Creating a pan-European legal entity, the right way | Hacker News Reader

Creating a pan-European legal entity, the right way

klinger.io

32 pointswhyoh16 comments

How about instead of scaling up, try scaling-in? Promise superior internal market services and local storage/processing instead of competing on the global square. Kagi's subscription model comes to mind.

The myth of infinite start-up scaling is just that, a myth. We need a more pragmatic, context sensitive startup market, not one chasing scale-up stories.

That works until the American megacorp comes along, copies your business idea and outscales you.

A unique strategy (and sign) of the times, let's see how many start-ups are willing to get bought out.

This is a good point. Too much emphasis is placed on conquering THE WORLD (tm). This encourages a mindset of domination in which either you beat them by conquering the world, or join them by becoming an employee. Not everything has to be "global". It also produces a world of centralized services and products instead of flexible ecosystems that can cooperate.

Another benefit of decentralization is resilience to global market forces. As an example, look at Polish economic growth in 2008. It was the only EU member to avoid the recession. Why? Because of a strong domestic market.

It makes me wonder what is a Societas Europaea then. I thought it was some kind of pan-European legal entity, even though it's probably not suited for startups at all, as it looks quite complicated to set-up from what I read on Wikipedia. If anyone has more insights, I am interested to learn more about that.

IIRC basically the SE is indeed complicated and has a bunch of requirements that would not make sense for a startup. Plus, it isn’t really a common denominator for different corporate laws, but they kinda add together so now you need to know about laws in Germany AND laws in Spain AND etc, wherever you operate.

Per the Wikipedia article, the "SE must have a minimum subscribed capital of €120,000 as per article 4(2) of the directive".[1] Note that it's the regulation, not the directive, with the requirement.[2] It appears the OP's article discusses an alternative 28th regime model suitable for startups.[3] See also the recent European Commission project group on the subject.[4]

[1] https://en.wikipedia.org/wiki/Societas_Europaea#Minimum_capi...

[2] https://eur-lex.europa.eu/eli/reg/2001/2157

[3] https://en.wikipedia.org/wiki/28th_regime

[4] https://commission.europa.eu/document/download/7f3e1d1e-e406...

Doesn't this already exist?

https://en.wikipedia.org/wiki/Societas_Europaea

That's the legal form Airbus and SAP are using, as examples.

Those must have minimum capital of €120,000, likely one of many onerous requirements.

That doesn't seem like a crazy amount of capital to me?

Maybe I’m overthinking it, but don’t see this happening. Not now, not by 2028. 2050 maybe, and I don’t know if I would like the centralized United States of Europe that I see as requirement for this to happen in any meaningful way. Federation and independence has its downsides, but to me the benefits of the European way of plurality are much more preferable.

(Co-founder of various European and US entities)

What would be the benefit?

Right now you can incorporate a company anywhere in the EU, where-ever is the most advantageous, and do business anywhere.

I think the same goes in the US and that does not seem to slow them down...

In the US, you actually have to register your business as a foreign entity in every state you operate in (foreign in this context means “out-of-state”) and it’s a minor annoyance, it can and does delay business.

Well, the argument is that EU start-ups are lagging because of the lack of EU-level legal entity, which is obviously not true...

In fact the best way for the EU to help start-ups is to stay out of the way as much as possible (a big ask...)

Indeed. I'd say a major annoyance. After all it includes filing taxes and sometimes you have to "align" your company name if for example you apply for federal grants.

This reminds me of the old XKCD about inventing new standards... fine, you get an EU Inc corporate model. What's the labor law applied for employees? what is the tax regime, and which countries will take in taxes? what about oh, I don't know liability, insurance, debt and bankruptcy, etc, etc.?

A company is a legal person within a jurisdiction --of which all of the laws apply to every person. You can't have an EU Inc without a federal EU. Heck even the US doesnt have a US Inc. This is naive at best.

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