales was a scam, at least in NA when you get to the notary, it's a flat fee.
- namaria 3y agoIn Brazil notaries get a cut of real estate deed transfers, and the position was hereditary until the 1990s.
- ProjectArcturis 3y agoIn Italy, getting something notarized costs $1-2k. As far as I know, the position is still passed down from parents to children.
- morkalork 3y agoAre there other officially hereditary jobs still out there?
- piaste 3y agoIt's not technically hereditary. But if the job licenses are a finite resource, and the licensee "owns" the license and is allowed to give/sell it to a person of their choice, and the job is reasonably pleasant/profitable... they're very likely to pass it on to their children, unless those children have other plans. Pharmacies in Italy work much like notaries, although they obviously provide a much more useful service. My understanding is that in part of the US taxis work the same way, with limited # of "medallions" being treated as an investment.
- RicoElectrico 3y agoI wonder: why EU did not try to somewhat harmonize company law? I can understand that things like tax code, penal code would not benefit from unification across disparate societies, but companies seem like a ripe target. This should have begun 20 or so years ago.
- throwaway11460 3y agoGiven the domination of Germany and France in EU, thank the universe it didn't. Signed, a citizen of an EU state where you can create a company by digitally signing one form and paying the equivalent of $300.
- _a_a_a_ 3y agoCreate a company, or do you mean buy it 'off the shelf'?
- throwaway11460 3y agoI mean incorporation of a new company.
- seszett 3y agoIt's about the same in France by the way, except that it's free.
- throwaway11460 3y agoCool! My bad assuming without checking.
- realusername 3y agoFrance is much more digitalized compared to Germany, you can't really put them in the same basket. The issue on the French side is more that they put the exact same excruciating procedures they had in paper online and didn't simplify too much in the process.
- blablabla123 3y agoFun fact, GmbH is not about protection of getting sued. (Because there's "Durchgriffshaftung") It's useful for companies that trade physical goods and e.g. when a vendor that was already paid got bankrupt it won't affect the finances of the founders. Although it shows to the outside world that 25 k€ have been paid and it's not a 1€ company. But in case of impeding bankruptcy it must either be resolved or declared otherwise things go bad. ("Insolvenzverschleppung" - the punishments are a little draconic) GmbH is really a lot of effort to maintain and expensive. The paperwork for UG "Mini GmbH" is basically the same. If I would try co-founding again, I'd probably not do a UG or GmbH.
- awesomeMilou 3y ago> ("Insolvenzverschleppung" - the punishments are a little draconic) The concept of declaring bankruptcy is well known in most western jurisdiction, as is the criminal practice of delaying bankruptcy. Believe it or not, in most of the developed world you can't just have a company go tits up and expect to go out of there scot-free. > Durchgriffshaftung I've never heard of this concept before, but from what I can gather it's a rarely applied legal practice that's defined by case law (case law is is pretty rare to encounter in Germany) and it essentially just sounds like what happens in the case of gross neglience / large scale fraud.
- blablabla123 3y agoI don't know the implications outside of Germany although looking in the Wikipedia article it sounds it's an especially big deal here. If I recall it correctly from a back then mandatory course I did about it, it can even happen for an unpaid parking bill on an empty account. I'd assume so but probably most legal matters are settled outside of courts. Also looking at it the other way around, it would be pretty silly if creating a GmbH would create immunity. Indeed I doubt it's applied very often but when trying new territory regarding copyright, it's probably worth a consideration that one may still be personally liable. That said, my point is just that UG/GmbH is overkill in many cases especially if the company isn't making any serious money. You can invent a name, go to the town hall, fill a form so you can do business with it and it's possible to legally receive payments. Founding a GbR is a quite informal thing
- tdullien 3y agoI have founded a company in Germany in 2004 and sold it to Google in 2011. I started an AG in Switzerland in 2019 and organized a Delaware-Flip therafter. Most of the described steps are also necessary for a Delaware incorporation, and I found the process of incorporating a nothingburger. 1) The choice between a limited liability construct or a pass-through construct exists everywhere. My advice was always: Separate the biz from you personally, always use the non-pass-through option unless you really know what you're doing. Complexity and pain of a GmbH is identical to Delaware corp. 2) picking a new name that isn't in any dictionary is generally good advice, no matter what your jurisdiction is. We originally incorporated as SABRE Security, then years late got into a trademark dispute and had to change names. The fact that the Handelsregister can reject particularly poor names shouldn't be an obstacle. 3) I find getting riled up about the share capital a bit weird. I have never seen anyone struggle with that. 4) we can debate the utility of the notary public system in Germany, but this is hardly an obstacle. 5) Setting up a bank account with a GmbH iG in Germany is easy and quick with any of your local savings banks. These are non-profit banks with the explicit charter to help local businesses. Not sure what the author did wrong. 6/7/8) yes you need to pay in the share capital and prove you've done so, and get the reply from the Handelsregister. 9ff) yes you need tax and VAT IDs. Yes you need someone to do your books and taxes. True in Delaware, true in Germany, true in Switzerland. All in all, the article reads super-whiny. I mean the author even complains that the notary uses your passport to authenticate you (?!). I have been through a German GmbH, a Swiss AG, and a Delaware C-Corp with VCs, and I can tell you: The bureaucracy is pretty similar. And you will need help with taxes, accounting, legal compliance etc. And yes, it'd be nicer if all of this was simpler, fewer middlemen and lawyers involved, etc. - but this article paints things that are the absolute basics in any of the big jurisdictions as nefarious obstacles.
- raverbashing 3y agoThanks for this reality check Yes the process in Germany can be improved a lot. But a lot of it is similar or equivalent to process in other places > I mean the author even complains that the notary uses your passport to authenticate you (?!). Yeah I had skipped this when reading the article, sorry it really sounds like the author doesn't know much about the basics of gov processes "Don’t forget your ID or passport because that’s their foolproof way of identifying you" Yes, that's exactly what it is. Your passport is official ID
- robert_foss 3y agoHaving founded a company in Germany, I would never under any circumstances do it again. Notaries should not exist, and could be replaced by a simple website. It's all incredibly tedious and slow, and there are lots of reoccurring work and fees. Closing a company takes 2-3 years too, even if there are no irregularities.
