Wow, this article is a mess. Yes, registering a UG or GmbH is more complicated than Ltd (I’ve done all three) but the process can be basically narrowed down to:
1. Notary.
2. Bank account.
3. Steuerberater takes over from here. Why does he even do Elster himself if he uses a Steuerberater?
4. No. You absolutely do not need an UG as a founder to start a GmbH. You can start a GmbH as a legal person. You do the UG intermediary stunt just for the case if you (the UG) sell the GmbH shares to avoid paying income taxes on that sale. Because every company in Germany is basically a separate legal entity (it’s equal to a person) with its own tax number and everything.
My UG took days to be registered, GmbH took 5 months due to international founders.
Regarding the language. The only thing you’re going to hear as a response to that entitlement: “this is Germany, we do this the German way”. I’m not German, just fyi… you know, when I arrived in the UK in 2006, I didn’t expect that everyone will explain to me things in Polish. I actually had to learn the language.
> Regarding the language. The only thing you’re going to hear as a response to that entitlement: “this is Germany, we do this the German way”. I’m not German, just fyi… you know, when I arrived in the UK in 2006, I didn’t expect that everyone will explain to me things in Polish. I actually had to learn the language.
I think his point is, English is the lingua-franca of the internet and international business. If you are looking to accept international founders, investors and money, maybe it's a good idea to add EN i18n.
Unless you’re looking for a country to change it’s official language to English I think this is a wrong direction. The law is in German, it’s interpreted in German, if there’s some misunderstanding or a mistake in filings it will be heard in court in German. It’s better to set expectations early. All legal processes are held in country’s native language. It is better to NOT provide “official” i18n of the process of starting the company, which unless you’re then willing to support the whole process in this foreign language. How do you also then make sure that the English translation is fully legally equivalent to the German version?
Generally in this case, the law would refer to a German contract, not a translated one, and there is no need for the two to be 'legally equivalent'.
But the process should be clear for all those who take part and so much stuff in Germany is not even clear to native speakers, and I don't even mean legal contracts, just objects and instructions on stuff you buy at the hardware store.
> But the process should be clear for all those who take part and so much stuff in Germany is not even clear to native speakers, and I don't even mean legal contracts
Is it that much different in English speaking countries? There’s a reason why whenever a legal matter pops up people say “consult a lawyer”.
In Germany all proceedings will be held in German. But you can represent yourself everywhere without speaking German assuming that you have a sworn translator with you. That will cost you probably around €200/hour.
Having started three companies in the UK, I have never required a lawyer nor have I advised many of the people who've asked about to get one. The process is extremely straightforward and fast, which obviously helps in making it easy to understand. Currently thinking about starting a company in Germany but the bureaucracy here feels bloated and protectionist rather than lean and facilitating. Like a massive overpriced American Ivy League university. If a company is so hard to start for people who don't know how to start a company, it's not exactly encouraging people to take a risk on a cool idea they have, is it?
Complex entry processes favour incumbents, it sucks.
You can entirely start a UG without ever seeing a lawyer and the fees are low, as long as you stick to the standard contracts available. You have to see a notary, though. A lawyer is important if you want to have complicated arrangements between the shareholders - they would essentially write your company charter.
The complicated part about having a limited liability company is that it requires double accounting and strict separation between your personal and the company property and that your books must be testified by an accountant. So you’ll need a tax accountant.
Minor note: having formed a British Ltd, I can tell you that some things are much more confusing for foreigners than you might expect. And some are outright hilariously bad. I could not negotiate a health insurance for our British employees since the insurance folks are not allowed to talk to foreigners - something something personal data something. Yes, I tried multiple companies.
The personal data rules in the UK are essentially the same as those in the EU, but with a huge exemption for "insurance purposes". So it's unlikely that there is a systematic data protection roadblock in the UK that you wouldn't encounter elsewhere in Europe. I can't think what rule you're referring to, so I suspect there was a misunderstanding, perhaps unique either to the company/broker you were dealing with, or unique to you.
I tried multiple companies, and I’m a pretty normal German resident. They all said they’re not allowed to talk about insurance matters with people not residing in the UK. So we basically ended up having a UK person relay all communication, since that is apparently fine.
> Currently thinking about starting a company in Germany
I would advise against doing it. You will regret it at every step of the way. Save yourself a million headaches (and euros) and go to Ireland or some other EU country with more respect for entrepreneurs. In Germany you'll just end up feeding the entire endless bureaucracy network that is set up to thrive on the work of other people.
Among those being:
- lawyers
- notaries
- tax consultants (this is a big one)
- IHK (useless mandatory organization that takes a piece of your cake)
- Radio and TV tax (they require a tax based on the number of locations or cars that your company operates)
Irish company tax is lower than Estonia and the process equally simple. Estonia, like Portugal, does one thing very right and its PR. But once you scratch the surface there are much better options out there to have a company or to live in.
I am genuinely interested in good places to live where:
- it is not cold, if possible
- the tax rate is low (even if I have to pay services later myself but with my own choice)
- the hospitals and school system are good, even if private
- it is not difficult/expensive to open a business
Singapore: probably meets all of your requirements. Low tax, easy to open a business, lots of private schools. No idea how to rate the hospitals, it has a couple in the best hospital lists in the world, but I don't trust those. Drawback is everything is expensive.
Andorra: not cold for Northern European standards. Low tax, a couple of international schools, private medicine, you should be able to access the private medical system in Spain. A few inconveniences are no train, no airport (closest are Barcelona and Toulouse), custom inspections into France or Spain, generally isolated feeling and tourist centered feeling.
Portugal: Warm and friendly people with good food. I don't know anything about the schools or medical system. Bureaucracy probably isn't great. Low tax for a couple of years. Unfortunately local citizens do not benefit it so a foreigner taking advantage of it is likely displacing a local. Feels very unfair.
Puerto Rico: not cold, no US federal taxes. If you are a US citizen and non-resident and move there, there are some other tax benefits, but people who were already residents can't take advantage of it. Lots of infrastructure problems.
Yes, I am currently in Vietnam and was thinking of making the move to Singapore. I worked there before. I do not think the food was that expensive. I can eat cheaper in Singapore than in Europe IMHO.
From the list Puerto Rico looks to me like the new idea. I was considering the others, yes. But Andorra is cold as hell and boring :( Portugal's bureaucracy approaches that of Spain, but Spain is getting sooo bad IMHO that some day Portugal could be better, if it is not already.
Good point, Singapore has great, inexpensive food. Housing is where you spend the big $$$. Singapore is probably at the top of the list for the low tax countries. The big breaker for me is the lack of four distinct seasons, but all the other low tax countries have bigger negatives.
A few other low tax places to consider that I don't know much about: Belize, Bulgaria, Croatia, Macedonia.
He looked into opening a GmbH, not the other way around. He wants to do business in Germany.
You can absolutely go through this process without speaking German but it will cost you money in lawyers.
> I think his point is, English is the lingua-franca of the internet and international business.
Maybe the Internet, yes. But international business? I don’t think so. Maybe from a perspective of native English-speaking person it appears to him like that. But it’s not the case in many non-English speaking countries.
> Maybe the Internet, yes. But international business? I don’t think so. Maybe from a perspective of native English-speaking person it appears to him like that. But it’s not the case in any non-English speaking country.
When a Swedish company does business with a Portuguese company, they speak English. Other languages are used for domestic business. International business is done in English. There are exceptions to the rule like the Francophonie, but let's not be pedantic. You may learn some phrases of the other party's language as a gesture of goodwill and politeness (and honestly it's kinda fun use of company time), but the actual important talks take place in English.
> And depending on the education we also speak Spanish, French, German and Italian, as the main learning paths in high school available to chose from.
Come on now, how many people had any of these languages in high school speak it at a conversational level let alone for business. The vast majority of people i met who learned a foreign language in school (other than English) cant speak it.
I specifically went to a European language focused school where learning a lot of languages was a thing people did (it was also classified as such as by the government). Six languages was the most anyone ever spoke, and that was a dude who spoke English, German and Chinese natively (lucky bastard). Even people who were good with languages did not go above 4 usually.
IMO you're misrepresenting to a huge degree the actual part of the population that is able to learn this many languages. Most young people in Europe can speak a native language and a second language, with a bit of a 3rd language thrown in. And that's only counting the richer part, many do not learn past a 2nd language if that.
BTW I count speak fluently == could have a dialogue with a native person about a random topic and be understood. Being able to ask for directions or talk about the food is not fluency, I can do that without language at all.
Yes, I specifically said myself, not everyone. I have worked professionally in all of them, when I said fluently I meant it.
The average as per EU statistics is three languages.
The person's country main language, english, local dialects or additional national languages in countries like Spain, Belgium, Luxembourg, Switzerland and so forth.
Or in the case of European expats, the language of the country they happen to work on.
Presumably because the contracting parties want the contract to be interpreted and enforced by the courts of a country in which they both do business.
It's not unusual, I think, for big international companies that already have assets and legal advisers in the UK to specify English law and English courts for a contract, but if a small Greek and a small Italian company were to have a contract in English, it would, I imagine, just make a legal dispute much more dififcult and expensive to resolve (whether or not the contract specifies English law and English courts: different problems in each case).
Because a dispute needs to be heard in a court, at which point precedent and/or statute need to be considered, and if the contract is in a different language to either of those two then interpreting all of them together becomes impossible.
That’s not true - you can have a contract in any language in Germany. But the first thing that a court adjucating any dispute would do is have a certified translator translate it into German - at your cost. And that translation will be out of your control. So it makes sense to have a German contract, so at least you know what the contract says going to court.
Plus, if during the certification of the translation it comes up that the document does not comply with the legal requirements, it may lead to a contract invalidation. It can be really expensive depending on the matter of the dispute.
Obviously not true for many countries. In Sweden we often use English even for domestic contracts. I've seen employment agreements in English between a Swedish company and a Swedish employee.
You can choose both the law and forum in many types of commercial agreements. Typically international contracts will choose English law as the governing law.
> and they both feel less entitled about the other part not speaking their language as English native speakers do
Have a couple of stories about this. Yes, some people think that you should know their language when they just speak theirs. I do not find it too polite, honestly. Especially a couple of times I saw things that even once made me jump in and say: "how many languages do you speak?" He was abroad, you know, in Asia. And I had to reply: "what makes you think everyone should speak english? You are not even in an english speaking country".
It is not nice to see people behave like that. I think it made the locals feel insulted, not bc he cannot speak the local language. It was because of the attitude of demanding the others to talk to him in english. English is the most used second language. But noone said each of us must learn it.
Sweden went through a massive cultural swing towards English/US culture in the later 90s and then at full speed through the later decades. English was initial an alternative language that Swedes could optionally pick at the age of 15-18 (a choice between German, french and English). Then it became a graduation requirement for all students at that age group (with German and french being delegated to a third optional choice), and then English moved down the age groups and now Swedish children learn it beginning as early as age 8-9. English has become a second required language in Sweden throughout the education system.
Okay, and what about Poland and Germany? Or Germany and France? Or Belgium and The Netherlands? Or Germany and Italy? Can you with 100% confidence tell that all companies in all cases between those countries do business in English? What about a Belgian company from Wallonia and a French partner? Or Luxemburg and Wallonia?
> Can you with 100% confidence tell that all companies in all cases between those countries do business in English?
No, but in every one of those cases English is the way to bet.
> What about a Belgian company from Wallonia and a French partner? Or Luxemburg and Wallonia?
Almost certainly French because it’s the working language of both companies. If people share a native language they’ll use that. Otherwise the default is English. It’s not certain that they’ll use English but Siemens doesn’t expect its international partners to have German speaking partners for dealing with it; it does expect its executives to speak English.
Just as science has a lingua franca so does business. It is English.
The only English speaking country in the EU is Ireland. Many people in France, Italy or Spain do not speak English, at least not beyond elementary school level. It's even worse in countries such as Greece, Romania or Poland. It's hard to do business that way. So we use a lot of Google translate, but contracts are always in the native language.
And also basic levels of German and French. Outside of tech I actually hear from multiple sources German is an important language for trade between medium-sided companies, to Germany of course but also a large portion of the other eastern EU members.
This is all true but as an American (I grew up speaking a different not European language), Europeans' ability to switch languages is interesting/fun.
Once I had a business meeting in Switzerland. It was all in English (for me, the American), but at one point they were speaking German to each other. And later in the hallway, they switched to speaking French with the lawyer who was there with me. And at lunch in the restaurant attached to the office, the Swiss German host ordered his food in Italian.
In Denmark I received English copies of various work / housing contracts, with a very clear disclaimer "in case of any disputes, the Danish text applies". I believe we did the same in Italy with foreign clients - Italian binding text, English courtesy non-binding copy.
Such a copy is good enough to use for 95% of the negotiation process. Then, if it's a serious business contract, you get a sworn translator to check its accuracy before the final signing.
(In my case, since the Danish ones were standard contracts, I just checked that they didn't differ from the publicly available texts).
It is a mistake to think merely translating bureaucratic lingo will suddenly lead to an understanding of it. Even if the individual words are understood, it is likely the meaning is still lost. Translating bureaucratic lingo may certainly speed up the route to understanding, but one would still need to internalize laws and processes. Most bureaucratic lingo is tricky even for natives.
Example from Dutch bureaucracy: "A household receiving an allowance under the Participation Act must contend with the Cost Sharing Norm". That's all nominally English, but effectively gibberish without an understanding of what the Participation Act is all about.
There is no easy technical solution at hand here. That doesn't mean the author doesn't have a point concerning the notoriously obtuse German bureaucratic machine. But any real solution will have to involve a cultural change.
I wouldn't expect the forms to be in English, because that would be Ugly American. It would be very hip for them to do it, but that's their choice. Almost every educated adult under 60 there speaks English, as far as I can tell.
I would note, though, that in a court proceeding, one side can pay for simultaneous English translations (I don't know about other languages). I know this because of the German map patent I worked on. I didn't get to go to Germany for the hearings, but if I had, we would have gotten the English service.
No they cant and legal translators have insurance to pay you damages if it dies. You should not use random translator, but one that specializes at legal.
It's almost impossible to grow up in Germany and not be forced into English lessons. English is mandatory even for the lowest level of education. I can asses you, more or less everybody here does know at least some English.
But of course no official will talk to you in English. No way. Even if they could without much effort.
If you need to speak to an authority you need to do it in German. They will insist on that. Out of their perspective it's all about forcing you to "show respect" for the German authority.
Berlin is special anyway. It's more likely that some random dude on the street speaks English than German. I know people that live in Berlin for many years and still don't speak any German at all. In the day to day life that works out pretty well. The only occasions where they need to bring some native speaker with them is when they need to interact with the authorities…
On the countryside it's different though. Even everybody does also know English you wouldn't get away with not learning German; as not only the authorities would insist on speaking German. People will just ignore you and pretend they don't understand if you try to talk to them in a foreign language (even everybody understands at least some English).
I took German in college, and I'd say without hesitation that my German, even right out of college, was worse than your English.
However, I found when I was there that attempting to speak at least a little bit elicited sympathy, and they would answer in English. It was probably easier than finding some German words I would understand.
So yeah, you don't just walk up to someone and start out speaking English.
I would say the English level in Germany is quite high all in all.
Everybody understands it, most people are able to speak it quite well.
This should be no wonder as the languages are actually quite similar. At least the gap isn't so big as for example between English and some Latin language, or even something linguistically much more far away.
But even people are considerably well educated in this regard they don't like to speak English in daily life. Berlin (and the few other big northern cities like Frankfurt) are mostly an exception to that. But even there this does not hold for authorities. They will on principle insist on German.
They're actually quite not.
Try typing something into www.deepl.com - verb placement alone separates the languages by much more than a few shared roots.
* I do so wish the German rules on the pronunciation of 'ei', and 'ie' could be/ could have been internationally adopted.
Not only words and grammar are closely related even most of the idiomatic "pictures" are exactly the same in both languages.
I have also no clue what you mean by "verb placement alone separates the languages" as both languages use by default SPO (subject - predicate - object) word order. (German is a little bit more flexible in this regard, though).
