EU Inc.: A new harmonised corporate legal regime | Hacker News Reader

EU Inc.: A new harmonised corporate legal regime

commission.europa.eu

145 pointsguidoiaquinti86 comments

Even if it falls short on the ideal implementation via a regulation rather than a directive (the former mandating all states to adhere to a single implementation and the latter defining a framework that can be implemented by member states) this is still a huge accomplishment and a step in the right direction.

And all done as a grass roots effort from a few dedicated and motivated folks like Andreas Klinger.

Exactly. Even if all it ends up amounting to is the stuff in the last paragraph of the summary, that would be huge.

The EU has a long history of doing things like this -- forcing the hand of national governments to do what they all knew needed to be done, but lacked the political willpower or mandate. Freeing monopolist-dominated or coddled industries like telecoms, delivery, airlines, railways would never have happened without the EU.

Will I be able to freely move between EU countries when I own such a company or will Germany tax 340% of the average profit of the last three years for doing so as they do now? People with German GmbH are essentially unable to move anywhere.

I think you know the answer already. Another half-baked initiative. I can't imagine countries willingly losing their tax revenues.

half baked? disagree, doing EU is hard - it's a bunch of fully sovereign countries trying/having to agree, and we're still figuring out how that could work.

We'll need a bunch of steps like that, to get closer to the efficiencies we're hoping for.

You can move before you make a profit however ? Seems quite self defeating for Germany - all the companies that are about to break out will move out just before hitting profitability ?

Noice!

(I'm of course spitballing ;)

> tax 340% of the average profit of the last three years

Go into loss on purpose for 3 years, then move. If law is written literally, they will calculate negative tax and thus pay you for moving away.

This is a legal framework, not a fiscal one, so presumably no.

Unfortunately the foundational thinking behind this runs deep in German culture, stemming from the social upheaval of the early 1800s when a foreign colonizer introduced the (already natively sought) end of the estate system as a way to pit Germans against each other (and gain loyalists). The resulting loss of privileges agitated the heirs towards successful entrepreneurs: Labeling them as Traitors, Jews, and people that didn’t deserve it. As modern Anti-Semitism was born out of this so was the tendency to see success of others with contempt and failure with glee. Though things have improved, you can still notice it.

Apart from that: How is that de-facto locking in of individuals compatible with the EU‘s foundational freedom of movement?

the exact reason why I moved out of germany after leaving there for 4 years

> 340%

Holy crap.

> People with German GmbH are essentially unable to move anywhere.

Well, that's not entirely true, but I can see how it might complicate things considerably.

> The objective is to enable innovative companies to operate under a single, harmonised set of EU-wide rules, covering relevant aspects of corporate, insolvency, labour and tax law.

A good idea in theory

> legal framework provides faster (within 48 hours), cheaper (maximum EUR 100) and fully digital company registration, simplified procedures throughout the company life cycle

Did not expect this

If they deliver, this might actually make startups in europe a bit more common

> If they deliver, this might actually make startups in europe a bit more common

Just in time for AI to make startups no longer possible for labor capital to undertake as financial capital alone (plus the hyperscalers) take the reigns.

Once there's a $1M Claude Code button to implement an entire business, it's over. Engineeers and business folks and the startup hustle are over.

I was hoping open source would save us, but it's not keeping pace with the leading edge of foundation models. Plus the hyperscalers own all of the infrastructure to run and scale anyhow. Piddly RTX cards are nothing in the face of this.

This is tech (and humanity's) final "embrace, extend, extinguish".

This is the last few years of startups.

Nah. Very few start-ups succeed or fail because of speed of writing code, or lack thereof. And there is huge opportunity in areas where LLMs are barely helpful at all: for example new low-cost guided missiles (disruptive innovation in military affairs).

Brick and mortar stores, as well as service oriented businesses do exist and will continue to do so for the foreseeable future. Tech is not the entirety of business.

Would you invest in e.g. a Croatian startup?

I bet not, because you don’t know their laws, and you don’t want to litigate in Croatian. You also don’t know the tax implications and chance is you will only find out when it’s too late.

So if an EU Inc happens, it needs to be based on a shared English law, otherwise it doesn’t change much

You can definitely invest trough a holding company set up in Ireland or in other lower tax jurisdiction and pay less tax that way. Even if you invest in a Croatian startup you can wrap in a UK structure to have the British courts available. Or you can structure the deal to include the British court as a venue for conflict mitigation. Also Irish courts are comparable and since 2020 have remote hearings (thank COVID). Either way, your main risk is not the law, but startup market risk.

It's funny that the EU pretends not to be a sovereign entity or a state in its own right, but then sets up legal frameworks like this. Even in the US, you can't set up a corporation at the federal level: apart from a handful of entities chartered via special acts of Congress, a business entity must exist under the laws of a particular state.