- TillE 3y agoGermany loves endless bureaucratic paperwork which absolutely must be done in person (and good luck getting an appointment in Berlin), despite the many years of bleating about Digitalisierung which has apparently amounted to nothing.
- robert_foss 3y agoFrom what I heard the cut the public funding for Digitalization by 90% last year. It truly is like going into a a -20yr time machine living here. Soon you'll be able to use a credit card in most shops even!
- lttlrck 3y agoI moved from the UK to Germany in 1996 and back then the banking & payment was just sooo backwards. Some stores were incredibly anachronistic (Lerche springs to mind - since closed down) Sorry to hear it's still the same.
- mk89 3y agoGermany and "digital" payments have a history due to old reasons. We don't appreciate its meaning anymore, but cash is literally the only anonymous payment method you can have in this lifetime, and people in Germany tend NOT to trust any entity/company/government holding your data for no particular purpose. The downside of this is the split brain problem that you have with distributed systems: a state knows something about you that another state maybe doesn't, which leads to "interesting" things like illegal people having multiple identities in several states, etc. Weird s**.
- deleted 3y ago[deleted]
- frankjr 3y agoNot sure if that's common in Germany but you can use services which offer "empty" but legally established companies and you just change the name.
- konha 3y agoIt is. “Vorratsgesellschaft”
- seabass-labrax 3y agoDo they also sell really old ones, so you can start in business and immediately advertise with a slogan like "since 1950"? This is something that has been somewhat common in Britain with businesses such as breweries, as provenance is highly valued by the market, yet not generally examined with much rigour!
- drooopy 3y agoI've heard similar Kafkaesque stories from German relatives of mine. And from what I gather, most digitalization efforts by state and federal government essentially resulted in digitizing existing bureaucratic procedures.
- kleiba 3y agoYeah, I would say it's pretty typical. I moved to Germany about 10 years ago, and my wife and I bought a house here last year. I think the money went to the seller some time in October, but to this day, we're not just yet the official owner of the property because we're still stuck somewhere in the red tape. We're almost there though though (we hope), it's just that change of ownership of a house is a super complicated multi-step procedure here that must involve a notary! Good stuff. And mind you, I'm not talking about anything special about this purchase, just a young family buying a home from an ordinary person who moved away. (We're hoping it's only a matter of weeks now, though, wish us luck!)
- lifestyleguru 3y agoFounding a company in Germany?! Simply living there and working on employment contract is complicated enough. Do not attempt it without lawyer parents.
- hnhg 3y agoThere is also a brutal and inflexible exit tax. Should you decide to leave Germany, even temporarily, you will be faced with a tax of ~30% of the current valuation of your worldwide shareholdings (in companies in which you have >1% ownership). I commented on this in more detail in another post a while back: https://news.ycombinator.com/item?id=39786934#39788110 https://news.ycombinator.com/item?id=39786934#39788110 In the author's case, because he is using a holding company, his exit tax burden will be doubled!
- _Microft 3y agoIf this reply [0] to a comment of yours is true, then you’re allowed to „temporarily“ leave Germany for 7-12 years before being affected by this. [0] https://news.ycombinator.com/item?id=39790138 https://news.ycombinator.com/item?id=39790138
- hnhg 3y agoI answered later in the thread: "Unfortunately, so far that deferral will most likely come with the requirement for a security, typically cash. That is the prevailing view of tax specialists right now, but will depend on each individual's experience with their local tax authorities." Sadly, you cannot just leave and think it would be automatically deferred. You must apply for the deferral before you leave and the local tax authorities can ask for a security in cash for the entire amount owed. It is absolutely kafkaesque. As with many German corporate tax matters, if you think you are affected by this, you should really speak with a tax advisor who has strong experience working with people in your particular situation. You cannot just read the rules and figure it out.
- _Microft 3y agoWhat would prevent anyone making off with the money owed if they didn‘t require that?
- hnhg 3y agoIt depends where you go. I believe (but could be mistaken) that there are agreements between countries, especially within the EU, that enable them to go after you. I am also not sure what the statute of limitations is regarding tax-related crimes. But it could be a valid strategy, I guess!
- nicbou 3y agoI document German bureaucracy for a living,[0] and everything is like that. Every life event - immigrating, getting a job, getting married, having a child, buying a car - is mired in slow, paper-based bureaucracy. It is a constant, significant impediment to life in the country. Just last week, I was telling people that the best way to get married in Germany is to get married in Denmark. I cannot overstate how terrible German bureaucracy is, and how defeating it is to deal with it. A lot of people give up and leave the country over it. [0] https://allaboutberlin.com https://allaboutberlin.com
- histories 3y agoYour website is amazing and has helped me personally thousands of time. It became the first quick english reference for everything when I first moved here. Thank you!
- nicbou 3y agoThis is exactly what I'm aiming for since 6+ years. It's really happy to hear that it's working.
- freyfogle 3y agoReally I think this is overdone. I fully appreciate Berlin is disfunctional, but in other regions (I live in Thüringen) things go quite quickly.
- nicbou 3y agoI don't think that it is overdone. It's bad everywhere, and it's much worse in Berlin. If you've experienced anything like a modern bureaucracy, Germany is infuriatingly backwards. The article is painfully accurate down to the minute detail.
- freyfogle 3y agoI have lived/worked/banked in four countries (UK, US, ES, DE). Germany is not at the cutting edge, but it is far from the worse. The interactions I have had with bureaucratic systems in Thüringen have all been entirely fine. Friendly people, clear process, done quickly. Obviously that is only an n=1. It is a rural area that is not overloaded as Berlin is. Which country would you consider "modern"? My experiences: In the UK the way you prove who you are is literally a physical copy of your water bill. Spain, some things work well enough, others are insane. US, massive variability from state to state and government department.