I can see why in Berlin people who hang out in bourgeois spaces would think that. Almost every university graduate under 40 is able to speak English and an awful lot of those under that age. Germany isn’t like Scandinavia where everyone without severe educational issues speaks English well but it’s another world compared to Italy, and Berlin has unusually high levels of competence in English for Germany.
> Berlin has unusually high levels of competence in English for Germany
I would not confirm that.
In Berlin everybody speaks at least some English, and more importantly, people are way less "shy" to do so.
But the overall level of education (and that includes foreign languages) is much much lower in Berlin than in the southern states. You can even get your Abitur in Berlin without having to take English exams. That's something that's impossible in say Bavaria.
There’s no requirement for English in the Bavarian Abitur. You must pick one language up to the exams, but you can totally pick Latin.
I’m fairly confident that you have to have at least 4 years of English in school everywhere in Germany if you have at least Mittlere Reife (you can pick a different language as first language in 5th grade, but you need to have Englisch from 7th to 10th)
English was once mandatory as far as I remember. (And you could pick French, Latin, and sometimes ancient Greek, or Spanish additionally).
But the point about Berlin is in fact a little bit different to what I've written before: You can get ABI there without any foreign language at all! (And their math and physics level was more or less comparable to my 11th grade in Bavaria). I was shocked when I leaned that… (That was the first time I've understood why some people would like to lower the ABI results of people coming form the north by one up to two grades when they come to study in the south; the different levels of education across Germany are in fact a real problem).
You can get the Abitur in Berlin without having a written or oral final exam in a foreign language in Berlin, that’s true as far as I know. You still need to take classes in at least one foreign language in the time up to the exam and the grades will be part of the final grade.
Exactly. It's possible there to have no final exam at all in English (or any other foreign language).
Whereas there were not much possibilities to get around the final exam in the second foreign language in Bavaria, and no way at all to avoid the exam in at least one foreign language. Which makes a very big difference for someone who's not good in languages—as only the grades form the exams are part of the graduation certificate (which is relevant for example when applying for a university place).
That extremely unfair!
You get Abitur in Berlin more or less for free.
The grade from the subjects you don't have any final exams in are of course not part of the graduation certificate…
I know someone who was struggling in Bavarian middle school with at best average grades, moved to Berlin, could join the "equivalent" of Gymnasium there, and got out with an A-grade ABI. Such "good" grades would get you for example prioritized for say studies in medicine or law, whereas you would not even be allowed to get into university in Bavaria with a middle school diploma.
That are literally life changing differences! That's really not OK.
I know someone who changed school from
Rheinland-Pfalz across the river to Mannheim (Baden-Württemberg) and got their Abitur essentially for free - at a private school well known for making everyone pass. So what does that tell us?
I believe the author’s point to be that due to no English translation available, the already involved process in Germany becomes unnecessarily hard for a non-native speaker. As a native speaker I can attest to lots of gobbledygook official documents I had to deal with in my lifetime. The amount of paper you have to deal with when running a business is truly staggering.
Bureaucracy is indeed a rampant runaway force in Germany. Every attempt at reducing it will inevitably create more of it, because, in the bureaucratic mind, you now have to create an oversight committee to control the adherence to the decree of reduction.
I believe this to be a universal constant: you cannot task bureaucracy to with making itself superfluous. Digital services are a decade behind here, since most bureaucrats fight tooth and nail against them, for fear of losing their job.
I think the issue is actually much worse than just making it harder for someone to start a company.
The primary issue i see with Germany are that the issues raised by the writer is not just limited to starting a company. It is EVERYWHERE.
The problem is that whether Germans realise or not, it profoundly affects them in many ways.
Because of the archaic system of doing things, everything takes time. You have to set aside time to do these things. Because of how bureaucratic every process is, each staff can only see a limited number of people.
You constantly have to refresh some archaic website to find a slot. Slots are usually all gone in an instant, and your luck depends on someone cancelling or maybe them adding an extra staff for that day.
Often, there is no way to submit applications online, even for things that may logically be better off being submitted online.
The problem i see is:
1) It affects everything, including healthcare. Waiting times for public healthcare, government support etc, are through the roof.
2) Often times, this time blowout issue is blamed on something else (such as refugees, etc). There may be some truth to it, but as an outsider I see how easy it feels to blame some hapless refugee than admitting that system was already at its seams prior.
3) This system disadvantages the less-well-off - being able to pay for it lets you buy your way out of the hassle.
4) Unfortunately, most Germans view this from some perspective of denial, helplessness while others get defensive when you argue about it.
There’s also a lot of resistance to digitalization- for example I work with some government organizations (both federal and state) and they’d often require me to send some documents printed out and signed in the post. There is absolutely no reason why in the 21st century you shouldn’t be able to accept email documents digitally signed instead.
That’s what I meant with digital services being a decade behind here. I attribute it to extreme conservatism to preserve jobs that aren’t in fact necessary. Bureaucracy is incapable of seeing beyond itself, just like so many other areas are as well.
Since one of the EU's goals is to make it easier to do business, I would expect the EU to fund translations to all its official languages (with English among them). As far as I know no country has requested it.
I agree with your general point that the EU does not know how to make life easy for small businesses.
However, your examples are not the best: GDPR and Cookie Law are actually quite good. Regarding the GDPR, I like being able to obtain all the data a business has on me, and to demand that it be deleted. As for the Cookie Law, it’s only a problem for websites using them for tracking people: you are not required to get agreement from the user to use cookies for things like logging in.
Those annoying pop-ups almost everywhere are a disinformation campaign to turn users against that law.
Now, there are other things like the Link Tax you mentioned and the MOSS (VAT on digital services), which means having to charge/pay different VAT rates depending on the user’s country (which you need to justify with 3 different pieces of evidence) that are a big burden on small businesses while not affecting much the big ones to which they were supposedly directed.
> The end effect of those Bizantine regulations is that big companies just use them as loopholes while small businesses get weighted down with them.
Yeah, this is exactly the issue.
I work in Finance and the right to be forgotten / right to deletion is a pain, as it doesn't apply to invoices (needed for financial reporting for 10 years), but can apply to the user ID, etc. which makes it tricky. It's doable in a big company though, even if it's a headache.
But for example, I live in a housing co-operative, and there the laws really become a pain. Like we wanted to use the CCTV to better enforce treatment of communal areas, but you can't without a police report, etc., and we wanted to build a better portal for residents but then there are lots of issues with the GDPR, etc. - like all just little hurdles that get in the way of iteration and innovation. Especially for something like that which is basically part-time among residents.
> But for example, I live in a housing co-operative, and there the laws really become a pain. Like we wanted to use the CCTV to better enforce treatment of communal areas, but you can't without a police report, etc.
I also live in a housing cooperative and I'm glad these laws exist. They protect me from some neighbors that want to set up CCTV everywhere because somebody once saw a kid in the yard that he didn't recognize so must be a burgler (dark skin tone I might add), and because some neighbors don't fold their cardboard boxes properly in the recycling room. And for that BS I and all neighbors should be put under permanent video surveillance in all common areas on the property? No way, I'm glad the law prohibits that.
>I agree with your general point that the EU does not know how to make life easy for small businesses
Is this even an EU specific thing?
I set up a company in the UK, and the only thing I needed was a number to do tax returns. The only other required thing is the tax returns, and that only gets you to the level of the typical American who has to do tax returns anyway.
> Those annoying pop-ups almost everywhere are a disinformation campaign to turn users against that law.
I think it's just businesses not knowing, and Googling a service, and installing that service which introspects their cookies and shows them to users with an obnoxious popup.
Some of it are bigger companies being deliberately obtuse and making it as hard as possible to uncheck the tracking cookies.
Then a bunch of mid-size companies who just do what the big guys do because if they do it, it must be fine.
If everyone who just use cookies for session tracking (which is perfectly fine) woulds stop asking, we could better differentiate the bad ones from the good ones.
> If everyone who just use cookies for session tracking (which is perfectly fine) woulds stop asking, we could better differentiate the bad ones from the good ones.
Agreed. My experience was slightly different: we used cookies purely for login, and our legal person still just heard "cookies" and so we needed a consent popup.
And this kind of attitude is why Europe’s future prospects don’t look great.
Based on the demographics, most European countries are going to have to start importing young people (immigrants) if they want to keep their social welfare systems up for the next generation. It’s a well known fact that first generation immigrants often have the highest rates of entrepreneurship.
Yet, unlike the US, which was created around the idea of being a nation of immigrants, Europe does a really bad job of integrating people (not unique to Europe, it’s really the default state of humans).
English is the lingua franca of Europe. To make it hard for the people most likely to start a business (immigrants) to do so, is astonishingly short sighted. Where do you think the tax money that pays for the salaries of the 5 million German government workers rubber stamping all these documents comes from?
> Europe does a really bad job of integrating people (not unique to Europe, it’s really the default state of humans).
> English is the lingua franca of Europe.
These two sentences contradict each other: Integrating people implies that these people better learn and speak the native language of the country that they are in instead of English (in the EU of course except for Ireland and Malta, the only two EU countries where English is an (but not the only and first) official language).
I live in Germany and have lived in Austria before (I lived in the German speaking countries since 2005). I have 2 native born Berliner children who speak German as their mother tongue. I speak German just fine for my day to day interactions but legalese German for corporate use with the government isn’t the same as everyday German (I also run a company here).
I manage anyway, but im sure this unnecessary friction is one of the factors in reducing entrepreneurship in Germany (my native tongue isn’t English but like everyone these days I learned English very early in life and still speak it better than German).
Ultimately it would be better for Germany to reduce friction for economic activity as much as possible. As others said you can register a company in Estonia without being fluent in Estonian. There is nothing inherently different about German or Germany except that they don’t care as much as Estonia does to encourage (or at least not discourage) entrepreneurship.
In general I wish “old Europe” would have been subjected to the same requirement for reform and modernization as the former communist countries were as a condition when they joined the EU. And generally for some Germans to drop the attitude that they’re better than Eastern Europeans - nobody is suggesting this with malicious intent, it’s meant to make things better for everyone in Germany - including Germans themselves.
There isn't even a english speaking country in the EU anymore, and you say english is the defacto langauge of Europe? Seriously? If someone comes to a foreign country, they better start learning the language there, or they will have a hard time integrating. I see this on a daily basis. Language barriers are the biggest issues. We have people from foreign countries working in restaurants now, and somehow the customer is now supposed to speak their language if they want to talk about the order? The future is sign language I suppose.
No, it is not as simple as you seem to put it. Egnlish is not german, period. If someone wants to prosper in germany, they better learn german.
> There isn't even a english speaking country in the EU anymore
Ireland and Malta have English as one of the official languages, and for Ireland English is in practice even the more important one of the official languages.
> There isn't even a english speaking country in the EU anymore, and you say english is the defacto langauge of Europe?
Hrmmm. What language do you think people who work in the EU government use when communicating with each other? Here's a hint, it's not Portuguese, Finnish, Dutch, French or Italian.
It's definitely not German (a few historical reasons for that...).
The term lingua franca means "bridge language." That's what English is in the EU.
> ...The future is sign language I suppose.
Or, Europeans can continue doing what they already do when conducting business or dealing with tourists, which is...speak English when dealing with people from other countries.
Yeah, Euro English is a thing https://en.wikipedia.org/wiki/Euro_English
but doing bureaucracy in it on the local level isn't easy, mainly because legalese is often untranslatable
indeed. As I was doing the process with two native German speakers, the language was really the minor part of the problem. Really it is the overall process that is absurd.
I can confirm all of the above, except the international founder thing, kind of. I went through the GmbH thing as a solo founder, which went from lawyer (not really necessary, you can use standard incorporation legalese), notary, bank to a steuerberater. All that took all of 2 weeks, getting a VAT number took the longest with a month or so if memory serves well.
I had a UG, still do so, with a partner (non-German citizen but a German resident) that started out as a JV for the above mentioned GmbH and ended up with me as the 50% shareholder after the GmbH was closed down. That went even faster than the GmbH, again getting a VAT number took the most time (tax authorities in my city are so bad that most companies just move 2 km into another community over it).
I said it before, and I say it again, GmbH set up (or incorporation in general) is something almost every single mom-and-pop retail store and every single contractor shop with more than two people goes through. How smart can start-up founders be if they almost fail at something all those lowely (sarcasm, I have the utmost respect for those traditional and small scale entrepreneurs and blue collar companies) do with a singoe complaint?
Maybe, if the basic legal things about incorporation go above your head, choose a different jurisdiction or, well, maybe flubding and running a company just isn't for you...
EDIT: Why do people insist on the 25k captial? Half of that is ok, founders are on the hook for the reminder. Also, we talk about start-ups, potentially raising millions of VC money. Why can't those founders be bothered with coming up with 25 thousand? Unless, of course, people aren't actually serious about running a business, aka the real "life style businesses", as opposed to those run by people who actually have to earn their living with a company.
Also, the stab, or whatever it was, at the German subreddit over his entitled English requirement (try that in the UK or the US with a non-English language) is just pathetic. And honestly, no amount of language mastery enables you to read and understand legal documents, regardless of the language, without a legal background in the particular domain. But hey, if notaries are outdated maybe we don't lawyers neither as long as we have a native language speaker?
I think a broader question for the EU is whether ever greater integration is possible without some standardization around a common "admin" language.
Having lived in several EU countries, I love learning new languages, but it does make day-to-day life much harder, not to mention more complex topics such as starting companies.
It's conceivable that Germany could introduce English an official second language (having multiple official languages is common in the EU), even if just for certain sections of legal life.
At the end of the day, EU citizens have fairly robust rights to live and work in other EU countries, so it's not a privilege. Providing ways for those people to integrate better into the legal systems would be beneficial to creating a more unified Europe.
There are a couple of official government languages in thr Ru. And for doing business within a certain country, local official languages apply. For international contracts, parties can simple agree on a different jurisdiction, in which case those jurisdictions languaged apply. But maybe all non-English speaking should just feel sorry for bothering the English speaking world with foreign languages.
For the EU so, the only English speaking country left is Ireland.
Setting up is still the easy part, managing (the bureaucracy part, not the actual business) and getting rid of it is much more involved.
I don’t see any positive factors to being in Germany as an entrepreneur, only reason to be there is if the business can’t do otherwise (eg serving something physical to a German customer) or you already inherited something and the cost of moving would massively outweigh the benefits.
Edit: note on the inheriting part, afaik if it’s a company they tax you for the sale if you move your tax residency away (in the EU you have a few years to pay, otherwise right away). That’s also another risk when setting something up in Germany.
Yeah, managing is some work. The best is to find one of those Steuerberatungsgesellschaft and let them guide you through everything. Filing taxes will cost you €2500+ per year for a GmbH, €1300 for an UG.
Getting rid of it is easy. You file an Auflösung, sign it at the notary, ask them to notify agencies on your behalf. Then you have one year to liquidate. Not sure what’s difficult about it.
Getting to a notary when not in Germany, all the agencies, getting to the notary a second time when it’s done, all the things you need to file (3 tax filings, 2 different accounting statements, etc), getting the letters from the agencies - all when the company is essentially dead and doesn’t have any extra 2500€ per year left for filing.
Could all be done with a small number of forms and online or for a small fee in many other countries.
> all when the company is essentially dead and doesn’t have any extra 2500€ per year left for filing
That’s bankruptcy.
> Could all be done with a small number of forms and online or for a small fee in many other countries.
> What’s the benefit of doing all that?
Frankly, I have no idea. Maybe they do want to make sure that the process stays legitimate. I believe you can do all of this without having to show up in the country by giving a lawyer a power of attorney. But you better have the money to close all financial matters.
When I was shutting down the Ltd, I did it via my tax accountant. And yes, I did tax filings for the last year too. The only difference was that there was no grace period for liquidation.
So you're saying for a small UG you should always spare 1-2 years (most likely more than 1) in case you decide not to pursue the business anymore? I'd rather spend 2-5k on other things.
