We have our share of a bureaucracy (example: took 6 months to get reply from Revenue as to what VAT to pay or not on sales of hosting packages, 23% sales tax (VAT) on customers from EU-28 was the answer eventually)
and you quickly realise there are 3 types of companies here:
1. Large corporations setting up shops to launder money onto somewhere warmer in Caribbean, these often dont hire many people or pay much in any tax despite moving billions (example Apple in Cork)
2. Small indigenous companies who dont receive much support, run by small families who never really grow to become large companies EU or worldwide, ask anyone outside of Ireland to name an Irish company beside Ryanair! And no Guinness are UK company
3. Zombie companies still clinging on from the haydays of the last boom, supported by taxpayers bailing out the banks, surviving thanks to the inbred gombeenism that is still prevailent despite the largest recession in any of the developed countries since 2007, see this great lecture https://www.youtube.com/watch?v=8LCofepdUzE
Two caveats though:
- You DO need to get a good accountant to get advice on international VAT charges as they are complex (I suggest bypassing them by using a company like FastSpring that manages them on your behalf).
- Small business owners should have the same social welfare security net as everyone else (I think this might be changing).
I agree with you on the inbred gombeens and cute hoors, but thankfully there seems to be less of them in the tech sector :)
"You have the option to pay either 8.9% flat or 5.9% plus $.95 per transaction. "
Wowza, thats steep!
edit: Sorry but experience has been different here in west, in another lifetime I worked on an "innovation partnership" with EI, it was nothing more than a way to funnel state money to politically connected "friends", the business idea was crippled from day 1 but that didnt matter the objective was transfer money, which as as a taxpayer was sickening.
Sorry for being cynical but I have many years of experience in business here, and seen it all in my interactions with state bodies. Maybe in Dublin they manage to put on a better show or things changed in last few years.
> "You have the option to pay either 8.9% flat or 5.9% plus $.95 per transaction. "
> Wowza, thats steep!
FastSpring customer here.
First, they handle lots of boring and complicated stuff for you, not just taxes. How much would it cost you to accept all major credit cards, PayPal, checks and (international) wire transfers, and provide customer service for all of those transaction types?
Second, if you sell the more expensive B2B stuff like we do, and/or sell lots of your stuff through them, you can ask for a custom rate.
Currently working with Elavon for credit card payments (cant disclose exact rates, but much cheaper than Stripe),
completely avoiding Paypal who can go and f&*k themselves,
and getting several of the larger customers to pay via SEPA bank transfer or bitcoin which have nearly no fees.
I am not sure I understand what you are talking about. If we set the price at $1K, we get from FastSpring $1K minus their commission, whether the customer has paid the EU VAT or some sales tax on top of that $1K or not. And it is FastSpring that does EU VAT remittance.
We have a lowish corporation tax of 12.5% yes paid on company profits, but everything else is very high!
For example out of a ~€39000 salary last year after all taxes i was left with €25000, things get rapidly worse from there if you want to move money from your company to yourself, people can check http://www.deloitte.ie/tc/ for ideas of what income taxes people pay here
As a director one could take a company loan (illegal above certain % but dont think anyone checks) but this would be liable to witholding tax of about 20%
Capital gains is 33% here.
And of course VAT of 23%..
tl.dr: the taxation structure here works great for large corporations who can hire expensive accountants to launder literally billions thru' Ireland to warmer climes BUT for anyone running a normal small business, expect to hand over 20-40% of your earnings
and anything left after you pay income taxes for example, is heavily taxed with loads of stealth taxes (tv license, house tax, soon water tax etc etc) and of course 23% on anything you buy (essentials like food aside, some of these have lower VAT tax rate)
Sales tax and VAT are different. http://en.wikipedia.org/wiki/Value_added_tax#Comparison_with...
VAT only taxes the value added to goods by an entity, so if they buy parts for £10, make a widget from those parts, and sell a widget for £20, they pay VAT on £10, with the assumption that they entity that sold them £10 of parts paid VAT on the rest of it. There are also possibilities for running costs (such as purchasing a screwdriver to assemble the widget) that are not taxed, because they are not sold on to the public.
Sales tax is repeatable, so tax may be paid for a particular good each time it passes hands. Yes, there are exceptions.
Its afterwards when the fun begins especially if you are in IT where Revenue might not know how to tax you and you need get a written judgement (So they don't accuse you of not paying taxes).
For example I would love to start a bitcoin related business but afraid of what decision they might make (according to newspaper last week they are still deciding)
Overall starting business here is not too bad, its growing and expanding that is hard, and misconception that Ireland is low tax, it is not nor is it a cheap place to live. Everytime i hear americans complain about sales taxes I say you seen nothing yet :D
You don't understand because of the following idiotic strawman.