- khaomungai 3y agoYes, it's really painful here in Germany. I've heard in Portugal it's pretty easy. Any recommendations what would be the best place to found a company for someone who's living in Germany?
- sph 3y agoOpen it in UK. There are dozens of online businesses that deal with all the overseas paperwork. Otherwise Estonia. You will still have to pay your personal taxes in Germany, if you reside there.
- chironjit 3y agoHaving lived here for 1.5 years, I can say that beraucracy in germany basically works in the sense of how bureaucracy in other lesser third world countries work. Basically, the system works in general for the average population but is broken such that it affects most those at the margins (for example, the rich, the poor, those entrepreneurial, etc). In other countries, when this happens, you see the rich paying their way to access while the poor generally suffer until some populist movement comes and promises to save them. It's thus really not that surprising, I just had yo change my view on where I placed each country in this developed/developing country mental model
- resolutebat 3y agoIn third world countries, if you're wealthy (by local standards), you can grease the wheels with bribes, or better yet, cheaply outsource tasks to "consultants" who know exactly how to navigate the system and pay the bribes on your behalf, giving you plausible denialability. Need an Indonesian multi-year business visa? $200 to the right "visa consultant" and it's yours in days. As far as I can tell, this is not an option in Germany, certainly not cheaply. Healy, one of the global companies that does this kind of thing, wants €14000 to create a GmBH for you, and I'm pretty sure that doesn't speed up things, it just makes it somebody else's headache.
- sliq 3y agobrilliant comment! also, the average population doesnt know better, as they dont have a reason/possibility to compare, so they think THIS is the best possible solution.
- 4ad 3y agoAs an EU citizen, it's easier to open an LLC in the US, without even stepping a foot in the US than opening an LLC in the EU. The most depressing thing is that EU citizens don't even see any problem with that.
- nickpp 3y agoEntrepreneurs do, so the even more depressing thing is how low EU's entrepreneurship rate is.
- onnimonni 3y agoThanks for the great blog post. I'm very happy to be living and building business in Estonia instead. Establishing the company is easy and everything else except KYC meeting in bank can be done online. Also in Estonia companies don't pay any taxes on yearly profits. Almost all of the government officials speak fluent English except in the case where I wanted to have company owned car. Would highly recommend this option for others too if you can relocate easily. They even changed the rules in 2023 and now even 1€ initial capital is enough.
- novaRom 3y agoWhy relocation is needed? Can a EU citizen open a business in Estonia?
- onnimonni 3y agoThey certainly can. I think even people outside of EU can open companies in Estonia. The problem is that you need to pay taxes in the country where the work was physically done. So if you have Estonian company while living in Germany typically the same taxes need to be filed and paid compared to having a GmbH in Germany. Plus you need to also do the taxes in Estonia as well so you would end up having double bureaucracy instead. You can read about tax agreements between your country of residence and estonia to find out more. I'm not a lawyer and this is simplification and Can even be wrong but it's the best understanding I have so far.
- globalise83 3y agoI know this is a tongue-in-cheek critique of the process, but it's also a really handy guide! Good job author.
- harha 3y agoEven more fun: how to get rid of a company
- type0 3y agoThe national slogan of Germans is "Papiere, bitte!"
- nforgerit 3y ago"Ausweis!"
- kaashif 3y ago> And then, if you pay it out from Magic Holding GmbH to you personally, then yes, you pay ~26% capital gains tax – but the huge benefit here is that it could accrue investment returns in the meantime! This isn't an optimisation and doesn't matter unless I'm misunderstanding what is being suggested. Multiplication is commutative so it doesn't matter if you pay the taxes before or after accruing returns, as long as your goal is to get that money to you. $100 * 0.5 (for 50% income tax) * 2 (for 100% investment return) = $100 whichever order you do the multiplication.
- yieldcrv 3y ago> Two important points on how to save time here! >. International “startup” banks like Wise generally don’t support this, so don’t even try! You’ll lose multiple days going back and forth with their support, like I did. You can open a Wise bank account later when you’re properly incorporated. The real optimization is not using Germany companies to begin with. I'm a US citizen and US resident, I had some German limited partners in a small hedge fund several years back. The offshore feeder was in the Cayman Islands, alongside the Master Fund. Both had bank accounts only in US banks. (All forms with IRS and other regulators filed no problems there, good to have a business bank familiar with these things.) Now to those particular investors, wiring money to a foreign bank with foreign transaction needs was too much for them. The US being a foreign bank from their perspective. They just wanted to use SEPA transactions and transaction instructions that they are familiar with, which are (potentially) instant. This US citizen was able to sign up the Cayman Islands feeder into Wise for an EU bank account no problem, had SEPA details no problem. Makes it super easy to swap over to USD with few fees and wire it to the primary bank account. Its also important to note that Wise has high transaction limits. Like $1,000,000 per transaction is the limit, its not a daily limit. so even if you get a large LP its not really a limit just multiple transactions. Not perfect, but way better than many other fintech app solutions for casual use. Before Wise it was nearly impossible for an American to get real Eurozone banking easily after FATCA treaty was ratified. But with Wise it was pretty quick maybe 1 business day with support in their business sign up. One point against Wise is that their Terms of Service are very restrictive. There are lots of legal activities you're not supposed to do with them.