Apart from being an absurdly high amount for something that can be read out easily from any sane accounting system (thanks Germany for basically forcing everyone to use Datev, which they obviously only sell to professionals, so that's how a simple task becomes 2k+ per year [0]).
> Maybe they do want to make sure that the process stays legitimate
That doesn't really solve the problem, I've had clients with GmBHs who ended up not paying what they owed me - just because they pay a lot to accountants, notary, the state etc. doesn't make the business more sound. Conversely, you can handle a legitimate business (e.g. selling expertise in form of consulting projects) much cheaper and with less time invested elsewhere.
Maybe if everyone weren't wasting so much manpower on inefficient systems, things would actually work.
The added burden of dealing with personal tax, the high price tag for it along with social welfare (which only helps in highly rare circumstances, e.g. when I literally don't have anything anymore - which I don't need because of what I've invested) and the time lost just don't add up.
I've lived in many countries, small, large, rich, poor, and I think Germany is the worst among them to start a business (and also to live, but everyone has their preferences) unless you have a really good reason to be there.
To start something you need flexibility, low overhead, and not to waste time you could be using to talk to customers and build something, rather than deal with bureaucracy. Germany offers neither.
[0]: one quick note on the side, I've used Collmex to do my own accounting back then after I had to fire my tax accountant for absurd things I was being charged and to wrap up the business that I wasn't working on anymore. For me it worked out - in principle what is accounting: you want to track receipts and transform them into a balance sheet and P&L statement + a few of the extras you need in Germany, like VAT reporting. Still a massive pain to transform it into what the tax agency wants and get the info what that actually is, I think it's hard on purpose to waste people's time and direct them to tax accountants that overcharge.
Anyway, time invested vs. paying someone to do it probably doesn't fully add up but I learned a bit more about accounting which is nice to have in any business context.
> So you're saying for a small UG you should always spare 1-2 years (most likely more than 1) in case you decide not to pursue the business anymore? I'd rather spend 2-5k on other things.
I am telling you that if a company runs out of funds to sustain its operations, it's bankrupt. In Germany it is called Insolvenz. You can feel as emotional about it as you want, but that's what it is called. Yes, you absolutely need to take this into consideration, if you want to shut down a company gracefully. You need to have that financial resource available. You can, of course, finance your company by capitalizing it with extra funds and that's really simple - you put the money in the bank account of the company and write a document as a director stating what has happened.
In any country in the world, when a company does not have money to pay its obligations, it's bankrupt.
Well to me it’s quite unfriendly to small businesses to (without telling you in advance - UG is always advertised as the simplification that it isn’t) require so much money for essentially nothing. I think it should be much cheaper and easier to shut down a business. Yes, there are alternatives, but nothing is really great to start a business there, especially if you want to bootstrap and not get a massive apparatus running before you have a good market fit.
My impression of Germany was that they try to force you to keep things going on forever - health insurance, pension, etc. as soon as you want to change something you lose a ton of money. Also: don’t ever criticize anything because they obviously really know what they’re doing.
> I've lived in many countries, small, large, rich, poor, and I think Ger many is the worst among them to start a business (and also to live, but everyone has their preferences) unless you have a really good reason to be there.
Try India. There was an HN post the other day about a guy who tried to set up some manufacturing and 2 years in he was still far away from all the permits.
One thing the article we are discussing notably lacks is the mention of bribes. Obviously, you'd add, those would be illegal. Haha. True! They are illegal in India too. And in all other countries. But compared to some forms that are (outrageously!) in German, those re a real PITA.
I'm living in Germany now, by choice, and it's a lovely country with lovely people. Not everything is perfect, but many of the imperfections contribute to the loveliness. Just like in many other countries, rich and poor.
Agree that bribes should be part of the analysis, but I would do the comparison with the time and cost to accomplish a goal, without judging the method.
If you look at the outrageously high fees and lack of competition (notaries and tax accounts - yes there’s a bunch out there but it’s not the market dictating the fee and no guarantees that they won’t work towards a suboptimal outcome) I don’t really see how bribes are worse. In Germany corruption has just moved up the chain making everything expensive.
Overall it’s a lost opportunity to create wealth, jobs and a competitive advantage, both in India and Germany.
Then there’s the bit about personal preference. I didn’t see anything good in Germany, but happy for you if you do and live there.
> Agree that bribes should be part of the analysis, but I would do the comparison with the time and cost to accomplish a goal, without judging the method.
I'm sure you can get your business quickly off the ground if you are friends with the dictator in a country with an oppressive regime. (Others go to jail but that's less important apparently.)
> Then you have one year to liquidate. Not sure what’s difficult about it.
What is funny is that germans don’t even realize how absurd this looks for the rest of the world. Compare this to closing a company in two weeks in the United States.
Funny how the Americans don’t even realize how absurd that looks for the rest of the world.
The reason for this is that the company must pay any outstanding debt before it can shut down - and you need to give creditors a window to write their invoices. And you’re legally allowed to write and collect on invoices for work (or deliveries) that date back up to three years.
So what happens when you liquidate a GmbH is that a notice is placed in the register for all your creditors to see if you have an outstanding debt with them - and then you just have to wait.
The register is electronic and it’s common that people monitor it, especially if you have large sums outstanding. I have done so in the past. I know of multiple other cases where people monitored the register.
If they don’t have money and outstanding debt, they can’t liquidate the company - they’ll need to file for bankruptcy, which is an entirely different thing.
How is this complicated? You don't have to do anything for or during that closing period! The only thing that happens is that you get the final "it's been closed for good now" after that period. I let the "Steuerberater" handle everything while the GmbH was active anyway, the fee was not that much. I just gave them all my receipts and they handled accounting completely. I was a bit pissed at the Steuerberater fees accumulating during closing, which were a bit much, but I negotiated that down significantly.
But again, the least complicated part of it was having that waiting period. It had no impact on me whatsoever, not for taxes, not for anything. I just got a message after that time was over, and another one even later from the tax authorities that they are satisfied and would never retroactively look at the company again, so that I knew I would not get any tax surprises from them. Which I did get from the US IRS - years after leaving the US they wanted money from me.
When you close the GmbH it's not like you have to keep anything. You really close it, bank account and all too. The waiting period has nothing to do with you, unless creditors show up. The only thing that happened was that that very final message about the final closing only comes after that period, without any creditors showing up it has no impact on you and you don't have to do or pay anything.
I had had an "offene Handelsgesellschaft" (OHG) with someone before I had the GmbH. The limited liability company forms, GmbH and AG, are much worse than the ones with a fully liable owner. Those are much easier to set up, and they too can become quite big companies and are quite commonly in use in Germany even for established firms. But it's true, the effort around the liability corporation forms is enormous, and lots and lots of fees everywhere. You can shield yourself easily and outsource it all, but the got-to company form that Germany aimed for historically for the "common man" to quickly and easily set up a company was one of the two where one person or a group own the company and are liable. Limited liability was (still is) deliberately kept to be much more demanding.
Maybe too many people go for a GmbH too quickly? A KG with one main owner and partners only liable with their share and they can be any legal entity, so businesses instead of people can be a partner, would probably work just as well. I know I went for the GmbH form out of such stupidity, because it was "cool" and internationally it was the form everybody was talking about (limited liability. hey!) but I would have been better off with another form. The "limited liability" has very limited benefits if you are a new founder anyway, nobody is going to give the new company any credit without someone being liable in addition because creditors are not stupid.
> you know, when I arrived in the UK in 2006, I didn’t expect that everyone will explain to me things in Polish. I actually had to learn the language.
Expecting the immigrants to speak the language is one thing and should be mandatory, something that many countries in EU have failed to enforce.
Expecting entrepreneurs to speak the language to set up their company is a failure of the state. Everything should be done to ensure that new businesses can prosper.
I emigrated from old Europe (France) to new Europe (Estonia) 8 years ago. I’ve experienced the bureaucracy that steals time and the one that saves it.
The old world notary concept is not the same as the new world’s or the crossdrift back to a modern UK
old world notaries are an entrenched protectionist industry that function more similar to what lawyers do, or at least have similar weight with the addition of being required
slow a lot of things down and will be unfamiliar to new world + UK
similarly, the new world doesn't require share capital anywhere. where it is a common “proof of stake” system to reduce spam and capitalize the country’s coffers in the old world
Having spent the last few years analysing European startup data, the idea there are "hardly any startups in Europe" does not match my experience. Fewer who seek VC funding, sure.
If you don’t intend to get big, fast, then you’re founding a normal business. Seeking VC funding isn’t a necessity but it’s certainly correlated with that desire.
It appears deliberate. They don't necessarily want a bunch of Delaware-style entities doing multilayered shell shenanigans (they outsourced it to the Netherlands).
> GmbH took 5 months due to international founders
> No wonder there are hardly any startups in Europe
Please remember that the process is different in each country. AFAIK the equivalent process takes less than a month in my country, and that's mostly waiting for the paperwork to go through and registering for VAT (which is technically optional, but almost always necessary). There are also companies that will do all this for you for basically pocket money.
Yes, it can be worse! In Switzerland the process is quite similar to Germany, but the pain really starts not with founding the firm but when you first start to employ people. Or indeed, when you need to shut the company down.
Source: I've done this. The first time I tried to shut a company down, my advisors (who you need to handle the local paperwork) didn't tell me about the "three strikes" requirement in the public register. So it took five years to get the company fully shut down.
I've had visitors complain bitterly that they can't get a pre-paid SIM without providing identity and address proof while apparently they can back home wherever.
The concept that rules differ across nations should not be so hard to grasp.
It's not ever a surprise that rules differ abroad, it's that rules can be surprisingly backwards i.e. they make the lives of people doing day to day things harder. That's when people remark on rules (and sometimes in the positive when things are easier than they're used to, but your example is not that).
Well, I was surprised as a German living abroad in the EU when I went to visit family in Germany and realized that my phone stopped working. My pre-paid card used to work in Germany for 10 years before that but Germany decided to switch it off. So now nobody can reach me whenever I'm in Germany. It's not entirely clear what the advantage of that is.
The header makes it pretty clear "Danger of terrorism! Lawmakers tighten restrictions on pre-paid SIMs". That is of course useless nonsense, but politicians can point at it and claim they did something. Also, something, something, stones, glass houses.
Since roaming isn't a thing anymore in the EU, why would you need a German sim card/phone number? And it is not "Germany" that decided that, but rather what ever provider you use.
I wouldn't, and it is decided by new German telecom regulation that went into force last year. The card I'm using in Portugal no longer works when I visit Germany, because it's a pre-paid card.
Thanks for explaining. I didn't have a pre paid card for as long as I can remember. Strabge so, my son's prepaid card works just fine in the EU outside of Germany...
Edit: Just realized, that's not a prepaid card anymore, so forget everything I said...
Why should the telecom company be obliged to keep your prepaid phone number active in perpetuity? Seems a very reasonable thing to terminate it after some period of inactivity
I'm talking about the Portuguese sim card I'm using in Portugal every day. The German system started to switch pre-paid cards from abroad off, nevermind that my phone number is registered with the Portuguese telecom and they know who I am.
The procedure in Germany is very similar to that in Belgium (and most EU countries), I don't see why the OP opted to tackle every step of the process manually instead of delegating most of it to the Steuerberater.
Regarding language, I see little reason to make an effort to support it when alternatives are available. If you are an expat/foreigner and unable to speak a local language you can usually pay your accountant/lawyer or a dedicated company to carry out the procedures for you and explain to you (in your preferred language) what you need to know.
This is no different to other countries, for example here in Belgium you will have to do the process in Dutch or French (depending on the region). Here it's also common to hire an accountant and a "social secretary" company that specialises in facilitating the administration and book keeping of your company so you can focus day to day business.
>Regarding language, unfortunately English is no longer a EU language and so I see little reason to make an effort to support it when alternatives are available.
Of course it is an EU language as Ireland is still a member.
Also, alternatives to English are not readily available to the overwhelming majority of people in Europe or outside. English is the language of international business and science.
> Regarding language, unfortunately English is no longer a EU language and so I see little reason to make an effort to support it when alternatives are available.
What about Ireland and Malta?
Also English is the language of international business. It's crazy not to support it.
Germany is a technologically backward, conservative and anti-innovation backwater. From refusing card payments to absurd "privacy" laws (banning Google Street View and use of CCTV, etc.) and no digital identification, stopping nuclear power, etc.
It's terrible how much influence such a conservative backwater has on the EU, and actually makes me skeptical of the EU as a whole. For example, the GDPR is a nightmare for startups - where a few angry customers can cause you hundreds of thousands of Euros in legal costs and implementation issues. It really destroys the ability to iterate quickly.
> Regarding the language. The only thing you’re going to hear as a response to that entitlement: “this is Germany, we do this the German way”. I’m not German, just fyi… you know, when I arrived in the UK in 2006, I didn’t expect that everyone will explain to me things in Polish. I actually had to learn the language.
That's where he lost me and I stopped reading. It's funny that I only ever hear this comment about English. If the language barrier is that hard, then hire a translator to work with you.
I don’t comprehend how or why you are defending bureaucracy, on the idea that because the capriciousness he experienced doesn’t exactly match the capriciousness you experienced, then he must be wrong. Surely you see the irony in that.
I'm not sure there are any Polish-speaking places outside of the historical borders of Poland (which have certainly fluctuated a lot).
For Spanish: all of Mexico, Central and South America except Brazil, which speaks Portuguese; Cuba, the Dominican Republican and quite a few of the other Carribbean islands; and all of the southwestern United States and to a lesser extent all the rest of it.
For Chinese: true story: many years ago, my neighbors three houses up the street were two Chinese immigrants and their three kids. Very nice people. The parents each spoke their own Chinese-family language and could only communicate with each other in English. When they had kids they decided to all learn Mandarin together. So... China, Mongolia, Taiwan, Singapore, and probably parts of Malaysia?
The point is where you arrive to a country you should be the one adjusting you language to them and not the other way around. That applies even when you speak the most popular language - arguably chinese - and arrive to anglophone countries which speak the “Internet language”
Ostensibly, countries like Germany are competing to attract talent and investment, mandatory bureaucracy in a relatively obscure language is going to be a detriment to that.
A language spoken across Germany, Switzerland, Austria, Lichtenstein, and Luxembourg, parallel in weight to French across European countries, and in the old days the lingua Franca in Eastern Europe, which would rather speak German than English.
>lingua Franca in Eastern Europe, which would rather speak German than English
No we wouldn't. As an Eastern European I can assure most of my countrymen know and prefer English far better than they prefer and know German.
You're probably thinking of the countries bordering Germany that still have ethic German populations from the post-WW2 era, or the ones part of the former Austrian empire (Slovenia, Serbia, Croatia, Bosnia, Hungary, etc.) where learning German was mandatory during those times and the tradition of learning it in school as the main foreign language was kept till recently, but if you go a bit east, or look at youth of today, almost nobody speaks German compared to how many speak English.
If you go as a tourist to Slovenia, Croatia or Bosnia, and talk to old people, you're far more likely to get by in German rather than English, but if you talk to young people, it's almost the complete opposite, which is fascinating.
bureaucracy is not mandatory here. If you are clever you can entirely bypass it.
When I registered my German company the worst was to get an internet contract. Registering was done in one or two day. Internet needed more than 2 months.
First you don't need a notary.
Second you absolutely must not need to register a Gewerbe, as this will inherit the most costs. Check how your work is a "free Gewerbe" (eg. providing system IT services, opposite to application IT services).
Third, get rid of a tax advisor, if you care to read the tax laws and maybe a book. I only took a tax advisor in one of my early companies, and it was a massive pain and costly. Without I always managed fine, and survived many extra tax office checks.
Finanzamt and Elster is easy. Social insurance also, just a bit expensive.
GmBH is expensive, so just take personal risk and register a normal UG.
It's not always so simple though, I moved to France when I was younger for a few years and thanks to a girlfriend who spoke French fluently and living there, I managed to pick it up relatively quickly.
However, even after a year or so, when I had to go to some more 'official' appointments (for like CAF and banks, etc.), it was like I didn't speak French at all. None of the language they used was language I used in daily life.
