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Comment by maddening | Hacker News Reader

I believe that equity is mostly SF thing.

One of my friends works in a startup in Berlin where he was offered equity as one of the founders (10th engender or sth like that). Chances that he will be able to liquidate them in foreseeable future is non existing.

Nobody else that I know was offered an equity, even though quite a lot of my friends work for well funded startups. I worked in some and nobody offered me anything else but a salary.

If I relocated near SF? Sure, there would be a possibility. If I was a rockstar and one of first 5 cofounders? Also yes, but I am not famous.

I am really skeptical about any such post, as I saw myself that some strategies that works in Silicon Valley do not work anywhere else and I am not into moving to the most spoiled IT region in the world.

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FWIW, Germany specifically has complicated tax laws that make equity tricky. Namely: if your equity ever increases in value — e.g. if your startup raises a round of funding and gets a higher valuation — you owe capital gains taxes on the increase, even if the equity itself isn't liquid (which it might very well never be). There are workarounds, but they're a hassle. None of this is an issue in the US, where you're only taxed when you sell.

I've never been an employee of a German company, but I'm in the process of founding a startup here in Berlin. I totally get how saving early employees from having to deal with that headache would be a blessing.

(In general, the advice in the article tracks with my experience working not just with SF-based startups but companies in other top-tier tech cities like London and NYC. If you get a job at a startup in SF, you'll absolutely get equity as meaningful part of your job offer, even if you actively don't want it. A large part of startups' ability to hire depends on them being able to convince you it's okay you're being paid literally less than half of what Facebook pays because someday your 0.01-0.1% equity stake might be worth something)

> None of this is an issue in the US, where you're only taxed when you sell.

Nope. In the US, you may be taxed when you exercise, and will be taxed again (against the new basis) when you sell. Whether or not you are taxed at exercise is a very complicated matter.

Keep in mind, when you are granted stock options, you don't actually have any equity. You have an /option/ to acquire equity. The taxable events are the acquisition of that equity and the subsequent liquidation of it.

You’re totally right about options. I was thinking more explicitly about stock itself (e.g. RSUs in the case of employees at companies that issue those instead of options, or founder's stock in my personal case).

Separate from that, things are still more fraught in Germany: whatever your US taxation situation is, I'm not aware of any situation where a valuation change in stock/options/etc you're holding will trigger a taxable event for you, as I understand to be the case with Germany. As I understand equity taxation in the US, you'll only ever be taxed when events happen that you yourself have initiated (e.g. exercising options or selling stock).

Well, I know people working not only in Berlin, but also in USA, just not in SF. One blockchain startup from Utah wanted to develop some advanced stuff, got investors hyped, ICO and stuff.

They paid their employers quite well, really good rates. All of programmers (besides 2 founders I believe) are contractors - no equity. They negotiated their hourly rates pretty high, because they knew that even if it will be a great success, they won't get anything else than a salary.

I’d argue that even in NYC, people associate less value with equity compensation. But, when most of the multi-billion exits have happened in SV, isn’t this entirely justifiable?

Depends on country all eu countries have differing approaches to how small share holders and employee share holders are taxed.

And I would not call it spoiled its just that in the US "engineers" (using the term widely) have managed to get a fairer share of the pie.

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