- yieldcrv 3y ago> The drawback of holding construct is that you have to found your holding company first, so you have to go through all of this twice. The holding company doesn't have to be a German one (and neither does the operating company, but you could follow this tutorial and have a holding company elsewhere)
- justadolphinnn 3y agoHow cute, he thinks the kebab shop is registered and paying tax LOL
- sliq 3y agoGerman here. The example with the Kebap owner is -probably- not like it seems, because there are usually two ways how it works: 1. these kind of stores are technically owned and legally run by somebody who just made the paperwork and gave the finances. The people working there dont do any paperwork, and of course they cannot as they often (like in the vietnamese produce stores) dont speak german on a level that would allow to fill out paperwork. 2. Lots of smaller business actually didnt fill out anything, and surpprisingly it somehow works for them, sometimes for years, even in busy areas, i mean they serve hundreds of customers per day but never filed any invoices, only accept cash, nobody speaks german and they dont have any documents. It's fascinating. There are a lot of rules in Germany (of course) when you serve food or alcohol or operate at night or have tables and chairs, and i can tell you it's not even legal to NOT have toilet or to not have prices on the menu, but well, they still run the business, probably without even knowing all the rules. We can learn from them I think, just SHIP IT!
- nforgerit 3y agoGerman solo-founder here who just gave up this shitshow and moved to Estonia: > Estimate your revenue at 0€ for now unless you have real reason to believe otherwise (do you have paying customers lined up already? probably not). That way, you only have to pay corporate tax at the end of the year based on your actual profit (vs. having to prepay tax every quarter). This is funny. I tried to set my revenue to 0 in the beginning and the tax authority simply set it to 60k (they couldn't even tell me where this number came from). After a couple of harsh phone calls (from their end, they were yelling) they simply kept it and told me I could file a "Verwaltungsklage". Of course, they (and IHK) derive the quarterly pre-taxes from that and didn't give a rats ass if I actually made any revenue. I got my money back a year later (which got worse and worse over time). Simply kills you, If you have to pay the bills and try to route your little boat through the stormy seas. Several times I spontaneously had to credit 2-3k EUR to get my customers to shorten the term of payment. > IHK: Domains are not allowed. This is funny as well because my company name was a domain name. IHK noticed that and I told them (on phone w/o any proof) that it's mine and they were okay. The rest, I'd say is batshit crazy bureaucratic but somehow manageable. Germany is just not a good spot for "some SaaS idea" or maybe not even for bigger ideas as well anymore. At least not until they radically streamline their bureaucracy (which depends on radically professionalized politics which is not realistic at this time). PS: Founding a company made me stop believing in "Social Market Economy" (German self-label) since the taxation system and social systems allow for amazing things once you're out of the employee system. Edit: Typos and grammatical mistakes.
- pkos98 3y agoWhat "amazing things" are you referring to? I am not too familiar with the matter, only aware that self-employed people often generously use deductions and a company car to ease tax burden.
- nforgerit 3y agoIt opened up plenty of loopholes to avoid taxes and quit social systems, starting from healthcare, pensions etc. to all those little extras that allow you a tax avoiding setup which is impossible for regular employees. It also incentivizes ridiculous consumption, like the company car tax you mentioned but also to “just buy anything for 100k just to maximize cost”. It also doesn’t really incentivize RND but to wait for the next “RND tax program” any future government might be setting up. No shit that German companies are so bad with innovation (plus they’re usually lead by MBAs and lawyers who frequently have no clue).
- anovikov 3y agoWhat is the upside of opening a company there if you can incorporate in a EU country with much much lower taxation say Cyprus or, you have a EU citizenship and the company is in IT field, Malta, and pay just 5% tax (and 0% tax on dividends from it if you move there and become a tax resident)? It effectively means increasing your income 2x-2.4x depending on how high the revenue is, vs paying 30% profit tax and then on dividends, 45% personal income tax in Germany. While still enjoying all the same access to funding and open EU market as in Germany. Another much closer and cheaper to run option is Hungary where company profit tax is 9% and personal income tax is 15%, still providing up to 2x higher net personal income on same revenue vs Germany.
- WA 3y agoBecause you usually have to move to the other EU country, or at least live there for half the year and many people still like to live in Germany. Optimizing taxes might not be the main goal in life.
- anovikov 3y agoBut there are plenty of companies that provide substance
- WA 3y agoWhat do you mean?
- anovikov 3y agoWell, substance is a way to domicile your company in a certain jurisdiction in a way that passes checks according to the rules of tax authorities of necessary countries. I saw people doing it in Madeira, in fact with German clients, and had German cops/tax officers fly to them to Madeira, check compliance, and agreeing that they conform - you need to do a certain minimum set of things like keep an office, papers, minimum number of employees etc. - there, and that will be enough. As for your own tax residence, some countries offer shortened terms of annual stay to qualify, Cyprus offers 60-days scheme for example (that again comes with a certain set of rules to obey). Simply put, there's a massive demand for the "i want to pay as little tax as legally possible on my IT business" thing, and many countries lined up to do it as conveniently as possible for people from all kind of places. Only country for which it doesn't work is good ol' USA, because of world-unique system of citizenship-based taxation.
- lynx23 3y agoWow, I love this thread. Tons of expats talk to each other how bad the country they choose for living actually is. And on top of that, words like legally entitled fly by. If you don't like Germany (who is?) then move on. It was never a country particularily friendly to expats. Berlin might be different if you find your flock... Heck, I had friends from .at move to .de and totally fail to connect with people. Really, if you can move out again, go for it. But whining about the paperwork is pathetic.
- SkinTaco 3y agoClassic - someone from the EU who regularly hates on the US is upset when people do it to their country. I always say: if you want to know the bad parts about America - Ask a European! They're the only ones who seem to know.
- lynx23 3y agoThere is quite a big leap from perceived cureaucracy to the living practice of the death penalty. I think your comparison between EU and US is pretty much off. They are not in the same ballpark.
- hiAndrewQuinn 3y agoCome form a company in Finland instead! We're quite a bit better on the margin in this regard. Okay, alright, there are a lot of EU countries that are quite a bit better in this regard. More generally: Do your research, shop around, and move to opportunity!