My wife is Chinese, speaks English great but when she has to fill out more official forms she still struggles with some of the language used.
I do understand their point that English should probably be available in these instances - of course the contracts will be upheld in German.
I do think when moving to a new country, people should learn the local language, but languages are big and the subset we need for daily, effective communication is quite small.
> The point is where you arrive to a country you should be the one adjusting you language to them and not the other way around.
If you have a lot of money/skill/experience and the country wants it then I would expect the country to improve its services (in this case business but we could be referring to council services for immigrants, the immigration process itself etc) to the point where language is not a problem.
It was already said but I am willing to repeat. When a Chinese person arrives in the UK and wants to do business in the UK, they have to operate in English. All communication with Companies House, HMRC, NI and the bank will be in English. All filings will be in English. You can for sure have someone with the POA doing it for you, but it will cost money. Nothing different than in Germany.
I have a GmbH, and I'm German. The process is more complicated than in other countries because of the notary. The notary doesn't really add value in this process, he/she just costs a lot of money.
The German Standards Setting Institute, a private organization which provides lots of standard template documents for startups, actually make it a focus to minimize the notary costs in many of their docs (and ironically, they have notaries helping them because some notaries also think it's ridiculous).
It is much simpler to set up a limited company in the UK, for comparison (which I've also done). And everything the author describes, about the IHK for example, and the Bundesanzeiger Verlag, appears completely stupid to me, too. What value exactly does the IHK provide me? I asked my tax consultant that, too, and he gave me a vague answer along the lines of "they do stuff for you and it's good", and I still have no clue what the IHK does for me.
The official letter for the Bundesanzeiger Verlag states "we know that you probably received a lot of fraudulent mail asking you to wire money to other bank accounts. Do not trust them, only trust this letter and send money to the following bank account." Really? Your word on your letter vs their word on theirs? WTF?!?
The notary thing is insane. It's not a completely redundant profession, but it's not that far off. I suppose it's nice to have if two parties, non of whom the government trusts, sign a contract with each other and you need a trusted witness. But for when you submit some documents to the government? Absolute bullshit. But the German government really does not like to make itself unpopular by making professions redundant, so notaries are going to stay around for a long time.
It's all a part of the general conservatism that comes with having a high median age. Everything here moves slowly. And there are benefits to that, for people who for various reasons don't like change (and there are a lot of those).
I set up a GmbH, it didn't seem like such a big deal.
Regarding the fraudulent invoices, I was warned by at least two people (out of notary, tax advisor, and a friend of a friend who had done it before and outlined the process for me) about it, so no problem.
My biggest problem was a useless tax advisor / accountant who missed important tax filing deadlines and such. The Finanzamt was upset and threatened deletion of (some aspect of the company, I forgot). I got another tax advisor. That solved the problem.
The IHK represents the interest of local companies to the local government and also offers some (IIRC) courses, guides, meetups and such. Membership costs 70€ a year, I don't care about that.
I think maybe you didn’t see why it’s a big deal because you’ve never done it somewhere where it’s a lot faster/smoother? I run a UG here, it took about 3 months to set up because as a first time founder I messed up some of the weird arbitrary steps. If I’d have gotten it right it would have probably only taken 1-2 months (if I ever do it again it will probably take this long). It also cost a couple thousand € overall & still costs a few 100s every quarter for the Steuerberater et al.
It’s not enough friction for me to not incorporate in Germany, but I’d prefer if they’d reduce it nevertheless. Because so many countries (like the UK, Netherlands or Singapore) don’t take this much time/friction, I suspect it’s possible to optimize.
I disagree the notary doesn't add value, he takes legal responsibility for the truthiness of what you're signing and does all the checks to verify you comply.
Is that value worth over other systems? I cannot say.
But in other systems you will likely have to hire a lawyer, with the huge difference that if the lawyer makes a mistake he bears minor to no responsibilities in front of the law.
He takes legal responsibility so he has to verify it. He has to verify your identity, claims, documents, do checks in various registers, transcribe and transmit information to various offices, etc, depends on what you are doing.
I am not saying I love this system, but to say notaries are useless (especially in countries like germany or italy) means not understanding their service.
Arguably the most important service a notary provides is archival. Everything signed at a notary is kept there pretty much in perpetuity. If a notary retires all his documents are taken over by their successor.
Perhaps there's a difference between jurisdictions? In the US a notary only stamps that you are authenticated (ie, not fraudulent) and that the document is what it claims to be.
The notary in Germany has a prescribed list of duties which goes beyond just identifying you. There is money laundering checks and ensuring filings with the government registers as well.
why should the collective pay the bill through taxes for privates to check they comply with the law? You realize in other countries you would still need to rely on the subpar services of a lawyer for any non-trivial issue?
What is that, socialism? /s
As I said, I am not saying that I'm a fan of notary services, but in countries like Italy and Germany where laws are different they do have a role.
People bash on this system and think it's more expensive but let's do some math.
E.g. In Italy we need notaries to buy a home but this includes a lot of services and it includes taxes, registrations, appraisals, etc. I am buying a house right now and I'm paying a whole 3300 euros to the notary (including taxes) for his services and I have literally to do not paperwork, go to any office or anything.
Now, in Texas, when buying a house you'd spending 6.75% in taxes, which would be much more than what you would pay in Italy (almost by a 10x factor) and all the costs of the paperwork is on the buyer and you get no assistance of any sort.
Are we sure other systems are much better?
What if you file wrong paperwork, do you get any legal protection? No. Well you would in Italy or Germany as the notary has legal responsibility for any documentation error or any missing verification.
It is really not as bad as people make it to be.
Again, I'm not vouching that's the best system there is, but I find it better for the consumer, cheaper and safer (also, way easier to have someone else handle all of the beaurocracy).
I'm in the UK and these notaries sound a lot like conveyancers.
In theory the conveyancer deals with the contract of transferring a property, they check the liabilities and conditions attached to a plot of land, and ensure the process goes smoothly.
In reality each side is paying £3000-5000 to have a bunch of totally form letters sent back and forth between the two parties.
It is same in India too. The amount of time that is wasted on it is absolutely massive.
There is no benefit. We have director and ID sign which is accepted in a few departments for what they ask for a notary to witness in others.
Printing something on stamp paper changes absolutely nothing.
The amount of mindless bureaucracy just to waste people's time gets me every time. If you want more money, just ask for it directly.
Also all the penalties for not doing redundant and useless paperwork.
You can pay all the taxes and be compliant yet if you don't fill form saying I paid everything, they penalize you.
IHK is responsible for local advertising and recruiting and acts as a middle agency beween government and industry.
They give sometimes interesting talks and you can reach out for assistance. Not much to complain about for the price imho.
Just because you don't need it on your own doesn't mean other founders or existing companies don't need it.
With the foundation of a company you have some obligations and this one is one of those - strengthening the local market. (If you can't afford 150€ or 0,129% percent of your profit your business is not sustainable (referring to your value question)).
The classic argument, if you can’t pay XXX$ for some bullshit someone else invented and that doesn’t belong in 21st century, then you’re business is not sustainable. IHKs exist for the sole purpose of lining their fat pockets on other people’s hard work, like other professions in Germany, notary included.
> Just because you don't need it on your own doesn't mean other founders or existing companies don't need it.
Then they should be free to hire them on their own dime.
This flippant comment completely ignores the known problems with getting rid of rent-seeking behavior. Those that benefit from it will try very hard to keep it and the vast majority that are harmed, but only by a small amount, will not organize and campaign aggressively for its removal.
So it's very possible that the system is not liked by most Germans, but the dynamics are such that it stays the way it is.
Having lived in Germany for 5 years.. I think you hit the nail. Germans don’t like things to change. They like what they have as it makes business predictable and decisions easy. And if that means getting behind… so be it.
I hate paying taxes and fees. I understand anyone trying to evade or reduce them as much as legally possible. But the fee the IHK imposes is so little I honestly don't care about.
For 1.000.000 € profit its 1.400€. Literally some rounding errors or customer not paying thats not worth the hassle to discuss.
Dealing with the IHK, like in paying one single invoice per calendar year? Not that I ak very happy with paying my IHK fees for a basically non-operating company, but the actual effort of dealing with them is like 5 minutes every 12 months.
I registered a basic company - but without limited liability - around 5 years ago in Germany. I put my name, address, and the company name onto a 1 page PDF (form GewA1 [0]), sent it via email to town hall and received a confirmation and an invoice (I think it was 30 EUR?) a few days later. I was then owner of a company. The whole process took 10 minutes in total. The registration with the IHK was done automatically (the IHK is a kind of business lobby organization, and the required membership ensures that it does not only represent large companies). The tax office was also informed automatically.
This article is a strange rant by someone who seems to be infinitely surprised that:
1) You have to register your company with some authority.
2) Business is conducted in the countries official language. ("The whole process should be in English. I don't care that it is Germany. English. English. English.")
3) Legal documents should be notarized ("What is a Notary? I’m not sure")
4) Diverting company money into your private pocket is a crime ("Really, no joke, only use it for your company. Our notary did emphasise to us quite strongly that to do otherwise with that €300, would basically be fraud, and we could go to prison. Cool.")
5) Storing company money on a bank account is usually a good idea ("Do you really need a bank account? I have no idea. Theoretically not, but if you dare suggest that to anyone that you won’t bother with a company bank account they foretell doom and catastrophe, so I just shut up set up a bank account.")
6) You have to pay taxes, and it might be more complicated to do taxes for a limited liability company than for a private person.
Also:
> Find a Steuerberater (Tax consultant) Yeah, you need one of these to do the tax return for your not-really-doing-anything personal holding company. This will be expensive.
No. You don't need a tax consultant. You can do the taxes yourself if you want.
Just to make it clearer for other readers: The difference between setting up a limited liability company (GmbH), which is mentioned in the article, and a simple company, as you describe it, is crucial here. It is indeed very easy to start such a business in Germany. A simple registration is typically (there are exceptions) all one has to do to start one. If one works as a real freelancer, ie. if the work is primarily a personal service of oneself (in contrast to delegating the work to an employee) or if the "business" is only occasionally or non-substantial, one does not even need to register. But in all this cases there is no split between business and private assets. In other words: One is liable for the business also with all private assets and even all future personal earnings (one may file personal bankruptcy, though and get rid of all liabilities after three years).
The idea behind the effort regarding the registration of a GmbH (needing a police clearance certificate, a minimum of capital, a notary to confirm the correctness of everything, etc.) and its disclosure and documentation obligations is to allow for a certain level of supervision in exchange for limited liability.
A GmbH has also a fuctional separation between the owners of the GmbH and the CEO. In the special case of a one-person GmbH these are in the sense of a personal union identical. But since this is not necessarily the case, it is quite easy to change it when the company grows or the owner wants to retire as the CEO.
Typically even a one-person GmbH is established with a certain number of "shares". So if you want to sell a part of your GmbH, you can just sell a certain number of this shares (you need to notify the registration authorities via a notary about it, though). This is why even a one-person GmbH needs a charter (and one important job of the notary is to make sure that the charter conforms to the law).
My main complaint is that some of the procedures are still very redundant because the digital exchange of data between the various authorities involved is still in its infancy and in many cases does not even exist. For example, when I changed the location of my one-person GmbH in 2019, I had, after some paperwork with the notary via (snail) mail, to go in person to the town hall of the old location to deregister with a paper form and then go in person to the town hall of the new location within two weeks to re-register with the new location.
By "basic company" – you mean sole proprietorship (aka as a sole trader). There is a similar formation called partnership, but since you did this yourself as a solo person, I would assume you did a sole proprietorship. It is not an entity by itself, it's completely tied to you as an individual. It doesn't need a bank account or separate taxes. You use your bank account. When you file taxes as an individual you also declare taxes for your propretorship on your name. There is no corporate tax filing. You are just expected to maintain books (just like freelancers do) and file taxes on your name. Not to belittle – but a sole proprietorship is almost like registering a "brand name" to a freelance business. It does not have any legal requirements, it's all on you as an individual.
GmbH (LLC or limited liability company) is a completely different beast than sole proprietorship or partnerships.
Exactly. It seems like the complaint here is that creating a limited is more involved. And it is - but not much. Yes, there is a cost for the notary and accountant and that makes it a bit expensive if you want to create subsidies later. But the paper work is not the hard part.
Having lived in Germany, this brings back a few bad memories. So many processes feel overly complicated, frequently requiring lawyers or other highly-paid specialists. Add stacks of papers on top of that, faxes, certified translations etc.
Sometimes it feels, like the State there acts as a great gatekeeper instead of a facilitator.
Other times, you may feel, there's a "cartel" between the government officials and the aforementioned specialists -- pay some agent to magically pull out a near appointment slot, instead of waiting a few months to see a clerk.
I could speak B2-level German, so the language wasn't really that much of a problem. I can only imagine how much harder it's for people just starting in Germany.
Depends. If you are European (and work on IT) and immigrate to Germany without knowing the language, it's not that hard because there isn't so much paperwork you need to do. Basically:
- registration (it's rather easy, and sometimes they do speak English)
- bank account. It's all online (why would you prefer it otherwise?), so google translate is all you need
- job. Well, there are plenty of IT jobs in Germany that do not require German (and they are usually the ones who pay more)
- health insurance. Some companies speak English, and all the public health insurance companies offer rather the same, so go for the English-speaking ones
- apartment. Just show them your software-engineer-who-only-speaks-english payroll (or contract if you don't have a payroll yet) and you'll probably become their most promising applicant
- doctors. They all speak English (if you find one that doesn't or refuses then just find another)
If you intend to live in the country for some years, you'll be fine with little German (B1 level). If you want to live there for more than 10 years then sure go learn the language properly.
For the ones who are not european and do not work on IT, tons of paperwork and suffering if you don't know the language from the very beginning.
>- apartment. Just show them your software-engineer-who-only-speaks-english payroll (or contract if you don't have a payroll yet) and you'll probably become their most promising applicant
That's not entirely accurate and YMMV.
One, unless you work for a FANG or a well funded scale-up, not everyone moving to Germany on a dev job will be making super high wages, which is what's needed to stand out at an apartment visit, as other more traditional skilled professions in German big cities also make good money, and high-paying dev jobs are difficult to land.
And two, usually German landlords tend to prefer a local on a stable, if average paid government job (teacher, doctor, police officer, notary, social worker, birocrat, etc.) than an foreign IT worker on higher wage who just arrived in the country, doesn't speak German, has no rental/employment/credit history yet, and hasn't passed his probation period yet, and all he has is an employment contract with a large number on it.
For what it's worth, the companies seeking foreign employment either want dirt cheap labour (in which case you won't find an appartement any time soon) or are very big, very rich companies that do offer significant wages. As far as I can tell, Germany is rather in-looking when it comes to their highly skilled workforce so when you do get in, you get in at the top or all the way at the bottom.
If you move to Germany before having found a job, you'll have to get those high wages and the fancy appartement that comes with it yourself. You probably won't, especially if you're coming from a country with extremely high wages for devs like the USA or to some extent the UK, and expect around the same amount of money.
Social factors do play a role (it's easier to connect to someone who doesn't need you to switch to a foreign language just for them) but there is dedicated expat housing all around the world, for a price. Learning German and about German culture will definitely help your chances, both in securing a job and in everything else in Germany.
"The whole process should be in English. I don’t care that it is Germany. English. English. English. I speak decent German, but the vocabulary of company incorporation was not covered in my Volkhochschule classes nor Duolingo."
The process is difficult because I refuse to learn the language of the country. My first reaction was "What an absolute asshole", my second reaction is the same but with a paragraph of text explaining the reasons he's an asshole.
I have learnt German. I speak fluent German. I am German.
The language is only one part of what makes it complicated. It is very difficult for Germans too. Nevertheless, the whole process should be translated into English if the country wants to attract foreigners to come here and set up companies.
Current status is that people are warned against incorporating here.
> I have learnt German. I speak fluent German. I am German.