> Even in the US, you can't set up a corporation at the federal level:

This is only because the drafters of the US constitution didn’t think to list corporations law as an enumerated power of Congress - I don’t think they omitted it out of an ideological conviction, simply because nobody thought of it at the time. That said, given SCOTUS’ expansive reading of the interstate commerce clause, there’s a decent chance SCOTUS would let them get away with a federal corporations law, but they’ve never had the political will to attempt a general federal incorporation law

The drafters of the Australian constitution did list corporations law as a power of the federal government-but they were working over a century later, and they studied the US system intently to try to identify what worked and what mistakes to avoid. However, it took until 1989 for a federal corporations law to be enacted, and then the High Court ruled in 1990 that the new federal corporations law was unconstitutional, because the corporations power in the constitution only authorised federal regulation of existing domestic corporations, not the act of incorporating them - however, this was fixed by a federal-state agreement voluntarily ceding corporations law power to the Commonwealth (this is another innovation the Australian constitution has compared to the US - the ability of the federal level to gain new enumerated powers without constitutional amendment, by the states voluntarily agreeing to cede them)

You could setup a European company (SE) for 20 years or so, this is a new kind that solves some of the issues that one had.

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

You can easily hire a person from Ohio to work for your company incorporated in California without having a separate legal entity in Ohio. Not the case in EU.

True but you do have to register with the state of Ohio, and jump through some hoops.

It’s possible to be registered in a state you’ve never been to - how many people have actually been to Delaware or Wyoming - and employ nobody at.

Some countries play this game too - after the Cayman Islands enacted anti money laundering laws, they tried to keep companies with privacy and efficient dispute resolution.

EU is not a sovereign entity or a state but it needs to be and this is one step in that direction. EU eurocrats worked with the people affected of this and put together a proposal and the elected officials of each member state will vote on this.

Anyway, I don't know about the exact wiring of this but an alternative can be to create a virtual country with its own law, sign a trade agreement with the country to give it full access to the EU market and even some special rights and achieve the same effect of getting rid of the regulations and bureaucracy. These arrangements can be very interesting, like the City of London which is like a country inside London that is actually a corporation. Very weird things are possible.

It’s a mix, some competences lie more with the EU, some remain more, or exclusively, with the member states: https://en.wikipedia.org/wiki/Competences_of_the_European_Un.... Importantly, foreign policy and defense lies more with the member states. In addition, proposals by the European Commission must be approved by the Council (consisting of executives of all member states) in a qualified majority (at least 55% of member states and representing at least 65% of the total EU population) or in some cases unanimously.

Yes, but you can incorporate in any state you want (provided the state allows that).

That means there’s no barrier to movement.

It’d also possible to reincorporate relatively easily.

With the naming of “28th Regime”, I think they should have named it like “0th Regime”, or “Zero Regime”, or “99th Regime.” What if another country or two or more are added in the future? They will be on the 29, 30th, and so on.

Question: Anyone know if this is open internationally or is just for European Residents?

AFAIU it's just for EU residents, it's supposed to tie in with the local tax/labor/etc code, it just replaced the corporate law part.

The first policy of the last 20 years by this gerontocratic, bureaucratic, and corrupt institution, that makes sense.

> The objective is to enable innovative companies to operate under a single, harmonised set of EU-wide rules, covering relevant aspects of corporate, insolvency, labour and tax law.

Especially the last two topics are the nitty gritty details, subject to day-to-day populism by local politicians. It’s why „relevant aspects“ dampens my hopes.

Sometimes I wonder if we should just reduce the EU to a non-geographical sovereign state with which EU countries have a shared agreement. I‘d the incorporate within this state, have it taxed and regulated there. Sort of like a mixture of the City of London and the Holy See.

So this basically makes the Estonian e-residency program obsolete?

Let say I would like to start making good chees... In what 28^th regime even helps me ?

It imagines new registry so OBVIOUSLY any company in existence will need to do additional work to re-register itself and plaster that number on all invoice issued. You will see.

So all that years of meetings and documents and laws are just to instruct clerks how to handle additional work to workers ?

How about "destroing barriers" for doing business ? For example WHY THE FUCK EVERY COW NEED TO HAVE A FUCKING eu PASSPORT YOU MORONS ????????? Do milk is cheaper that way ? Do hard working agriculture peoples asked for this ? Or you just trying to get rid of agriculture businesses ? And now more stupidity to send in "digit" form ??

So more "digital services" bureaucrats can juggle all months and years and push into workers throats ? How wasting a time helps EU ?? In which reality things bureaucrats do helps small business peoples ? How new register number helps in anything ???

You aware that only way to re-industrialization is to have a lot of WORKING small businesses ? You know difference between "created" startups and existing businesses ? Startups often do not know when they are doing and giving money to "starting business" just ups statistics in temporal number of paper preparing "businesses". 20 years of doing that practice didn't improve anything.