- deleted 3y ago[deleted]
- mdekkers 3y agoI founded a business in Germany, and the tax departments decided to asses me for 2024 to an amount of 100% of my combined 2020-2022 turnover. Instopped trading halfway through 2023, abd there will be no turnover for 2024. I currently have a tax “debt” that is literally more money than the business ever _collected_ over it’s entire existence. It is nearly impossible to find a tax lawyer that is willing to take on the case, and my accountant keeps telling me that there is nothing to do except pay up and then wait for the refund. I don’t now have, or ever had in the past, the kind of money they are demanding. The anxiety that this situation has been causing for the past year and a half (they did a similar stunt for 2023) has become unbearable - I am threatened with personal bankruptcy and jail time for taxes I don’t even owe - and I often consider the easy way out. I recently had to appear, in person, at the tax office (I reside on the other side if Europe now, but was forced to make the trip). There are no options to send a representative. You must make declarations in person, like its 1734. Living in Germany and running a business there is turning out to be the biggest mistake of my life.
- sph 3y agoI'm sorry to hear that. I do not have any advice to offer, but someone close to me went through a similar ordeal of bureaucratic and fiscal hell in another European country. They lost everything they had to the taxman and its insane rules. There is a great number of people similarly broke or jailed because of how restrictive and anti-business these laws are. I do not see how can one in good conscience defend them as good, or productive for entrepreneurship. If everything fails, I would suggest to at least make as much noise about this as possible. On social media, local news, etc. Just like a viral post is the only way to get Google support, in these bureaucratic hells an interview from a journalist might open some novel avenues for help. I am so glad circumstances brought me to the UK, where in comparison company law is child's play, and managing my business and its taxes takes a couple hours a year at most.
- mdekkers 3y agoThabk you for your kind words. I used to live in the UK and had several businesses there, and can confirm your experience.
- heipei 3y agoEverything written in this article is true, but there are as usual more nuances to all of these. One of the primary reasons for me to go with a GmbH (and a holding) was the expectation of excess profits that I'd want to reinvest instead of drawing a salary. The other neat aspect of stacking a holding company on top of the operating company is that capital gains are not taxed in the event of a sale. That goes for investing into ETFs for example, but more importantly if the holding company ever sells the operating company then that sale is tax-free for the holding company. The ultimate owner is then able to pay out the proceeds and only be taxed using his personal capital gains tax rate (25%-ish).
- weinzierl 3y agoAs a German I agree with the gist: Germany is overly buerocratic and not startup friendly. When it comes to founding a company the author overcomplicates things, however. This is OK when you want to study the process, or want to become an expert in this and maybe make a business out of it. If you just want a company get started, just buy a ready made one. There are specialized lawyers that always keep a pool of freshly founded companies to sell - exactly for that purpose. These companies are brand new, usually just a couple of weeks old and have no significant history. They have generic names and you can decide on a proper name later. If you don't have anyone to advise you and insist finding a suitable lawyer on your own: Go to Germany's central company register (Handelsregister) and research startups in your field. The lawyers and law firms specialized in selling new companies will stick out pretty quickly to you.
- cess11 3y agoI don't know how it works in Germany but where I live one reason to buy an 'off-the-shelf company' is that you can pay out dividends with relatively low tax faster.
- redrove 3y agoThis is such a cop out. You shouldn’t complain about the process of incorporating and buy a ready made one?! This is just encouraging middlemen and lessening pressure on the government to actually work for your money! I’m guessing you’ve never tried incorporating in a country where it actually makes sense and you can get going for cheap in a matter of days. L.E.: Having worked with germans and german companies for a long time, I think this permanent mentality of making up excuses for why rules are this way (they must be Perfekt!) and blaming the people trying to follow them for not doing it right is one of the key things that’s holding you all back. I’ve bickered so many times with germans and their bureaucracy in company processes, after years and years I just decided to give up (I was never going to make any difference, just hurt my own sanity) and I try to avoid german companies now.
- jasonkester 3y agoI find that Europe often has things like this. That is, the “easy way” that everyone uses. The frustrating thing is that there is no way of learning about it until you’ve already endured months of pain trying to follow the impossible steps outlined on the official government website. If that site had a little notice on top saying “Stop! Nobody does it this way! Google this term instead”, that would save a lot of pain.
- scurth 3y agoAwesome writeup, i did a similar years ago. One important thing you missed is VBG Berufsgenossenschaft. Mandatory to register within 10 days after the notary. Even as a one person Gmbh you need to register there. Running costs: https://www.on-promise.cloud/en/compendium/01-how-much-does-a-gmbh-cost.html https://www.on-promise.cloud/en/compendium/01-how-much-does-...
- scurth 3y agoWith all these different writeups from so many people I am just left with one big question: Why is the not such a government curated list or guidance on these topics?
- i_am_a_peasant 3y agoLiterally the only good thing about germany are the salaries compared to the rest of europe but even that is becoming less great nowadays.
- skrebbel 3y agoAnd the pretzels!
- i_am_a_peasant 3y agoja they're pretty good, but they're easier to make than you'd think, you just boil them in baking soda for like a minute before baking them, that's what makes them fluffy.
- lnsru 3y ago€120k salary does not make you a king. And prices compared to pre pandemic ones also skyrocketed. Germany was once nice average salary/low living cost country. Now only average salary left. But it’s ok when one is already inside. Not recommended for newcomers though.
- i_am_a_peasant 3y ago100K is damn hard to break into if you're on the strictly technical path nowadays, but maybe it's just my line of work (embedded). I've been trying to learn some web stuff and go and C# to maybe expand my job options a bit.
- ostenning 3y ago100K is easy to break as a freelancer. You'll obviously have more things to consider - multiple clients, accounting, legal and potential downtime, but its totally doable. I think embedded could actually be a good discipline to work as a freelancer, most IoT products usually have a more rigid and defined development cycle than web platforms.