As a native German speaker, I really would not consider
> I speak decent German, but the vocabulary of company incorporation was not covered in my Volkhochschule classes nor Duolingo.
to be fluent in German. In such kind of language discussions, I often see that in the USA vs Germany, there seems to be a quite different understanding of fluency in the native languages:
- In the USA, you are considered to be a fluent (English) speaker when you can talk somewhat freely with the fellow countrymen
- In German(y), you are considered to be a fluent speaker when you are able to speak the language on quite a high level
> In German(y), you are considered to be a fluent speaker when you are able to speak the language on quite a high level
That reminds of an old joke: The ultimate test of your German skills is listening to „Jan Delay“ and understand a word he says. (being a famous German hip-hopper that tends to talk „through clenched teeth“)
Writing "somewhat freely with the fellow countrymen", while not wrong, is unnatural. Same for "In such kind of language discussions". Those constructs aren't wrong, or even particularly bad, but to me they immediately out the writer as someone who does not have native-level fluency.
For the phrases that you list, I actually did look them up in the dictionary beforehand when I wrote my comment to be sure that I express them correctly in English.
"fellow countrymen": according to https://www.dict.cc/?s=Landsleute "fellow countrymen" is the English translation of the German word "Landsleute".
If you tell me that in the phrase "In such kind of language discussions" I forgot an "a" (i.e. "In such a kind of language discussions"), you are surely right. Otherwise: according to https://www.dict.cc/?s=solcherart "such a kind" is the English translation of "solcherart".
I wouldn’t use those phrases at all to convey those ideas. Instead of:
“In such kind of language discussions, I often see that in the USA vs Germany, there seems to be a quite different understanding of fluency in the native languages”
I might write:
“When discussing language fluency, I often see that there is a significantly different perspective between Americans and Germans”.
Instead of “In the USA, you are considered to be a fluent (English) speaker when you can talk somewhat freely with the fellow countrymen”
I might write: “In the USA, you are considered to be a fluent English speaker when you can speak comfortably with other Americans”.
There, of course, many different ways to write those sentences. I’m not saying my examples are the best options, or that yours are wrong in the sense of being technically incorrect or incomprehensible. What I am saying is your constructions stick out to me as something a non-native speaker would say or write, and that if I see much of that in written (or spoken) conversation, I do not consider the writer/speaker to be fluent in English. My bar for fluency may be higher than average (apparently even linguists can’t agree on a definition,) but it certainly is not common in the US to consider someone fluent in English based on the sort of limited proficiency that would allow someone to “talk somewhat freely” in English.
If the foreigners aren't ready to spend couple thousand in fees to setup a company are they worth it in first place? Germany isn't exactly poor. And in general it might be better for them to garner those that can follow their rules and operate in their system.
Setting up limited liability company or equivalent would any way be couple thousand max? If someone wasn't going to invest this much, how much were they going to do anyway?
> the whole process should be translated into English if the country wants to attract foreigners to come here and set up companies
Good luck with that - Ausländern setting up companies in Germany without speaking German. They'll probably incorporate in Estonia or Ireland. It's way easier to set up a company in post communist Eastern Europe.
> Don't believe everything about Bavaria. Just believe the facts.
Maybe it's because of the article I just read, but I'm reading that like "Don't believe everything you've heard about how Germany is a terrible place to do business."
Presumably if New York or San Francisco had ads encouraging people to start companies there, they would want people to believe everything they've heard.
Dann lern halt Deutsch anstelle im Internet rumzuheulen, dass Menschen in einem FREMDEN Land nicht deine Sprache sprechen. Junge, wenn du kein Deutsch kannst, hol dir halt einen Übersetzer oder komm halt nicht her.
Wäre es gleichermaßen zu erwarten, das ich in Großbritannien eine Firma auf Deutsch registrieren kann? Ich denk, das wäre vermessen.
> Also - this is an international site - you should really write in English.
That was bait to expose your double standards. Germany is a German-speaking country, if you want to do business here, you should really do it in German.
I think "Entitlement" captures the essence of your article well. You did not research how to do it and created most parts of the mess yourself, and then blamed it on the german system. Of course this is going to aggravate people, me included.
If i was you, i'd take the article down because i would not want to be seen as a incompetent founder. Its one thing to fail at challenges, its another to put it online where people can find it when they google your name.
I mean, even in anglo countries, most native English speakers won't have the vocabulary for company formation. Then there are legal terms that don't really translate well.
Then sometimes DIYers get punished because the official instructions are vague/ambiguous, obviously never went through a UAT session, and/or fail to mention a questionable policy change that they informed every lawyer of through unofficial channels, but didn't feel the need to, you know, actually publish... (fuck you Canada Border Services Agency).
I'm going through a process for a small slavic country's citizenship, and all the forms need to be in that language. Many of the native speakers I talk to still get slipped up on some of the terminology because they didn't go get much education there before they emigrated.
On one hand everyone in Germany is complaining about Fachkräftemangel, on the other hand the attitude is "In Deutschland haben wir Deutsch zu sprechen!".
I think if any foreigner comes to our country with any form on entrepreneurial spirit, we need to support that and not make it unnecessarily difficult.
And frankly, the German used in these kind of transactions can even be hard for us German native speakers.
TBF, if a foreign entrepreneur doesn't have any mean to overcome the language barrier (either learn the language, have a dedicated translator or hire a lawyer), how successful will they be with understanding their bank account contract, properly filing their tax, passing contracts with local entities etc. Any single paper that will have an official value will be in german as well.
It loks to me like a decent filter for companies that won't make it very far anyway.
> The process is difficult because I refuse to learn the language of the country. My first reaction was "What an absolute asshole"
To be fair, I think within the EU we definetely need a right to deal with all legal matters in english (at least inofficial translations). And I say this as someone who is native in German, speaks two other EU-official languages, and currently resides in another EU country which language I do not speak. "Learning a language" is just not something that you do overnight, it takes decades, especially when you are busy being a full-time entrepreneur. And within the EU, the idea is to boost cross-border entrepreneurship and economic growth. Wasting time on learning yet another language will not make me contribute to the economy.
> within the EU we definetely need a right to deal with all legal matters in english
German is by far the most common native language in the EU. (Germany, Austria, parts of Italy, Belgium, Denmark, ...) whereas English as native language is a small thing since Brexit with only Ireland and Malta.
But that aside: Translating legal texts with all details and traditional interpretation and adaptions by court rulings is a complicated thing. There can be a lot of nuance in each detail. And also once you do that you have to allow proceedings in English for the complete chain. From the clerk in the government office to the constitutional court.
But I think Germany would be somewhat open to that, but others, like France? Hard time to imagine them accepting anything but French.
Wouldn't it be better to welcome and accommodate educated and enthusiastic foreigners who want to invest in your country and its people, rather than being a language purist for the sake of it?
Can a country like Germany afford to be picky with people trying to invest in it?
> Wouldn't it be better to welcome and accommodate educated and enthusiastic foreigners who want to invest in your country and its people, rather than being a language purist for the sake of it?
The same could be said about anglophone countries concerning people who don't speak English.
Germany hasn't created any new Fortune 500 companies in a long time, and it (I grant you, along with the rest of Europe) is increasingly lagging behind the US and South East Asia. 10-20 more years like this and the gap between Germany and the US will be as large as the gap between Western and Eastern Europe was in the 90s.
The German economy desperately needs modernizing, and the German state is not helping. It's wild to me that Germans don't even acknowledge the problem.
Not for nothing, but crossing the border between Switzerland and Bavaria is like time travel: on one side everything runs on diesel, all transactions are done in cash and nothing can be done online, and outside of Munich you're lucky if you can get DSL. On the other side of the border, everything is automated, everything is online and there is gigabit fiber and 5G in every village. Oh, and everyone speaks English.
The only difference is Switzerland has a free market economy and Germany has cartels backed by the German government.
EDIT: I apparently picked a fight with the German online brigade. I think it's part of the problem that so many Germans are personally offended when inefficiencies in their government are pointed out. This just proves my point: criticize the UK/US/Dutch/whatever government, and British/Americans/Dutch people will show up and agree with you. Criticize the German government, and 20 Germans will show up to tell you why you're wrong and Germany is actually a global leader in whatever you're talking about.
> and it [...] is increasingly lagging behind the US
Nothing new, that was also the case in the 90s. It's actually surprisingly robust. It does not create Fortune 500 companies, because it instead creates a very large number of medium size businesses (a few hundred or a few thousand employees only) that specialise and often become global market leaders. Because there are many different ones that model is robust and the work is labour intensive and creates both white collar and blue collar jobs.
So not just bad.
And let's not forget that it's a small country. The US has 4x the population, even Japan has 50% more. To say nothing of China, India, etc. Yet Germany is still #4 in terms of GDP.
AFAIK the strength of German SMBs is often overstated. When you look at what's been driving economic growth, it's mostly been creating new, large companies like Google and Amazon. Germany used to be good at doing that: SAP, VW, many others. But not for the past 20-30 years. Why? Because establishing a new large enterprise is most readily done by inventing a new sector of the industry. But Germany's (and Europe's) regulation regime, risk aversion and slow processes prevent that from happening. Maybe Google couldn't have been German, but Deepmind could have been.
But it's hard creating something new, when new technologies are banned by default and you are required to file tons of paperwork before doing anything. And it's also hard when the type of people who form startups are not moving to Germany, because they can start a company in the UK or Israel with 20 pounds by filling out an online form in 5 minutes.
Since you mention DeepMind, DeepL is German (Cologne). It is the best translator for the languages it supports. Source: I have a sister who is a professional translator. She uses it to get a rough version and then polishes it up as needed. No other tool produces a rough version that is good enough to save time.
The DeepL founder is, from his name, probably Polish.
> So not just bad. And let's not forget that it's a small country. The US has 4x the population, even Japan has 50% more. To say nothing of China, India, etc. Yet Germany is still #4 in terms of GDP.
This can be corrected for by looking at GDP per capita, where the US is at $75,180 and Germany $48,398. Perhaps 2022 is a special situation due to the dollar surge and Ukraine war, but in 2021 the picture was different, but still not great: Germany $51,238, US $69,227.
My point isn't that GDP is everything (it's not), but if you say "the US has 4x the population", you should at least attempt to correct for that and look at per capita numbers.
And Nokia was the #1 phone maker in the world in 2009, and Japan was the second largest economy in 1988 and predicted to overtake the US, and what did that mean today?
Current leaderboard position is not a guarantee for future success. GDP isn't everything to measure future success, and Germany could very well sink much lower in a decade or two along with most of Europe.
I think you're missing the key point that Germany doesn't have many unicorns or Fortune 500 companies, but a mass of lower tier family-owned businesses.
Which is a fair criticism, and I'm not invested in any form, but I guess judging a country's economy on the factors it hasn't optimized for is a bit weird.
Btw, I fully agree on the bureaucracy points, I'm not defending anything here :P
Switzerland is maybe a bit better than Germany but the differences are small. The bureaucracy around running a company is still light years worse than the USA or UK.
Forming a GmbH or AG still requires the involvement of notaries, for example, still involves significant amounts of paperwork, and still requires up-front 20k CHF (afaik not delayable). The UG holding company isn't apparently useful here and there's no mandatory IHK equivalent but the rest is similar.
But where things really start to hurt is the mandatory insurances and pension payments that are required the first time you hire someone i.e. yourself. Not only is it very expensive (~25% of salary), it's so complicated you can't actually do it yourself and neither can your accountant, so they all go via insurance brokers. In other words there's two different firms between me and the insurers, all of whom are adding huge delays and costs. The agreement with just one of these insurers is 25 pages of highly technical German.
Oh and don't even try the barrel of laughs that is issuing employees with equity, let alone options.
It's the slowness that gets me. The tax office is backlogged by years. Even a professional, decent sized Treuhand (roughly = accountant) will routinely do things like go on holiday for a month, come back, get sick for a couple of weeks, go on holiday again, etc. The mere process of setting up the company and fully completing that setup took me >1 year this time. And that's assuming you actually get competent help: I'm now on my third Treuhand because the first two made huge & obvious errors in their work (e.g. lots of typos in submitted documents, calling me Frau instead of Herr, unable to answer basic questions etc).
But this is not specific to forming companies. Swiss bureaucracy is hilariously kafkaesque and slow in other ways too. Recently I got a letter that my C (work) permit would expire in a month, so here is an invite to book an appointment with the local government office to come in and get another. I go online to book, which you can at least do, and discover they have no free appointments at all for a month and a half. OK, whatever, I book the first available slot. When I turn up they immediately fine me for being "late". I explain that I've come literally as soon as they allowed me too (you need the mailed invitation to turn up), but the lady shows me the fine print where it says that I have to inform them if I can't come within a month for any reason and that this, apparently, includes reasons they already know about like "we don't have enough staff to see people". They then charged me a few hundred francs for the privilege of getting my documents renewed, booked me another appointment to get a photo taken (another few weeks of delay) and of course during this time I can't travel outside the country because my documents have expired.
Problem is, everything here is like this. Every interaction with the government will take months, require the payment of hundreds of francs and involve Brazil-esque procedures that mostly involve manually schlepping printed papers between the huge and numerous government offices that dot the highly expensive real estate of the city. In many ways the internet never really happened here beyond online calendars so the offices often don't communicate with each other using wires. It literally often boils down to "print it out, stamp it, give it to you to deliver".
It’s interesting that we have such different experiences. When I had to get a residence permit in Zurich 9 years ago, the process took one visit to the Kreisburo, they spoke English and I was out the door in 15 minutes.
Maybe the system got overloaded later? Or maybe it differs per canton?
Business is not the only sector where language is such a hindrance. I am a foreigner and came to Germany to do a PhD, I work 60 hours per week for a miserable salary and I do not have the time nor energy to learn German after work. About half of my colleagues are international and in the same situation. If you want Germany to stay at the forefront you need people like us coming here and carrying your economy forward.
Let me tell you, no matter how miserable your salary in academia in Germany is - it is more miserable in the UK (higher living costs at slightly lower salary, which is around 1250 GBP for most students). I actually know Germans from top UK universities that are considering going back to Germany after they finish. So, same problem here, after Brexit: UK needs people to come and move things forwards, but the place is rotten enough that it doesn't happen.
This is not about "the grass is greener on the other side", it's more about: The only place in research you really can make $$$ seems to be the US and, maybe, Switzerland.
Incorrect. Some get a stipend, but some are also hired as part-time research assistants, on a salary that is equivalent to a stipend after deducting a few meagre pounds as tax. It depends on who provides funding (a research council, your supervisor from his grant etc).
It would be nice and I'll fully support it. But I think those outside founders would benefit more than Germany would benefit from them. For those who actually want to create roots in the country, create jobs, generate taxable income - well, for those the incorporation will be a very small roadblock. Tiny compared to everything else.
I‘ve been running my company in Germany for years and do absolutely zero paper work. Zero. As I said, I spent a few hours to incorporate and we pay external services to do the work to keep it running (taxes, insurances). And I refuse to believe that you don‘t have to file taxes in other countries, sorry. It‘s just ridiculous.
People take what I wrote as an insult to the German language and country. I love Germany, and the language. I learned it and gained German citizenship. I want the country to succeed and do well.
Currently, the business registration process is a hindrance. They should take a leaf from Estonia's book and simplify the process. Including making it possible to navigate the whole process in English.
Its not an insult to Germany. Its an insult to people from non-english speaking countries. The normal situation for most people across the world is: you go to another country, you don't share any language with the people there, and as the foreigner, there is no option for you but to learn the local language.
You have the privilege of having English as mother tongue, you can go to another random country and you'll have people speak your language. And yet you complain that the foreign authorities don't work in your language. This is what aggravates people on reddit and here.
> Its an insult to people from non-english speaking countries.
No it is not. It may be an insult to people from larger countries who have been pampered all their life, with all the content they consumed being in their native language, being led to believe that their language is somehow equal to English. It is not.
I am Croatian. I don't expect anyone to learn my language, even if they're coming to live here. In fact, considering how difficult it is, we Croatians usually tell people not to bother. I do expect that when I travel, I can use English, the de-facto lingua franca, to find my way around and communicate with locals. I expect signs and information to be in English. Most amusingly enough, people from smaller countries _get_ this. They understand that if they want to participate in a global society, they need to learn English. People from big countries don't.