"If you want to be sued into utter oblivion and live on the streets with a nonexistent social safety net I guess it's all right."
Rather than whining about your impression of the US on HN, maybe you could do some research on your own to find out why it's such a strongly preferred place to start a business.
>(not some rinkydink app that mysteriously needs €30 million in funding so you can fail more spectacularly)
This further illustrates your lack of understanding of investing. To get that kind of capital, you need to have a good business plan or a really good app to start with. Investors don't intentionally lose money.
If you just meant that Ireland doesn't have any money to invest in software, then you should already see why nobody is interested in starting a business there. The capital pool is not as deep so your borrowing costs will be hire and it will take significantly more effort to get investments.
Moving would have opportunity, yeah! And a lot of it. But I'm not willing to trade my standard of living to go somewhere that I'll pay just as much tax as here, with far higher chance of penalties due to mistakes, and with a far worse social safety net (health wise) to cover me (as I won't be poor, Medicaid, etc) than I have here.
Now, you can deal with all those things. There are ways to manage, mitigate or avoid them. I'm well aware of that. But frankly, I shouldn't have to...
This is very common with a mismatch in entitlements. People don't know how to handle the things they are used to getting for free.
Realistically though, you can just pay to have someone do your taxes and you will never have to worry about penalties and you will likely get extra deductions that you didn't know were available. Yes, it would be nice if the government provided this service already, but they don't and even including this in a reason not to move to the US is sad because the cost of having a professional do it is so negligible.
The legal environment depends on what you would be doing here. If you are just working for a company, you will effectively never have to deal with it. If you are starting your own company, then yes, it's a pain but I haven't gone down that path so I can't elaborate on that further.
Finally, for health care it depends again your situation. If you are working for a good company, you will get good health care and it won't be a concern. You might have to pay small fees on visits to the doctor, but these are usually <$50. When looking from your perspective, keep in mind that the US health care debate is always going to bring up worst possible case scenarios that aren't representative of the norm, especially if you are a skilled migrant worker good enough for a company to get you an H1B.
The USA is a huge market.
> If you want to be sued into utter oblivion and live on the streets with a nonexistent social safety net I guess it's all right.
Oh come on. This is ridiculous even for hyperbole.
Medicaid and unemployment do not depend on age. ACA provides healthcare insurance subsidies based on income, not age. SNAP and other programs exist as well.
The US safety net is perhaps inadequate, but not "undisputably" "nonexistent".
His example is irrelevant.
I would love there to be more. I also think that discounting what we have makes it easier for those that would like to remove them.
Non-government solutions to Europeans is unfathomable.
The US has investors, angels and funds that are willing to take chances and put money into startups.
You simply don't have that here in Europe.
So given that you can (and people do) get serious cash outside the US, and everything you've said, Nitai, I'd be pushed to even think about the US as a venue for my next project, even if that was where the market was.
This has the double effect of probably making any one community more resilient to small market movements, but I have a hunch it also suppresses the volume of desirable candidates in the unemployment pool.
I'd wager that a robust, high-turnover unemployment pool (i.e. one where desirable folks end up for short periods of time that is always churning) is a boon for a new company that needs highly desirable employees in its mix.
Well, this is interesting.
It is true that it's much easier to get fired in the US. It is also true that social mobility is less, compared to many other rich countries.
Easier to get fired + less social mobility = yay, freedom.
Source?
That's why many companies are using some "alternative" ways to hire someone still legally with much lower costs (10-25% employer costs including the salary) and more balanced rights for both sides of the contract.
That alternative way is verboten in Germany. If the Finanzamt finds out you will have to repay social taxes on your "contractor" and he will have the right to sue you to employ him properly.
AFAIK in Poland social security payments are mandatory for self employed people so it's no real difference if you are employed or a subcontractor - you still have health insurance, pay into pension funds, etc.
In Germany on the other hand only health insurance is mandatory for self employed people. So being a "subcontractor" with only one customer is treated like cheating the social net out of money. (Because even people who won't pay into the social net are protected by it if stuff gets serious).
Oh, btw. a question about the Polish tax system: I read that Poland has the option to opt into a 19% flat personal income tax. Is this of any practical use? My Polish is not up to reading legal texts so I couldn't find out what the drawbacks of this option would be.
As personal and corporate income taxes in Poland are quite low (again, compared to other European countries), combined with the fact that labor in Poland is extremely cheap (in EU, if I remember correctly, the labor is cheaper only in very poor countries like Latvia, Lithuania or Bulgaria), employing Poles and doing business in Poland is very cheap. It's very illuminating to compare the percentage of corporate income spent on worker wages in various countries -- companies spend very little on employees in Poland in general.
Capital.
And, everyone is used to doing business with the US, so if you want to grow your business internationally, that's a better base than most.