- fxtentacle 3y agoThis article seems to be new, but the info in it appears to be very outdated. 1. Most startups now create an UG which has most of the GmbH benefits and protections, but only negligible cost. 2. The handelsregister website is deprecated. It's replacement is quite nice and fast. Their section 2b also doesn't apply for UG because it's so cheap there is no need for trickery. Their section about issues finding a bank seem weird to me. I just took the paper slip from the notary office and walked over to Deutsche Bank (the largest mainstream bank) and it took them only a few minutes to set up the account. Then after the card arrived in the mail, I walked back there, paid in the money and gave the paper confirmation from them to the notary guy. I'm not sure how you could make it any easier. The only thing where I agree is that the spam is a problem.
- hnbad 3y agoIt's also not mentioning that incorporating (or being an Einzelunternehmer exceeding €600k) means you need to do formal accounting (Bilanzierung) which is a lot more involved than what any non-expert should handle personally so you will need a tax adviser to avoid severe fines for easy bookkeeping mistakes. That's another factor when deciding whether to go for a UG/GmbH or Einzelunternehmer. That said, the costs are based on revenue so you'll ease into it, it's just another cost to be aware of. Oh, and if you hire anyone for any editorial or creative work and they're not doing it as a UG/GmbH, be aware of Künstlersozialkasse payments (which you have to handle yourself unprompted). You'll usually get a visit by the Deutsche Rentenkasse after about 3 years for an audit and they'll be very unhappy if you didn't pay your dues.
- throwaway220033 3y agoGermany is a cult, not country. The whole system is designed for slavery. Never question anything here, just obey the rules, give up your individuality and live without a soul. The new European way of freedom is not building your own life; you must let government take care of you, and in return you do what they ask. The best part is they think they are free and afraid of their privacy. If freedom is not thinking for yourself and building your life, then what it is? The answer is; partying, drugs, alcohol, orgies. And complaining about other countries issues. Textbook cult patterns. German news are full of other countries’ problems, they will discuss racism in US for weeks and months meanwhile Nazis are burning Turkish families once a year alive, murdering ordinary people. You’ll see how they write the softest article about burning immigrants alive in 2024 their own country but they will happily go out to the streets and protest for US or Ukraine. How are you going to convince any immigrants to live here and work with you? None of the immigrants who live here say good things about Germany or Germans. Investment scene is also pretty much depends on your race. Unless you’re already profitable or white european, they won’t fund your startup. They rather fund some grow-carrot-in-balcony startups instead of investing in your company. I’m hoping to get out of this shit show soon and almost everybody around me consider the same.
- redrove 3y agoWhile I wholeheartedly agree with your points about being forced to remain a wage slave for pennies (in comparison to say the US) and people relying on the government way too much— these are right on the money — I do think casually slipping in “orgies” lessens the validity of your claim in the reader’s mind. Also I don’t think it’s fair to claim immigrants are being set on fire (with no citations) like it’s just regular business. Horrible things happen everywhere and I doubt Germany is the worst place in the world. Overall you had me in the first half, then went off the reservation. Still I hold that your first points are valid.
- throwaway220033 3y agoIt’s probably because you graduated from a university? :)
- Bishonen88 3y agoWaiting 2.5 years for an Einburgerung. Read online, that other people submitting papers now, get that done in 1-2 months. Supposedly there are people that contacted the government asking about that discrepancy (2+ years vs months) were told that they should re-submit their papers... Paying twice...
- leonry 3y agoI like that the author gives a detailed step-by-step process with caveats on the way along. However, I believe it is slowly improving. Namely, there is an online service (https://online-verfahren.notar.de/ov/home https://online-verfahren.notar.de/ov/home) that may somewhat ease the process (steps 2–4 & 8).
- dewey 3y agoI was talking with a friend yesterday who asked me about "de-mail" and "gmx.de", both words I haven't heard in many years. Apparently if you want to contact the pension insurance (Rentenversicherung) and you don't want to call them (Maybe because you don't speak german), or send a paper letter you'll have to sign up for this "secure email, but not really email" (https://en.wikipedia.org/wiki/De-Mail https://en.wikipedia.org/wiki/De-Mail) service. It costs a small fee to set up (10 Euros), or a bit cheaper if you are listed in the "public de-mail phone book" (6 Euros) and you have to verify yourself through a government ID. If you are not a german citizen you of course don't have this ID card and can't do the verification online, that means that you now have to go to one of the few places in the city where you can verify yourself for the service. Some of them are just small corner stores that usually also do postal services. Very bizarre experience, just to get some simple answers related to your pension.
- jonathanstrange 3y agoAddendum for others who read your comment, gmx.de is just a free email provider like gmail that is very popular in Germany.
- dewey 3y agoAt least it _was_ very popular many years ago, when I created my first e-mail address in school for MSN and because they had 10 free SMS every month.
- earthnail 3y agoI have a German company. It's driving me nuts. So much overhead for NOTHING. The bookkeeping and tax is insane. Tax system is so complicated only one dinosaur, Datev, works correctly, so you end up with 1990-era-style software (yes, that bad). I currently have to change our address. Need to go to the notary. ~500€ for that. WTF...
- brancz 3y agoHaving gone through this a couple of times, I'll say that all of this is true, but in practice, I find the actual founding process not very complicated with neo-banks that understand the founding process well. I just founded a new GmbH last week, and it took 2 days in total. One more thing I'd recommend doing before going to a notary though is get a "Vorabstellungnahme" from IHK to ensure that they won't reject your company name which would create delays and additional notary cost. It costs some money, but is worth ensuring it doesn't cause chaos afterwards. 1. Get "Vorabstellungnahme" from IHK, takes a few hours. 2. E-mail notary (yes I've worked with them a couple times, that might speed up their response time), get pre-fab founding docs within a few hours, appointment next day. Digital version of the founding docs will be available within a few hours. 3. Create account with Qonto or something equivalent, there's an explicit configuration for your notary email, so they will take care of providing proof of the starting capital. 4. Transfer starting capital. 5. Notary hands in Handelsregisteranmeldung, sends you a copy and upload it to your bank. In practice, I find the founding process not complicated, but the day-to-day operation, bookkeeping, taxes, etc. way more painful. Founding a GmbH wholly owned by a Delaware C-Corp, however, is intensely painful, practically no bank wants to work with you, and notaries aren't enough, you need to work with apostilles (international notaries). I highly recommend working with a law firm to set this up correctly but expect easily upwards of $10k between lawyer, apostille, and bank account costs.