This is an excellent point - if the processes were already digitized, if it wasn't necessary to interact with almost a dozen institutions in person or on paper when founding a company, translation would be trivial, because it would just be a matter of i18n of a website!
There are plenty of foreign companies listed on American stock exchanges using “American Depository Receipts”: for example the 100 billion dollar German company SAP is listed as an ADR on the NYSE (although not NASDAQ, sorry) https://www.wsj.com/market-data/quotes/SAP
There is a list of 460 foreign companies cross listed on US stock exchanges, and that list includes a handful of german companies, although somewhere else said that there are 21 German companies listed using ADR, so perhaps the list is incomplete? https://stockmarketmba.com/listofadrs.php
Have you never heard of foreign investment? People bringing their capital, but also their skills and knowledge? Despite scare-mongering about immigrants, it's often a really great thing that we should encourage.
The process is painfully difficult also for a native speaker. I can totally relate to the report as a German, whose wife went through the same fun recently with her GmbH. Actually, the process for liquidation of the limited can easily be worse. Things btw get a lot easier if you just do not open a limited (e.g. an engineering office). So all this is seems on purpose: if you survive the purgatory and are willing to burn money continuously to finance the system, you deserve some trust. That it does not make much sense in the modern global startup world is another story.
You can take your driver's license test in dozens of languages in Germany. English is the lingua franca, we should make it possible to do all common business tasks in English, because we want people to do business, and all hurdles should be removed as much as possible.
It’s not unreasonable to expect a country that wants to attract foreign investment to make it possible to interact with the bureaucracy in English. Whether Germany wants to attract foreign investment is of course their own decision to make, but I’m assuming here that they do.
It would be nice if a neural international language like Esperanto had caught on, but it hasn’t. In actually existing reality English is the global common language.
I think the author focused too much on the “it’s in German” argumetn. All other problems listed with the process do not shine that much when people in comments focus on that: a foreigner should not expect a country to conduct its legal proceedings in a language different to their native.
On a different note I found the tone of the article a little appalling with author’s dismissive attitude like “What is a Notary? I’m not sure”, “ I have not checked, but I strongly doubt…”.
One does not start a company every other day so this process requires attention and not checking or not researching certain things demonstrates little patience and “I know better” attitude that is harmful down the line.
It would be interesting to see the author research why some things are the way they are, there is always a historic reason that might be valid or not in the current age, but it’s good to understand before we critique.
Nevertheless, these kind of complicated administrative processes should annoy anyone who hasn't lost their soul by too many papercuts already. From a technical perspective, even starting a GmbH could be as simple as going to a web page, putting "Declare GmbH" into the shopping cart (cost: 25000 EUR), filling out a simple form and pressing "Order." German governments, politicians, and authorities have been talking about digital innovation at every meeting and on every fare for the past three decades and have spent billions on it, but in reality not much has happened.
When I lived in Denmark 15 years ago as a foreigner at least there was already a citizen center where a super-friendly attendant asked me how they can help me, like in a shop. Moreover, almost everything could be done with a state-delivered ID (CPR number and a digital ID). I no longer live in Germany (or Denmark), but as far as I can see Germany is still far behind other countries in terms of simplifying and putting administrative matters online.
I'd rather say everyone else focussed too much on the "in German" part. That really was the least of the problem with the process.
wrt to my "tone" - that is rather a stylistic thing - I am trying to write with a bit of humour - tongue in cheek. I do literally know what a notary is, yet at the same time the notary process is quite alien if you are from the UK (I am aware they exist there too but they are rare).
Indeed the historical reason for some of these things is quite interesting. Someone else shared some detailed article about it with me a while ago.
I would acknowledge that there are "benefits" to this laborious process - such as less shell companies or fraud.
> a foreigner should not expect a country to conduct its legal proceedings in a language different to their native.
If that is the case, perhaps countries should consider their native language as an actual disadvantage when it comes to attracting foreign investment? After all, if I need to learn, say, Slovenian, to open and run a business in Slovenia, that makes me less likely to do so. Which means that Slovenia might need to settle for lower tax rates or provide some other benefits in order to entice me to do business there.
Of course it is. The same is true for every country.
I don't see a Chinese, Polish, Russian, or Japanese guide on the website of the British Chamber of Commerce. American websites also feature Spanish but I don't speak a word of that either.
People who can invest large amounts of money can afford a translator.
Even if registering a company in Slovenia is easy, dealing with Slovenians themselves will require learning about their language and culture. If you need to ask "what is a notary" then you failed to do so in Germany.
You can't expect the rest of the world to work exactly like it does at home. And if the rest of the world doesn't work like it does at home, that doesn't make it any worse necessarily.
From the country's perspective: what good does this foreign startup bring? There's clearly no money in it because apparently hiring someone to look over legal documents is considered to be too expensive. The first thing this person did was set up a holding company on top of a normal company because they were probably trying to avoid having to pay tax somewhere along the way.
Germany can use some modernisation, for sure, but half of these complaints are "I don't want to put in the effort so someone should do it for me" or "I hired people to do the difficult work and then did all the difficult work myself anyway for some reason" or maybe "it's hard to set up a company where I have zero responsibility of what the company does to its operating environment".
> People who can invest large amounts of money can afford a translator.
Yeah, that sound like the European way of thinking about business. "What do you mean you don't want to spend money on red tape and pointless busy-work? Maybe you're too poor to start a business?" On the other hand, the Anglo-sphere makes it as easy as possible to start a business. And thus, the US is a hotbed of innovation while Europe...is not.
> You can't expect the rest of the world to work exactly like it does at home.
Funny you should mention that. I come from a small country. And when you come from a small country, learning a foreign language is basically required. Nobody is going to bother learning your language in order to communicate with you. Why this idea is so foreign in _bigger_ countries was always fascinating to me (even though I know why).
> From the country's perspective: what good does this foreign startup bring?
Free money without the country having to do much? I mean, if I was a government, I'd be pretty happy with somebody paying me money for doing nothing other than keeping a piece of paper with a company name in a filing cabinet. I'd be even happier if somebody I didn't have to raise or educate moved here to pay taxes and spend their money.
I did it, it's very easy. It just requires opening a bank account and then an appointment at the notary. All in all it takes about two hours. Obviously in Germany the documents are in German, this should not be a surprise. Most people doing business there will speak German and I'm sure many lawyers would help those who do not with the setup.
edit: Yes, you need a tax accountant to do your taxes later, but that's not related to registering. They also can do your normal accounting which you will need if you pay salaries. It's normal in most countries.
My first thought after reading the article was "the comments will be full of German people explaining that this is actually not complicated, and is in fact very efficient and therefore good."
> Yes, you need a tax accountant to do your taxes later […] It's normal in most countries.
What is not normal is the price tag attached to it. 1000-2000€ for a tax filing for a company with no profits (or not revenue, it’s all the same) can be called anything but normal. The reason for this is that in Germany the tax accounting prices are cartel-regulated.
Since the tone is hyperbolic, it's hard to discern how much it has been exaggerated/misrepresented (I suspect a lot).
For example, for someone who describes themselves as:
> I have learnt German. I speak fluent German. I am German.
The following:
> To have the Steuerberater file your tax returns on your behalf, you have to grant them Power of Attorney, so that is another nice form for you to fill out. I could have signed away one of my kidneys for all I know. It’s in German.
is grossly misrepresented. Power of attorney forms are generally easy to understand. Here's a sample one: https://www.vollmacht-muster.de/diverse-vollmachten/vollmach.... Anybody who's fluent in German could read and understand it, certainly not mistaking it for signing a kidney away. For those who don't, forms like this can be discussed with an English-speaking accountant (and there are), no reason to fuss about.
EDIT: No doubt that Germany has an English language problem - a significant part of the 40/45+ y.o. population speaks it poorly, so bureaucracy is definitely a problem. This also applies to the south of Europe, though.
No misrepresentation. Not even really any exaggeration I would say. Some attempts at humour, yes (like the PoA bit).ie I was aware the PoA would not affect my kidneys.
Sounds like you talked to a notary, talked to an accountant, opened a bank account and registered with a couple organizations. You never actually describe any difficulty you had registering with any of them other than like "it’s german" and "it took some time"
You can. You use your new/unregistered company name and the suffix "in formation" ("i.G."). Technically the company exists immediately in this "i.G." form without any paper work or process from the moment the founders decide to create the company. Later you tell the bank to change the name (for free) by showing them the documents you got when registering. The bank will do this for you anyway if you don't know about it.
The reason the bank account has to be created first is that you deposit the 25k there and pay the registration process fees from it.
That only works after you've been to the Notary, I think. The company doesn't exist at all before that step. It's Nothing => Notary => in Gründung ("in formation") => Registry Publication => Completed.
No bank will give you a company account on the promise that you'll go see the Notary next.
The company exists from the moment you decide to create it. [0]
This company is already an "entity" and can act accordingly. It can, for example, make contracts, hire, buy stuff and open a bank account. The main difference is that the owners are still liable. Liability only ends once the process has been completed.
In practice these processes happen concurrently. You call the notary to make an appointment and a bank to create an account. Then you show up at the bank first and the notary later and then afterwards submit the documents you received to the bank and you are done.
To me this seems neither complicated nor strange.
edit: I think you have a point about the timeframe. I can't remember this exactly, it may be that the bank account is completed after the notary. Nevertheless it just starts concurrently and the "i.G." exists from the very start, even before the notary. The process is concurrent and short and both the bank and notary will tell you whatever you need (except your company statute/contract which you need to draw up before or use a template). So I'm surprised the author found a need to do much by themselves.
--
[0] "die Gesellschaft besteht vom Zeitpunkt des Zusammenschlusses der Gründer", "Mit dem formgültigen Satzungsbeschluss der GmbH" ("at the moment the founders formally pass the statute" - this is when you formally create the company. This can be over a beer at home if you want. You draw up a contract and shake hands and from that moment the company starts to exist.) https://de.wikipedia.org/wiki/Vor-GmbH
You have a GbR (or OHG) then, not a GmbH i.G., so you'll create the GbR, and then convert it into the GmbH. I assume that step comes with extra costs?
Feels overly complicated, the process I know is to see the Notary and then go see the bank with the company papers (GmbH i.G. / Vor-GmbH), create the account as the company and deposit the required amount. You'll then inform the Notary and provide the proof of deposit, and he'll complete the registration.
No. The GbR does not have to be created formally. It exists just by deciding to start a company. There is no formality at all. This is, by the way, a fully functional company. It does not have an "i.G." suffix itself, because there is no process that could be completed. It already exists. It's kind of like you don't have to register to be a "participant in traffic" when you ride a bike, but you do when you ride a car. But there is not formal process to become a "participant in traffic".
Now what you want to do is to limit liability and to do that you create the GmbH. This GmbH will then get the "i.G." suffix.
In any case this is really only interesting for a lawyer to decide on edge cases. Such as what would happen if you break a law before being at the notary and things like that. In practice the process is just to draw up the contract (download and adapt a template), then go to the bank and notary in parallel. Then you're done. (Afterwards you also submit the data to the central register).
if I recall correctly, we could open the bank account before the company was properly registered but we only had something like 30days to submit the registration documents.
My wife and I live in the United States but got married in Italy at her hometown city hall. She is Italian and I am American. She wanted to do this badly, but for an American and an Italian to get married in Italy is an extraordinarily complicated process. It involved having witnesses present themselves at the US Embassy (conveniently we're in DC) to vouchsafe that I am not already married, and to have witnesses to vouchsafe for my witnesses. It also involved a huge back-and-forth between the embassy and the local city hall in my wife's hometown who, for who knows why, hold some authority. I had to go through some weird procedure because I was having a civil and not catholic church wedding. I had to have wedding vows drawn up in both Italian and English, and have a person available to translate in real time to make sure that I understood my vows (because apparently not understanding vows you wrote puts you in legal jeopardy in Italy, I kid you not). The entire thing required numerous notorizations, forms, and literally dozens of people along the way apologizing for the suffocating Italian bureaucray which of course, they were part of.
Along the entire way every single bureaucrat asked me the exact same question:
> apparently not understanding vows you wrote puts you in legal jeopardy in Italy, I kid you not
Those aren't just "vows", its a legal contract, you HAVE to understand what you're signing for your own good and it is the same reason the notary had to read 3 times the same thing in the article.
> the local city hall in my wife's hometown who, for who knows why, hold some authority
Because as I already said, marriage is a civil and legal act. It is not carried by the central nor state (as in us) government but the city one, and the responsibility falls on the mayor or its representative (which likely married you). Of course the city hall is going to need plenty of documents, especially in the case of a foreigner (and alien).
I'm baffled by how much entitlement Americans have in Europe. Bashing on our beaurocracy while not even bothering to understand what you are doing nor why.
In the US a marriage is not a contract. We are not Ferengi. A marriage is a license from the state.
Oh, and we not only had to professionally translate those vows in written form, we also had to have a verbal translator on-hand in case, you know, I didn't understand the vows I had already translated and was signing in English. Also, it didn't matter if I spoke Italian or not.
Italian bureaucracy is famously sclerotic. This isn't even a point of debate. It is among the very worst in the world.
> Because as I already said, marriage is a civil and legal act. It is not carried by the central nor state (as in us) government but the city one
Yes. It is a classic source of corruption and incompetence. Similarly, lots of other national-level things insanely have to get the sign-off by tiny local governments in Italy, such as Permesso di Soggiorno (Italian Green Cards -- that one was fun), passports, etc. My young sons, who both are entitled to Italian passports, had the processing of their passports delayed for the better part of a year (baffling the Italian Embassy) because a tiny local city council in Italy couldn't understand their names and so stuck the passport applications in a drawer and forgot about them. Note that we had submitted those applications in Washington, DC. We had to have a local relative go to the city hall and knock some heads. For national passports!
I'm baffled how you can possibly think this is normal and that I am "entitled". Italian bureaucracy and ducking responsibility is despised by both Italians in Italy and people abroad. The bureaucrats themselves apologize for it vigorously. There are entire movies made about it.
> In the US a marriage is not a contract. We are not Ferengi. A marriage is a license from the state.
That is so strange to me. In many European contracts, by default (unless you modify it with further contracts), marriage makes you co-owner of each other's property _and debts_, it makes you responsible for caring for each other no matter what happens, it automatically recognizes both sides as parents of any children born during the marriage, and so on. Even in case of divorce later there are alimony rights, and if there are children you probably have to deal with each other forever.
How can you go into such a big arrangement with each other and not have it be a contract?
See, that's what I mean by entitlement and arrogance, pretending that your laws are anything special, you didn't get married in the US. There's other laws here.
There's pros and cons to that, among the pros is that stuff like divorce, alimoney, etc are straightforward and depend on the contract you signed when you get married. In your country, that's expensive lawyers matter.
> Permesso di Soggiorno
Absolutely false, immigration is handled by the interior ministry through the police, you request it at the immigration office of the Questura (police preccint) that is closer to wherever you are.
Italian beaurocracy is definitely not the leanest on the planet, but really, it depends on what you need to do and who you are, opening a business here is extremely easy and fast, getting most documents is done *only* online and you rarely if ever need to really go to an office. Even if you lose your documents you don't even need to denounce it to the police anymore, it's all online.
You need to understand that in Italy you're an alien, you're not from a country in the European Union, your legal status is not different than someone coming from Pakistan.
You're not registered here, there's no records of your civil life, your schooling, your medical records, your previous legal statuses, your criminal record, your tax records, your act of birth, etc, etc, you obviously have to provide them yourself, and since they have not been produced in the European Union they need to be validated.
Obviously many local councils lag in progress compared to national or regional legislation and their services likely lag compared to national or regional ones, I would not be surprised if there were hiccups, but all I read in your post is ignorance about the law, ignorance about what you were even doing and what and complains.