> "attract private investment through common fast, digital and cost- effective procedures"

Do you even know how that thing "business" works ? peoples do things that business domain requires. Now you know. And _ANY_PAPER_WORK_FOR_GOVERMENT_AND_CONTROLING_INSTITUTIONS_OR_JUST_TO_PUT_IT_INTO_PAPER_STACK_BECOUSE_SOME_MORON_IMAGINED_MORE_PAPER_FORMS_END_PROCEDURES_NOW_ALSO_IN_DIGITAL

... is wasting time that can be used for business domain. or research and innovation.

So more perfect procedures for whom exactly ????????? To consume by time wasters , right ?

I was looking into using tokenize.it to get some of these benefits for a German GmbH. But I guess this eu inc will take years beige it exists.

Another take to deny the need of a POLITICAL union. Anyway a large slice of the issue lay in the many different social security systems, the vastly different inheritance tax regimes (zero inheritance tax for some states, over 80% for others) and so on, having a company that exists as a state unto itself, but with employees from another state subject to its rules, doesn't simplify things; it only complicates them.

What is needed is the arrest of the Commission for a coup d'état and high treason, with its powers being transferred to the European Parliament.

The only antidote to bureaucracy is more bureaucracy.

Well, this part of bureaucracy tries to provide a single bureaucracy instead of 27 different ones.

The second such attempt - there's also Societas Europaea.

I think the question really is: What's better? One giant bureaucracy or 27 smaller (and competing) bureaucracies?

Well, we've proven the 27 smaller, competing bureaucracies are creating plenty of their own issues. It's not like the US where 50 states (and yet more territories) actually compete on simplifying corporate law and offering strategic advantages.

Corporate law is inherently somewhat bureaucratic; better simplify it and unify it if proven necessary.

Why aren’t European countries competing on better corporate law?

To some degree they are.

Before Brexit there was the 1£ Ltd. as a famous contender, which got quite attraction and lead to creation of German UG. Nowadays Estonia is advertising their quick digital registration process.

The problem is that you are still bound to the individual countries legal system and many things there aren't unified. Having to appear at an Estonian court as your books don't comply with Estonian regulation (while at the same time for tax purpose your bookkeeping have to comply to your local legislation) isn't fun.

Also people don't know those names. What is a GmbH, an A.S., an OÜ? Is that a serious business or some shady shell company far off?

In America everything is a shady shell company so it doesn’t matter ;P

Well, it's all Delaware corporation ...

Bureaucracies are not in competition though. They are intended monopolies. For a prospective company they are investment options, larger countries usually have larger bureaucracies but also larger labor markets.

I don't like the limited liability construct. There needs to be full liability shared between all stakeholders.

Well if you want to kill all innovation and economic growth then full shareholder liability is one way to do it.

What kinds of innovations require protecting people from being held liable for harms that they participated in? Economic growth for whom and at whose expense?

Its complicated.

- It would discourage share buying.

- somebody with control packet can do terrible things, while minority stock owners have no impact. Blame attribution might be tricky.

- What's the catch? It's better than forcing the population to pour all their money into stocks that they don't understand just to stay ahead of inflation. This form of passive investing is creating a lot of problems under the surface.

- The one with the most control would get the biggest share of liability.

Blame attribution doesn't have to be precise. For example, if a police officer catches someone littering and it's a plastic Coke bottle, they would fine the person doing the littering, but also a small fine for Coca Cola for having made their bottle out of plastic... If the problem is significant enough, the CEO would be fined a large fine and lose their job along with any employees responsible for the design choice of using plastic. The shareholders would also get a fine (potentially taken out of their dividends).

Some panel of councilors in different towns can decide on the fines independently and fine any local branches that the company has.

It would open up opportunities for smaller companies which is good. Everyone is working constantly anyway; life would be better for most people if they could operate their own company.

Firstly, I question the efficiency of large companies in terms of delivering what people actually need. Secondly, I question the need for such efficiency to begin with; especially in a world where everyone is spending all of their time working bullshit jobs.

Wouldn't it be better if everyone could feel useful in their jobs? Even if it was less 'efficient' in aggregate? I'm pretty sure people would get more value in terms of what they actually need from such society.

This take basically defies every entrepreneurial experience as well as commercial history of the last 100s of years.

So just use a partnership?

Who does this?

That's the point: nobody except for dentists and lawyers. But it should be the norm.

Yeah it's interesting. For any activity where rich people care about outcomes, suddenly they want full liability.

We need to say no to diffuse harms and concentrated gains.

The biggest problem is the privatized gains/societal expenses. That's where the real accidents happen and with liability for shareholders and execs you can bet that a lot of corporate crime would simply never happen in the first place.

Reply on news.ycombinator.com