Just how complicated could it be to register a German company?
major-grooves.medium.com
major-grooves.medium.com
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.
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.
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.
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.
Correct, 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.
Just my two cents.
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.
But again, legal documents, Portuguese.
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).
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.
Myself I speak fluently six languages.
The issue is probably what you personally consider fluently / be able to speak.
https://ec.europa.eu/eurostat/statistics-explained/index.php...
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.
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.
Pray tell what the language of international business is in the EU.
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.
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.
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?
- 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
I am all ears :)
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.
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.
Thanks for the ideas!
A few other low tax places to consider that I don't know much about: Belize, Bulgaria, Croatia, Macedonia.
As for the negative points... did you listen to their english? lol.
And Dubai? Yes, it is not too cold there, hahaha.
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.
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.
Complex entry processes favour incumbents, it sucks.
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.
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)
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.
This is not true in Berlin, atleast. Even the immigration office may not speak English.
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.
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).
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.
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).
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.
I asked him about that. He said in Alabama where he was born this was fairly common.
> They're actually quite not.
Of course German and English are very close related.
Both are Germanic languages. Look here, in the right lower corner:
https://en.wikipedia.org/wiki/Indo-European_languages#/media...
Or here:
https://alternativetransport.wordpress.com/2015/05/05/34/
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).
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.
Translating legal terms can cause the meaning to change.
The German texts are often already highly complicated, that does not become better by translation but leads to new problems.
Translation brings in ambiguity.
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).
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.
And presumably thousands of euros in fees. And you think this is fine? Why, when other countries do it quicker and faster?
> 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.
Yes but nobody speaks Polish except the Polish, or?
Now substitute Polish with Spanish or Chinese and take note how dumb that statement sounds.
Chinese speakers: more than a billion.
Polish speakers: 50 million.
Not comparable.
Hardly obscure.
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.
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.
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.
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.
https://www.gov.uk/government/organisations/companies-house/...
https://www.gov.uk/government/organisations/hm-revenue-custo...
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?
Wow that's insane. Compare that to creating a Delaware LLC and getting an EIN. No wonder there are hardly any startups in Europe.
> 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.
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 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.
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.
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?
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.
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.
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.
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.)
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.
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.
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.
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.
It’s a bureaucratic exercise that most countries manage to avoid.
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.
https://www.ihk.de/stuttgart/english/services2/business-supp...
Forms 3 and 4, and 5 in that list, sole proprietorships and general and limited partnerships.
Here is a table with some numbers, how many firms of each form there are in three size categories by nr. of employees: https://www.destatis.de/DE/Themen/Branchen-Unternehmen/Unter...
(and just for comparison, the data for the US, scroll down for the table: https://tingen.law/2022/business-structure-statistics/54443/)
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.
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
The concept that rules differ across nations should not be so hard to grasp.
Edit: Just realized, that's not a prepaid card anymore, so forget everything I said...
https://www.computerbild.de/artikel/cb-News-Handy-Prepaid-Ka...
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.
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.
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?
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.
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.
But that's it.
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.
> 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 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.
Only if Europe wants to be some culturless "money above all" USA style conglomerate
The EU is to the German establishment what the USSR was to the Russian establishment.
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.
MOSS: https://europa.eu/youreurope/business/taxation/vat/vat-digit...
The end effect of those Bizantine regulations is that big companies just use them as loopholes while small businesses get weighted down with them.
Your last line summarizes it well: “The EU is to the German establishment what the USSR was to the Russian establishment.”
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.
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 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.
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.
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.
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.
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.
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?
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.
For the EU so, the only English speaking country left is Ireland.
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.
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.
edit: typos
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.
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.
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 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?!?
Yes, it is ridiculous.
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)).
> 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.
That's your opinion.
> Then they should be free to hire them on their own dime.
Cool thing of living in democracies is that people can propose and campaign for these changes. Maybe Germans like it as it is and it's their business?
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.
We can invert this logic on IHK itself. If it can’t sell itself in a manner than sustains it’s finances, it, itself, is not sustainable.
For 1.000.000 € profit its 1.400€. Literally some rounding errors or customer not paying thats not worth the hassle to discuss.
1. 0.14% of profit is not a rounding error.
2. The true cost is not the 1400€. It’s the time you waste dealing with it, your availability of which does not increase with revenue.
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).
Indeed, much more popular to be hit with a wall as soon as you try to start a business.
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.
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.
Also, counter argument:
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).
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.
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.
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.
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.
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.
[0] https://www.gewerbeanmeldung.de/formular-gewerbeanmeldung
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.