You can say and think what you want but at the end of the day I'm Italian and I know how many times me or my family have to go through offices and lengthy beaurocratic processes and it is extremely rare that you ever need to go in person to an office for anything but your id, driving license and passport.
Pretty much all of the rest can be done online and Italian beaurocracy has gone through massive amounts of modernization.
> Absolutely false, immigration is handled by the interior ministry through the police, you request it at the immigration office of the Questura (police preccint) that is closer to wherever you are.
I have been involved with applications three times now, twice in Rome and once in Forli. And I assure you based on rather personal experience that the local government is very deeply involved, much to the consternation of the Italian Embassy in DC.
The difference in the application process between Rome and Forli is unbelievable. It's touted as uniform but very much is not. This includes the procedures for both obtaining materials and for submitting applications to your local carabinieri; and the outcomes vary widely for the same applicant. Unlike Forli, the system in Rome is very clearly designed to put up as many roadblocks as possible. Do not apply for a Permesso di Soggiorno in Rome.
Creating 3x a personal company for the founders is not a required step. Germany expects those personal companies to be conducting business so it's all those steps like a "real" company. The 3 founders could've just created the real GmbH company and be 3 shareholders.
The founders also could've created a UG (mini-GmbH), plenty of startups do. It's no clear from the blog post why they do the real GmbH. Possibly because a mini-GmbH can't be owned by 3 personal companies. Well, sure, in that case you need those 25000 Euro on the bank account.
Transparenzregister (transparency registry) was new in 2021. The notary should've done that step. Germany kind of added the registry so people can't hide behind personal companies when doing business.
Chamber of Commerce for an IT company is weird indeed. Makes sense for businesses that need special permissions, certifications or have regional limits (let's say pharmacies) but not IT.
Think of Gewerbeamt as local taxes vs federal taxes. Gewerbeamt is your city taxes. While federal tax rate is the same everywhere, city tax rate differs and allows them to compete a bit.
"so we had to agree with our investors that we would transfer the
remaining 12,500€ over the next couple of years." Strange to have investors and then not have them pay the full amount. They're saving money here, true, but then shouldn't complain that this part of the process is not straight-forward.
Using a tax accountant for a GmbH company is not required. The author doesn't seem to grasp even the function of some of the contracts he signed so he should of course use a professional to file the annual accounts forms.
If you have money from investors and skip many of the steps: buy a holding company, costs 5000 Euro. You pay 30000 Euro and receive a ready-for-you company with bank account of 25000 Euro. Then go to a notary and have, in a single document, change the company name, change the shareholders, move it to the desired city.
OP here - the holding companies are indeed for obligatory, but they are what nearly all startup founders do for tax efficiency.
We took a 1.2M € investment round. Investors do not want to invest that into anything other than a "proper" Germany company.
The investors can't (or should not) pay any money towards the 25k €. We had 1.2M € go into the bank account, but we have to agree that we are liable for the 12.5k € and pay it in ourselves over time.
> If you have money from investors and skip many of the steps: buy a holding company, costs 5000 Euro. You pay 30000 Euro and receive a ready-for-you company with bank account of 25000 Euro. Then go to a notary and have, in a single document, change the company name, change the shareholders, move it to the desired city.
Is this a good idea? How do you make sure the company doesn't have any liabilities or did any shady transactions.
Wow, I didn't know this. Interesting. Apparently you can even buy it for just 3500 Euros (28500 in total) and already registered in your city of choice (presumably for the larger cities). It seems like the problem, then, is transferring the bank account (the new owners nee to be authenticated). I'm not sure this is easier than creating the company from scratch.
We bought a holding company, I should've made that more clear in my previous comment. Bank account transfer was straight forward. The advantage is speed, you're ready to do business in a couple of days vs waiting for various paperworks for weeks.
My company is in the process of buying out a German group.
To do that, we needed to set up a new holding company which would own the target group's shares.
Without exception, ALL our advisors/lawyers (both in Germany and out) recommended that we just pay the services of an "offshore provider" to buy an existing shell company with an already established and registered proxy director, instead of going through the creation process of a GmbH. "It's the most complicated process in the EU, and a PITA for all individuals involved.", they said.
Yes, setting up a GmbH might be a bit of paperwork for a solo founder who has to do all the paper work on their own[0]. But for a company having enough resources to buy another one? Lol.
[0]: I've done it before and it's actually quite straightforward. The actual work begins when you do the bookkeeping & declare your taxes. But for that you've got accountants.
Shutting it down will also take something like 1-2 years (gotta give any creditors time to file claims, is the official reason, I think), in which you again have to file the tax paperwork, paying a tax advisor to do it for you if you don't also want to become an expert on tax law aside from whatever your actual expertise is that you wanted to run a company for.
The Transparenzregister was new to me, but at least it only seems to consume an hour or so of your time and no additional money.
Basically, you can't afford to start a company if you just want to try something out, because the bureaucracy costs will outstrip your actual operating costs in the first year (which, for many IT people, are a domain and a laptop) and be a significant burden. Unless you go into it with "here's my capital, and here is my plan to turn this into the next unicorn", you're more likely to just give up before you even seriously think about the idea.
Basically "entitled American complains that doing serious business in a country that has an official language other than English is not done in English"
> I could have signed away one of my kidneys for all I know. It’s in German
what dod you expect? French? Why should Germany do their legal business in English? Most countries do all their legal stuff in their official language. Try buying a cellphone in Japan, you think they have their forms in English? Or German? No. It's all Japanese.
The author has become a German citizen. Does that make him more German than Scottish or British or whatever he used to be or still is?
The problem is that legal proceedings are done in a natural language. You try to do something exact with tool that is fuzzy by nature. So specialists basically create their own language in order to get precise. Can an average Scotsman or American incorporate a company in their own country and fully understand all legal implications?
That said Germany has literally centuries of traditions that some other countries don't have. For me as a German living abroad it's been a surprise what things can go unregulated, meaning that big corporations, lawyers or officials just (mis)use the gaps for their own benefit.
(Which does not imply that German desire to regulate things well have prevented greedy criminals to commit crimes like VW and Wirecard undetected for years.)
I went through the Elster "Frageboden zur Steuerlichen Erfassung" for a GmbH yesterday and can confirm that it's a nightmare. I can find no way to register a company successfully that will not generate Umsatzsteuer (VAT Taxes) due to developing software for non-EU/US customers. It seems that there is a difference between Steuerbare (revenues that can be VAT-taxed) and Steuerfreie (revenues that could be taxed, but per law aren't) Umsätze, as well as Steuerermässigte (reduced tax rate) revenues, but as far as I can tell the form only covers the latter two cases and not the first one. If you try to register a company with revenues but no VAT tax expected you get this wonderfully German sentence: "Der auf einen Jahresgesamtumsatz hochgerechnete voraussichtliche Umsatz im Gründungsjahr übersteigt die Grenze des § 19 Absatz 1 UStG und der Fragebogen zur steuerlichen Erfassung enthält keine Angaben zu gegebenenfalls darin enthaltenen steuerfreien Umsätzen.. Die Kleinunternehmerregelung kann daher weder in Anspruch genommen werden noch kann darauf ein Verzicht erklärt werden.". Translation: Your expected revenue is higher than the amount for the small-enterpreneuer taxation scheme but you did not list tax-freed revenues, for this reason you can neither avail yourself nor disavail yourself of the tax scheme for small entrepreneuers". LOL. I love my country but it urgently needs to liberalize its labor and capital markets - with corporate tax rates amongst the highest in the world and bureaucracy like this, it is unnecessarily slowing economic growth and opportunities for ordinary citizens.
Just did the same basically half an hour ago and it's a nightmare. It's just for a holding and a holding for a startup and it doesn't even generate any revenue until the startup shares are sold in an exit event.
Basically forces you to get a tax professional which is expensive not startup/founder friendly at all.
Of course, States don't want their citizens to pay the least possible amount of taxes, so they make it a nightmare to do so. This way, the state legally steals money from its citizens. Why do you think they called it "Elster"? https://en.wikipedia.org/wiki/Eurasian_magpie#cite_ref-Opie1.... As we say: "Die diebische Elster".
Being German myself, German government sucks at all things digital and that would be my main complaint. They still work with FAX machines and you often have to either use that or show up in person. Should be replaced by apps or similar.
The processes themselves are actually quite easy and efficient. Certainly not more difficult than in other countries. I have lived and dealt with paperwork in the US, various European countries, Asia and South America, so I think I can compare.
Well, I can tell you that it doesn't just depend on the Bundelsand, it also depends even on the Kiez that you are in. I remember things being quite different in different parts of Berlin :-(
Do put this into perspective a bit:
The 25000€ are the capital up to which you limit your liability. Yes you have to have it because you are liable up to it. GmbH is not just a promise that you won't be liable for more. It is also a promise that you have the money to cover your liabilities. If you don't, you have to tell the authorities immediately and your company is insolvent.
No you don't need a UG for each founder.
Yes, this shit is complicated, but it's that way for a reason. In Germany having a GmbH is like a badge of honor and reliability. It means you are an upstanding businessman. People usually trust a GmbH more than a non-limited-liability company (GBR) even though with a GBR the founder is liable with his personal wealth without limit. Because for a GmbH you know they at least put down the 25k.
The IHK stuff is very unpopular in Germany, too. Nobody likes the IHK. It's like a guild thing from the middle ages. It's here for historical reasons. It's legacy shit we haven't gotten rid of yet.
The forms and the registers are there for a reason, too, even the Bundesanzeiger stuff. That means if you deal with a GmbH, you know the founder needed to pull their pants down in front of a public register. If you get scammed, you can find out who the proprietors are, the authorities know who they are, and they can actually be held liable.
The British tradition is very different from the German one. In Britain you could historically change your name just by using a different name. Criminals and scam artists made use of this.
The German tradition is that your name is known to the state, in fact you get an ID card with your name and photo on it. If people don't trust you, they might ask to see it. Your name is serious business. It carries weight. If someone knows your name, the law can get to you. There are no credit cards accidentally issued to dogs in Germany.
So while to you this may look like useless bureaucracy, it is really a cascaded "Are you really sure you want to do this? You will be liable for your actions. There are rules here. They will apply to you whether you know them or not."
All that said: You can actually buy a "GmbH-Mantel". Someone else did all the leg work, and you just buy the empty shell of a company which will be renamed and assigned to your name then. This can be done within a few days AFAIK.
I should add that one consequence of this is that bankruptcy carries a real stigma in Germany. If you defraud people and can't pay damages and have to declare bankruptcy, you can't just change your name and continue defrauding people.
Also you can't just change your name. You can legally change your name, but it is a rarity and you have to give compelling reasons for it and is usually seen with suspicion if people hear about it. This is one of the reasons it took comparatively long for Germany to allow transgender people to pick a new name.
Changing the name is so foreign a concept in Germany that instead of allowing inmates who served their time to start fresh with a new name, the German way was to institute the right to be forgotten, to make it possible to expunge damaging references in search engines and even the paper record to a certain extent.
This is also why Germans tend to be reluctant to open an account with some web site if they have to give their real name. That feels like a boundary, an actual commitment.
This is the most complete, correct and helpful answer I've seen so far - agreed on all points.
I just want to add that the Bundesanzeiger stuff kinda correlates to the Impressumspflicht for websites, of which I cam not a fan at all for personal sites, but it's good to know that a company (which takes your money) has to have an official address and you can cross-reference if it's a real company.
The last time I started a business in Washington State, it involved putting the company name and address on a form, attaching a check for $50, and mailing it to the government.
You can start a business in Germany too for 15€ (Gewerbeanmeldung). The more "complicated" stuff (as I founded my UG in Germany it was a few clicks and one personal appointment) is required if you want the limited liablity part. So the trust establishment that it IS a real company behind.
I find it super normal that forms are in the official language of the country. That is whole point of official language - language in which you communicate officially.
I’m genuinely interested in example of that since I haven’t heard of a government bearing a cost of translation for somebody incorporating in their country.
I am aware this is provided in criminal cases, in court. Offering such service for free in civil cases, where you’re freely entering agreements seems surprising.
It makes sense or somebody incorporating - planning to conduct business - in your country to bear all the costs of doing so. Businesses from their definition are for generating profit. Although I might see that a country might want to attract new business by tax breaks or such of course.
That is a wildly complicated process - but it sounds like the advice was to incorporate somewhere else where it's easier instead? I guess that's fine with the common market? Why not just do that instead of going through all this hassle?
once upon a time people would just register in the UK, to make things simpler.
Biggest example is Soundcloud that started as a UK Ltd. However since Brexit, nobody does that.
We considered incorporating as a US company, but that seemed OTT. Maybe we will do a flip later. Lots of people suggest registering in Estonia as they apparently make it very easy, but I have never actually heard of a venture backed company that did that.
When you get foreign payments > 12.5k in a month, you need to report them to the Bundesbank. You can do that online. But only on weekdays and from 9am to 4pm on Saturday, because ... I suspect it's labor laws and to be safe they assume servers have to be treated as employees.
Sounds challenging but in fact this is only playing on intermediate difficulty!
The real fun begins when you want a GmbH as a subsidiary of a foreign parent company (HQ is in the US for example). Now no bank will accept you as a business customer due to money laundering / compliance reasons -- that is unless you're already incorporated as GmbH. But guess what, to get the GmbH formed you need to show proof of deposit of the EUR 25k in share capital - in a bank account!
There's a trick to break this chicken-and-egg and it involves a notary (of course!), putting 25k in cash in an envelope, writing down some numbers into a notebook and then storing that envelope in a safe place until you can deposit it in your bank acct.
Receive letter from the Bundesanzeiger Verlag (this translates to “people that send letters that look like a scam, but are in fact not a scam”).
Live long enough in Germany and you realise that it is, in fact, a scam. Just a legally sanctioned one. Same as IHK, Rundfunkgebuehr and overpriced mandatory work insurance for office workers.
If you really believe business should only be conducted in the official language (ie not both official language and English), then it better be worth the cost. Nobody is going to go to trouble of learning your language to deal with your market unless it is worth it. Multiply this by lots of counties and languages and it means you are missing out unless you are large or important.
If your country wants foreign investment, you don't attract people unless you meet them where they are (or, again, your market is really worth it).
On top of that, basically all international business between two companies will be done in English.
So in practice, it will be your countries' loss to establish these sorts of barriers.
Now, if your country is happy with the level of investment it gets from foreign small businesses, then great, nothing to do. But you won't get to have it both ways.
Germany is near the top of the list of countries with the least need for foreign investment - it is a capital-rich economy capable of financing all its economy domestically and looking for investment opportunities in the surrounding countries (both EU and outside, e.g. as of very recently Russia), not searching to receive investments.
Is it really worth the time to try to attract small businesses? Or should you aim for medium that are ready to hire someone German to do this in Germany? It is not massive bar to hurdle. But it seems reasonable to not allow just about anything to setup legal entity.
... were working together in the technology team of a German consumer credit bureau.
I wonder about this paragraph. I assume someone with experience around consumer credits should be familar with bureaucracy. I assume also that everywhere in the world you will contract a company lawyer in advance as guidance?
The bureaucracy in Germany is overwhelming. The tax system is a daunting. And bureaucracy provides a common set of rules, protects people, environment and keeps frauds and bribes low. For example the strict notary system protects normal people.
Thanks for posting this. I now know one more person who I'll make sure to never work for. Such a chaotic, ill-informed and partially self-contradictory mess.
Yes there is some bureaucracy involved. No, not all of this makes sense. (Especially to somebody with only partial language familiarity despite the repeated claims to the contrary, but you are making it obvious that there are quite some deficiencies in your knowledge. Fun fact: A foreigner in the UK also won't know all the English legalese.)
One of the points of all of this is to reduce the risk of something like FTX happening. That's why those guys are in the Bahamas, not in Germany.
Yeah maybe I'm either too old school or doing it wrong, but most of the people I know have not made a personal holding company. And not knowing that a GmbH needs a certain amount of capital is just... I dunno, did the author want to start a company and not even read the English Wikipedia article? But I have to admit all those GmbHs were founded before UG was a thing, so maybe my examples are bad.