- thiago_fm 3y agoBTW, congrats on the funding ;-)
- brancz 3y agoThank you!
- nerdyadventurer 3y agoIs there any good humane VCs in Germany, who like to play the long game?
- brancz 3y ago
- jheriko 3y agostep 1: register a british company step 2: done...
- Wris1951 3y agoAs of my last update in January 2022, I cannot access or retrieve specific articles or content from external sources like eidel.io. However, I can provide you with a general outline of the steps typically involved in founding a company in Germany based on common procedures. Here's a simplified guide: 1. *Choose Your Business Structure*: Decide whether you want to establish a sole proprietorship (Einzelunternehmen), a partnership (Gesellschaft bürgerlichen Rechts - GbR), a limited liability company (Gesellschaft mit beschränkter Haftung - GmbH), or another legal form. 2. *Business Name*: Choose a unique business name and check its availability. You can do this through the German commercial register (Handelsregister). 3. *Articles of Association (Gesellschaftsvertrag)*: Draft and notarize the articles of association if you're forming a company with others. 4. *Capital Contributions*: Determine the initial capital required for your business structure. For example, a GmbH requires a minimum share capital of €25,000. 5. *Register Business*: Register your business with the local trade office (Gewerbeamt) if it's a sole proprietorship or partnership. If you're forming a GmbH, you'll need to notarize the articles of association and register the company with the local commercial register (Handelsregister). 6. *Taxation Registration*: Register your business for tax purposes at the local tax office (Finanzamt). 7. *Obtain Necessary Permits and Licenses*: Depending on your business activities, you might need specific permits or licenses. Check with the relevant authorities. 8. *Social Security*: If you plan to employ people, you'll need to register with social security agencies. 9. *Employment Contracts*: Draft employment contracts if you're hiring employees. 10. *Open Business Bank Account*: Open a business bank account to manage your finances. 11. *Insurance*: Consider necessary insurances such as liability insurance, health insurance, etc. 12. *Data Protection Compliance*: Ensure compliance with data protection regulations, especially if you're handling personal data. 13. *Employer Obligations*: Understand and fulfill your obligations as an employer regarding taxes, social security contributions, etc. 14. *Ongoing Compliance*: Stay compliant with ongoing obligations such as filing annual reports, tax returns, etc. Remember, these steps may vary depending on the type of business you're starting and your specific circumstances. It's advisable to consult with legal and financial professionals to ensure compliance with all legal requirements.
- juliangmp 3y agoHaha actually everything here is that insane :)
- Aissen 3y agoAnd I thought France had it bad… There are a lot of hoops to jump through when owning a company in France, but the creation is the "easy" part. And we got rid of the minimum capital many years ago. A good accountant will even guide you through all of it (but it will be expensive).
- tymm 3y agoMy primary concern with establishing a company in Germany isn't the bureaucracy—it's the unreasonable exit tax. This tax feels like a trap because it's levied on the company's valuation, not its revenue, effectively anchoring businesses to Germany. I'm curious about the preferred destinations for entrepreneurs looking to avoid this issue. Do most opt for the Netherlands or Ireland, or is there another popular choice?
- limaoscarjuliet 3y agoMissed the point on communicating with the Tax Govt people by snail mail - you want it that way. Working with them over phone or email will inevitably lead to you being hit with fines and other nasty scenarios. Always get a lawyer to represent you when the Tax folks start an audit. Never tell them anything over the phone or email. Always ask for a letter and provide explanations via letter. Do record all communications with them. Never say anything they did not ask for.
- nforgerit 3y agoI absolutely agree. I learned the hard way that they cannot be trysted and will use the different communication channels to their own advantage. Still kind of shocks me as a German who usually went with “they do weird things but you can generally trust the state”.
- tietjens 3y agoMy biggest complaint about German bureaucracy (reflected indirectly in some comments here) is that there is an insistence on following the rules, even while there are SO many rules and laws that officials very often give you wrong, incorrect, misleading answers. I see this over and over and over again. If you hit a bureaucratic wall in Germany you often can get over it, not by paying money like in some countries, but by paying with time from your own short life, and with your nerves trying to bend the system to your will. Is it worth it? No. Not in my opinion.
- dappermanneke 3y agogermanys most important role is to stop people from noticing the actually good countries around it
- archi42 3y agoUh, yeah, this is all horrible. Even when founding a company makes sense, it's sometimes difficult to justify - e.g. when we were buying a house I was looking at bigger buildings with multiple units, so having a estate holding company would have made sense: We're already taxed over 30% and rents could have pushed us into the highest bracket, while most of the money (rents) in the holding would have gone into financing and maintaining the building anyway. Don't get me started on founding a company and then getting necessary loans (all while the loan market changes and suitable houses might vanish from the market). Some proper investor is probably now renting out a multi unit house we would have bought, making nice profits while we would have aimed at boosting our pension in a few decades. But well: That's the way it's meant to be, else the rules would be different, or would they? (We got an old SFH instead, and slashed energy consumption by ~80-90%. That's not even accounting for PV. It's nice to profit from that now and later in life, but I still believe that we, as a society, would have benefited more from improving a MFH and sharing the lower energy consumption with some tennants)
- SeanLuke 3y agoFor those of you griping about German bureaucracy I urge you to come to Italy to learn just how good you have it. My wife is Italian and wanted to get married in her small home town. In order for her to get married to an American in her home town required paperwork that bordered on the Kafkaesque. We had to show up at the Italian embassy in Washington DC (fortunately we live there!) with proof and witnesses that I was not already married, plus another ten pages of forms. We had multiple stages of notorization. And we had to have forms signed by other witnesses vouching for the truthfulness of our witnesses. In Italy we had to draw up a long declaration of vows in italian -- in Italy, a wedding is a contract -- and then even though I wrote the vows myself in Italian, just because I am American we had to have it translated by someone else back into English, by hand, just so I understood the vows I had myself written. We then had to contract someone to read the vows out loud in English at the ceremony so I understood my own words. At every step on the way, the bureaucrats apologized for the bureaucracy and asked us the same question, over and over and over again: "Why don't you just get married in the US?" Don't get me started on the *hilarious* complexity of getting a Permesso di Soggiorno (sort of an Italian Green Card) this year. I applied this past July and there are still more steps to do.