GmbH (LLC or limited liability company) is a completely different beast than sole proprietorship or partnerships.
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.
- 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.
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.
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 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.
Anyway, the main issue here doesn't seem the language, rather that the process itself is complicated no matter how you look at it.
I think that should be the point of focus which I guess you did, but the rant about German was a bit distracting.)
Language is the small part of the problem here. Really, it is the process that is bad.
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.
For example, recently getting a new one: https://start-ups.invest-in-bavaria.com/
> 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.
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
American here. I would not consider such a person to be fluent in English, and I don’t know anyone else who would, either.
We don’t have our own special, lesser, definition of fluency.
Based on your written grammar, I would not consider you fluent in English.
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".
“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.
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“)
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?
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 could criticise your approach with the founding, but the other comments did that well enough. I'd largely parrot https://news.ycombinator.com/item?id=33588536 .
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.
Can a country like Germany afford to be picky with people trying to invest in it?
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
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.
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.
The process of founding a company doesn't have to be as difficult as it is, and the more people can take part in it, the better it is for Germany!
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.
Yes, I think they're doing fine without business owners who are not interested in being business literate in the market they intend to participate in.
However, I think they would do better by making the business registration process more accessible to outsiders.
The value prop to me of being in Germany was entirely negated by the hostile environment towards getting anything done that wasn't paperwork.
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.
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.
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.
Starting a company in Germany is much easier if you don't need limited liability (which GmbH and UG (haftungsbeschränkt) do offer).
The DeepL founder is, from his name, probably Polish.
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.
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".
Maybe the system got overloaded later? Or maybe it differs per canton?
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
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.
Or does anyone know any other country?
In either case: It's low. Very low.
The same could be said about anglophone countries concerning people who don't speak English.
Critique the article, don’t insult the person!
We can make online discussion a nicer place! :-)
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.
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.
It loks to me like a decent filter for companies that won't make it very far anyway.
All these things should be available in English, if GER is serious about overcoming the skilled labour shortage.
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.
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.
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.
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.
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.
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.
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".
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.
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.
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.
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.
No bank will give you a company account on the promise that you'll go see the Notary next.
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
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).
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.
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.
Along the entire way every single bureaucrat asked me the exact same question:
"Why don't you just get married in the US?"
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.
I think a difference between the US and European countries is in the US legal documents don't have the same weight of finality as they do in Europe.
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.
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.
That stuff is medieval crap that should be summarily removed from european and american bureaucracy
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.
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.
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.
Is this a good idea? How do you make sure the company doesn't have any liabilities or did any shady transactions.
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.
We followed their advice.
[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.
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.
> 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 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.)
Basically forces you to get a tax professional which is expensive not startup/founder friendly at all.
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.
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 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.
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.
[0] - https://www.gov.uk/limited-company-formation/register-your-c...
The entire process is a disgrace
Ref: https://tradingeconomics.com/germany/ease-of-doing-business
Germany is almost uniquely hostile to foreigners in this regard.
> Germany is almost uniquely hostile to foreigners in this regard.
Do English-speaking countries offer such services for, say, Polish or Italian native speakers?
Anyways, the spirit of the question is the same. In Germany they should have these documents available in Turkish and English.
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.
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.
The Irish process ... Well, is much less streamlined.
Still a damn sight better than Germany though
I'm not joking: https://www.bundesbank.de/de/service/extranet/-/zugangszeite...
And they enforce it, too. Logging in on a Sunday will only get you an error message.
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 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.
... were working together in the technology team of a German consumer credit bureau.
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.
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.
You cannot possibly be serious. Wirecard happened only two years ago.
So, while the thinking might goes that all this is for something like FTX, it's obviously not succeeding.
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.
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.
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.
on the other hand the UK is the best example of how company creation should happen. everyone should follow them. all digital, 5 mins to setup.
money laundering is a separate issue to company formation.
the worst money laundering countries are the likes of Uganda, Mozambique and friends. the UK is not even in the top half.
but biases need to be confirmed i guess.
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.
You just need people that have a mindset of mutual respect and following their word. Not much more.
I bought a house in Germany. It felt safe.
By coincident there was a story about the UK how there is so few process to sell a house, that it's a common fraud to sell houses you do not own.
I prefer the German way to the UK way.
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.
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.
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:
https://gruenderplattform.de/unternehmen-gruenden/vorratsges...
Oh, sorry, that's in German again.
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.
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[...]
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.
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.
First, I got a lot of value out of this web site: https://www.firma.de/en/company-formation/registering-a-limi...
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.
It serves as basic legitimacy.
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.
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.
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.
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.
UK Ltd much easier to invest into.
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.