The rest sounds accurate and I'm not happy, so I'm not defending anything here. But maybe read up for an hour before you go complaining.
Germans are completely unreasonable when it comes to their language. There's no point in arguing with them. Next time, just open your company in Portugal (https://eportugal.gov.pt/en/servicos/criar-uma-empresa-onlin...), we don't mind that you don't speak our language (which has far more speakers worldwide than German).
I can’t think of many reasons why a startup should incorporate in Germany sine you can have the company registered in any other EU country and have access to the same common EU market.
As someone who started his own company fifteen years ago I can relate.
Being german, the process itself was not that much of a hassle. But the financial aspect of having to pay for so many things i do not need or want (IHK membership, Genossenschaft membership) was mind boggling.
There is a joke they tell you in Germany when you think about creating a company:
How do you make a million Euros in Germany?
Take two and create a company.
It's actually not. But you need to speak the language... Duh.
You make a notary appointment to sign a default company contract. You pay in the 25000€ for a GmbH (or less for an UG) onto a newly created bank account. You send the confirmation from the bank to the notary office and they'll inform all relevant government agencies. About a week later you get a letter that your new company is ready to use.
And remember, there are only 3 invoices you have to pay: 1) the notary (it was €196 in my case 4 years ago), 2) Handelsregister (€150), 3) IHK (€40 for the first year of operation). Bundesanzeiger Verlag comes a litte bit later. Don’t forget to do the Transparenzregister. Everything else you can ignore.
Registering already seems daunting but it's nothing compared to what comes after - payroll, health insurers, taxes, dealing with import duties, various registrations, fax, constant cold sweat from missing important snail mail. The admin ordeal intensifies with unexpected twists and turns. Ask me in a few years if it was worth it.
Bureaucracy and wish of control is sinking european economies in my opinion. In Spain it is also a hell to do business, worse than Germany I think.
Many of the things that happen in Europe are the consequence of slow decisions, lack of capacity, yet the taxes are high. This is destroying the economy in a great measure, together with high tax rates.
In Spain for example, court is suuuuper slow, medical care is slower than before, we have a really relevant problem with property occupation, yet the law does not let you even put them out your own home and you have to pay the bills! Even a private company became really famous for doing this, that should be done by the administration.
To open a company, get ready...
And things are just getting worse, not better.
I hate bureaucrats, politicians and taxes with all my soul. I think they create a lot of problems.
And if you, for some reason, happen to have a few sacks of Euros just, you know, lying around, Deutschland will quite happily accept that house purchase in good old untraceable cash. Freshly laundered
The difference to other countries is that the notary essentially can revoke their notarization of your company and thereby voiding it (which I am not aware has ever happened), if they at any point decide you lied to them.
Germany has companies going back to the 15th century so a lot of the company founding processes have been grandfathered in over hundreds of years.
I’m actually somewhat happy about the notaries because they essentially commit to keeping a copy of your contract in eternity (until they dissolve), so you can always be assured that you can get a copy of your founding contract at any time.
Perhaps it's more streamlined in the UK, but generally in Europe you will have to go to a notary.
The process is often 1) notary (incorporation deed creates the entity), 2) followed by setting up a bank account (get the initial capital in) and 3) do some additional registrations for your new entity, such as corporate and VAT number.
While it can take a while depending on the country, it in all honesty isn't as bad as portrayed. But since he was setting up a holding entity to hold the shares before he could incorporate his actual operating company, he had to go through it twice.
In Switzerland you also need to have a notary to register the company. However, some companies saw the opportunity to streamline the process and offer a Notary-as-a-Service so you create the company from home (mostly) and don't need to interact with the notary. You have to sign a Power of Attorney so the company takes care of most of the paperwork. The process is quite easy if your company structure is simple (eg. initial balance of 20kCHF is only cash, shares split equally between founders, one type of shares,...).
I can confirm that it takes around 6 months to open a GmbH, having done it myself here in Germany. It is a complex process even though I had an accountant the whole time as well as a notary.
Founding a limited-liability company with a builtin tax-evasion scheme is more complicated than it needs to be? I. am. Shocked.
Here's a suggestion: Pay your taxes or hire some consultant or lawyer to do the oh so complicated process for you. If you want things nice and simple you can simply buy a prefab GmbH:
During covid WFH, my partner and I moved to Berlin for three months to study German. We stayed on the seventh floor of a nice apartment building, where the elevator broke on the second day of our stay. The owner of the apartment offered us some money as compensation, but kindly informed us that repairing the elevator would require a vote by all the people who own the building together and might take a few months to organize. (By the time we left three months later, it still hadn't been repaired.)
One day I was in the same classroom with someone who later tested positive for covid19, and the school told us to go home and check with the health authorities about self-isolating. They started us off with a website and a covid hotline phone number, and off we all went. None of the students had the German covid app, because Robert Koch Institute (German CDC) hadn't made it available outside of the German App Store because of invented reasons that no other country in Europe apparently had.
I spent the rest of that afternoon trying to find out how long to isolate. The information wasn't available on any website, and the COVID hotline was disconnected, Finally, after finding a phone number at the city health office that was connected to someone who wasn't on vacation (which, at any moment, is about 50% of German government employees), I learned that the rules differed per Borough of Berlin. I had to isolate for 48 hours. My classmate, three blocks down the road, for a week.
The same classmate later told me that she had moved to Berlin to work at a German company, but still hadn't finished setting up her residency paperwork. The latest step at that time was receiving a letter from some German department, which she had to put in another envelope and send back, in order to receive another letter inviting her to set up an appointment to come and be interviewed.
A friend of mine visited Berlin while I was there - he was looking for a job and had an interview with a German company, who ended up having to hire engineers in the Netherlands, because the German government had banned the sale of some VR headsets in the country, which were needed for the job.
Our way back out of the country was through Prague by train. The train was several hours late, but a Deutsche Bahn employee told us we should feel lucky: the day before, there was no train.
Now, I've dealt with US government bureaucracy, I've dealt with Czech and Swiss bureaucracy, and my partner has had to deal with residency permits in the UK. None of these experiences compare. (Except, maybe, getting a Czech construction permit.) German bureaucracy is so, so much worse than people think. The Germans mostly have nothing to compare it to, and think it's normal: it is not. And it's costing the country real opportunities: companies that don't get started, people who don't end up moving there, repairs that don't get done because it's hard to organize some stupid paperwork. And it doesn't have to be this way.
> The Germans mostly have nothing to compare it to, and think it's normal: it is not.
Many Germans know really well how bad it is. This is one of many reasons why politicians and bureacrats in Germany are hated the same as, I think, lawyers in the USA. It's rather that most German citizens have given up hope that any improvement will happen.
> [...] repairs that don't get done because
> it's hard to organize some stupid paperwork[...]
That German homeowners didn't scramble to fix an elevator at extra collective expense says less about their bureaucracy, and more about how important you think it is to avoid walking up a few flights of stairs.
> The same classmate later told me that she had moved to Berlin to work at a German company, but still hadn't finished setting up her residency paperwork. The latest step at that time was receiving a letter from some German department, which she had to put in another envelope and send back, in order to receive another letter inviting her to set up an appointment to come and be interviewed.
I'm going to guess that letter was some kind of verification from the Department of Labor to say that the person was legitimately needed to do a job that couldn't be done by some EU person. They need to hand it off to the Immigration Department to let them apply for a residency permit. I'm not entirely sure, because I never had any to get any similar letter, and I was exempt from that process.
However, as for the question of keeping government departments separate and isolated from each other, this isn't really a bit of German bureaucracy gone mad. It used to be that Common Law countries would like to keep government departments firewalled from each other, to prevent the government from building up Super Files about everyone that they could use to oppress them later on. I think the Common Law countries have generally become so happy with their government that they no longer fear it as a possible source of oppression, whereas Germans have recent history of actual government overreach, and retain or regained this tradition of keeping government departments separated from each other. Obviously the questions of which boundaries can be crossed and which boundaries should not be crossed is going to be an issue that is up to each separate country to decide based on its own history. (For instance, the German government did a police check on me, to make sure I didn't have a criminal record, but I wasn't part of that; whereas to get a residency permit for Australia, the applicant has to get their own police checks - when the immigration department asks for it - and then pass them on.)
I think this kind of issue should definitely be kept separate from the question of how difficult it is to open a business, and the use of notaries etc etc. You're entitled to be irritated by it, but it's a political decision of a country about perceived risks, not ignorance or rentseekers who can't be worked around. So your irritation should be directed to the Department for Avoiding Totalitarian Dictatorship, and not the Department for Overwhelming Bureaucracy.
Not defending the draconian process or the pain the author went through - but wildly different scenario. Building anything on agricultural land should face scrutiny.
As much as I like some historical reference like the next person, I think this discussion here takes a wrong turn through comments like these, sarcastic or not. I think OP is free to criticize the process of registering a company, but should rather give suggestions to improve said process instead of ranting about the official language of a nation.
People are different, aren't they? On one side I have a friend living in Austria for about a decade now and he still complains that quite some information isn't available in English. He doesn't even see the irony as an Italian, makes no attempt to learn the official language (German) and continuously makes fun of any explanation I'm trying to give on why a specific German term would be used in a certain context. On the other hand there are people like me, who moved to Norway for about a year and frequently felt like shit that I didn't make a proper attempt to learn its official language (started a course there next to my study, but didn't finish it). I was amazed that every Norwegian I encountered was able to speak English on a very high level. Me not learning the official language, but still trying to achieve some kind of future there, really made me feel foreign and my failed attempt to learn that nations official language remained a lasting feeling of lost time. I would never consider to complain that some documents aren't available in English.
Curious what the process would be like to start a comparable company (an LLC maybe?) in the US? Certainly a bank account, notary, and town/city official would have to be involved, and probably a lawyer and accountant.
Interesting article. This seems like a normal experience for any regulated industry selling abroad. Maybe this is the writer's first professional working experience ever? Maybe I'm overly critical.
I feel like this could be made automated. Why isn't a forming a company harder that making a company account on YouTube, TikTok, etc. Does the government not care about the sign up flow?
It explains the various steps that are needed and their inter dependencies. In short, you are expected to know and act on this stuff and not be caught by surprise by any of it. Failing to act means the process derails for a few weeks/months until you fix it. And fixing it is exclusively your problem. So, read up.
Getting angry at the process is pointless. It is what it is. There are no short cuts. But the flip side is that it's a very predictable process. This is Germany after all and unquestioningly following convoluted processes to the letter is what they excel in. Yes, it doesn't make any sense whatsoever but if you play along and it ends up being fine.
A few things to be aware of:
- There's a chicken egg problem where you need a paper with stamp to open a bank account, a bank account to prove that your company has enough means to pay it's bills, and that proof to go to notary so they can register your company. Typical German solution: wave some cash at the notary and they'll wink at you and take your word for it and register your company. Likewise you can actually open the bank account before you get the paperwork done.
- Then the real work starts of registering with the Gewerbeamt, the transparency register, and the tax office. They all need the company to be registered first of course.
- German banks are pretty bad. Use one of the online more modern outfits. I've had a Commerzbank (I used them the first time, big mistake) employee explain to me once that the paper I needed was archived on microfiche in some basement. This was after weeks of trying to get them to produce said paper work which I needed for my taxes. Classic "the dog ate my homework" situation. We showed up in person to basically ask WTF?! and then they grudgingly admitted they could actually send somebody down to the basement to sort it out. So, this time, I used an online company called Penta (since merged with another player) and the whole process was super smooth. Bank account ready for action after a simple online verification process. By far the fastest thing in the whole process. I actually had this ready before I even went to the notary. I still had to wave cash at them because that's the process. And then I sent them confirmation that I put that cash in the bank account. Which unblocked the registration.
- Speaking of money, this whole process has a lot of hidden cost. Make sure you capitalize your UG to pay for: IHK (chamber of commerce), the notary, the accountant, your company bank account and a few other things. A personal loan is the way to do it. Put 3K aside for this.
- The process is not quick. Even doing everything in the right order, it took me nearly to the deadline my bank set for getting the right paper work to them (in digital form). The tax number and the ihk paper with the stamped company registration. Both took many weeks for some reason. End to end, it took me nearly 4 months. Most of that is just waiting for bureaucrats to do whatever it is they do and push the right buttons.
- I tracked all the steps in an issue tracker. It starts out simple but every step generates more steps. Basically all I did was track the known but unsolved steps I knew I had to take. Fill in this form, get that paper with a stamp, contact this or that agency. About 20 steps.
As for language. It's a mix of German and English. Get some people to help you with the German stuff. No way around that.
As operating capital. Doesn't seem too unreasonable for most industries. Maybe it is high for consulting and software. But with anything you need to buy inventory, machinery, rent space and so on. It makes perfect sense to demand.
I know people who have left their european country for another just to start their business, because it was way too much bureaucracy. It's kinda sad because they want a more free market so they leave their welfare state for this reason. But I kinda understand it too. So as a proponent of socialism I'm kinda torn. I just think we could still allow these companies the freedom to operate as long as we had safeguards in place to ensure the freedom and dignity of citizens first and foremost, always before corporations.
> business school where you will learn how to deal with notaries and tax authorities
It’s interesting you view business school as that. That seems to basic human interaction skills, interacting with people that are helping you set something up (notary - company) or fulfill your civic duties (tax authorities). In the case of the notary you’re their client, you’re not supposed to know everything, you pay them to figure out stuff for you and help you in the process.
It's not about order. And "people" (the active dominant business industry) get things done because they know the process, the people, and the right forms to fill.
It's gate-keeping coupled with organized petty corruption.
I did this and found it reasonable easy to create it.
It has a sensible layer of complexity for what you get out of it.
Your German rant is still stupid, no one would do that manually or would otherwise just take the time and effort to learn what is necessary.
Unfortunately for this discussion I have no clue how the UK version really compares to the German one and I also don't know from a statistical point of view if this is a real problem.
After all just creating some company implies a lot of things you need to know anyway like doing the taxes right and doing all other critical things like the yearly get together with all participants.
maybe to expand - this isn't really about me. I managed successfully and now have my company.
but there is a reason that a significant proportion of the startups in Germany were UK Ltds until Brexit cooled that down. I don't take it as a positive sign for the process that people will literally use another country's registration process because the home one is so bad.
> there is a reason that a significant proportion of the startups in Germany were UK Ltd
The reason was that the GmbH required depositing 25k. But the UG already solved that problem and afterwards the UK Ldt didn't really make sense anymore.
It is not just that, it is how difficult it is to invest into a German company afterwards, requiring each individual investor to visit a notary.
We had some investors refuse to invest in us as a German company because it was just too much hassle, and not worth the cost if they made a relatively small 10k€ investment.
You seem to have serious lack in understanding when it cmes to legal entities. If you have a small number of large outside investors, a GmbH isn't adding much hassle. If you have multiple small investors, choose a different legal entity form. Those do come with different sets of requirements. Legal consultation helps, I would even say is necessary, regardless of country.
In the end it comes down to cost of business. If the German market is interessting enough, a GmbH is just one thing to do. If it is not, pick another EU country.
1. Notary. 2. Bank account. 3. Steuerberater takes over from here. Why does he even do Elster himself if he uses a Steuerberater?
4. No. You absolutely do not need an UG as a founder to start a GmbH. You can start a GmbH as a legal person. You do the UG intermediary stunt just for the case if you (the UG) sell the GmbH shares to avoid paying income taxes on that sale. Because every company in Germany is basically a separate legal entity (it’s equal to a person) with its own tax number and everything.
My UG took days to be registered, GmbH took 5 months due to international founders.
If he doesn’t know what a notary is, well, here’s a good British source he could find using Google: https://www.thenotariessociety.org.uk/pages/what-is-a-notary. Notaries absolutely exist in the UK and I used them myself in London.
Regarding the language. The only thing you’re going to hear as a response to that entitlement: “this is Germany, we do this the German way”. I’m not German, just fyi… you know, when I arrived in the UK in 2006, I didn’t expect that everyone will explain to me things in Polish. I actually had to learn the language.