- pavel_lishin 3y ago> then even though I wrote the vows myself in Italian, just because I am American we had to have it translated by someone else back into English, by hand, just so I understood the vows I had myself written. We then had to contract someone to read the vows out loud in English at the ceremony so I understood my own words. I badly want to learn the historical reason for this insistence that non-Italian-speaking foreigners must understand the contract they're entering into. They wouldn't put up these hoops to jump through unless someone's gotten badly burned in the past, right?
- kome 3y agoIn Hungarian courts a contract that you cannot read is invalid, or at least, highly contestable in court. So translations are needed. I guess it must be the same in many other jurisdictions.
- jarek83 3y agoThe chicken-egg situation for bank accounts is the same in Poland - it's funny how such fundamental thing haven't been fixed even in Germany
- rsp1984 3y agoThe worst part of being a founder in Germany is not even the bureaucracy (even though it is just as bad as described), it's that everybody wants money from you all the time: - For services that you never signed up for (there are certain institutions in Germany that can bill you for stuff you neither want nor need but they have the full force of the government behind them): IHK, GEZ (Rundfunk), Verwaltungsberufsgenossenschaft (in case white collar workers hurt themselves by typing on the keyboard...). If you refuse to pay, they can literally put you in jail. - For services whose necessity is entirely generated by the government: 1k EUR for the Notary to read you some boilerplate text. 500 EUR per month for bookkeeping services (govt creates all these arcane rules to make sure you never want to do it yourself). Plus many legal bills because German business and employment law is a minefield and you don't want to blow yourself up. - For tax on imagined revenue that you didn't even realise yet. Yes, the govt. literally makes things up and says "that's probably going to be your revenue this year and you owe us tax on that". If you're a big company with large predictable revenue and departments of people to deal with this, I guess it's tolerable, but there is no doubt in my mind whatsoever why the vast majority of successful startups exist outside of Germany.
- caseysoftware 3y agoThat's nuts. I created a pair of LLCs in Texas in '22 and the registration process was $300 (each), submitting one form, and saving the resulting pdf. Starting their bank accounts was another matter though as they wanted the pdf from above and Articles of Incorporation and/or an Operating Agreement, neither of which was required by the state. But the document itself wasn't important as my banker googled to find a one-page version, emailed me the link, I filled in my details, and printed it. :| Now once a year, I have to go online and report my annual revenue. And because I fall under the minimum, the rate is 0% unless I file it late, then it's a $50 late fee.
- nickip 3y agoResearchgate might have a gmbh but technically is incorporated in the US. Maybe thats how they got their "special name".
- rurban 3y agoThis is only about founding a GmbH. Only to avoid high liabilities. ("beschraenkte Haftung") A normal simple Einzelunternehmen is trivial. I needed about 2h just to avoid the trap of the Gewerbesteuerpflicht (tip: system software counts as freies gewerbe, application software development not!), went to the "Steuerbehoerde" (local tax office) and that was it. No "buchhalter", just Online Elster 4x a year for the USt, and 1x a year for the ESt. Same as in the US or every other state. I did that in 3 countries so far. The US was easiest. An engineering office is more complicated because of additional mandatory expensive IHK insurances and membership fees. TKK (Techniker Krankenkasse) is always better
- Systemling0815 3y ago[dead]
- stevoski 3y agoI lived in Germany for years. I listened to Germans gripe about how bureaucratic it was to do things there like open and run a business. Then I moved to Spain and started a company there. Germans, your country has NOTHING on Spain when it comes to pointless, confusing bureaucracy. Your country, your laws and rules and the application of them are BLISS compared to Spain.
- quitit 3y agoWhen it comes to European bureaucracy: If we put Germany on one end of the scale and put Estonia on the other end, most of Europe is going to be placed near Germany. Germany isn't the outlier, Estonia is. Also one would be mistaken to believe that these bureaucratic processes produce a better result - there's already numerous examples where weaknesses in these systems have been exploited. One recent example exploits the requirement for applicants to supply their own photos. In this case people who looked somewhat alike used computer graphics to merge facial features to produce a mid-point headshot, resulting in one identity that worked for two individuals.
- febed 3y agoI don’t think I understand fully, do you have some links on this?
- silexia 3y agoGovernment bureaucracy is not accountable like business. There is no bankruptcy mechanism and there are no competitors to choose from
- dragonwriter 3y agoBankruptcy is the opposite of an accountability mechanism.
- Major_Grooves 3y agoI experienced the same thing, and wrote nearly the same article two years ago: https://major-grooves.medium.com/just-how-complicated-could-it-be-to-register-a-german-company-e5eb6e50db79 https://major-grooves.medium.com/just-how-complicated-could-... Yes I know we can register a UG, but in the end you don't. And it is not just the share capital that is annoying it is everything else. It literally costs 10x more to do the bookkeeping for a German company vs a UK one. Plus getting investors is much more difficult because of the notary requirements. We used a SPV for our first round, but even that is annoying. I had some angel investors pull out purely because we are a German GmbH.