[bjornsing]

You know people in Belgium who make $600k a year as employed software engineers? Yea, sure...

In Sweden you can incorporate and work as a consultant. That lets you accumulate capital on the corporate side of the tax barrier so to speak. But the tax authorities can show up at any time, claim that your one man company is “overcapitalized” and force you to pay income taxes on your earnings.

[charlesdm]

You can't just work your way to wealth. You need to reinvest what you make into other assets and let them compound...

That said, I know self employed developers making 150-200k (EUR) gross per year as contractors. But I also know employees that get allocated a few 100k/year in stock options as part of their compensation.

Yes, you do need to be exceptional. And you need to be smart in the choices you make. I thought that was a given, since millions of dollars don't just come falling from the sky.

[bjornsing]

> That said, I know self employed developers making 150-200k (EUR) gross per year as contractors.

There’s nothing unusual about that. I was making that kind of money 15 years ago.

But one problem is, that’s about what I can make today as well. There is no upward mobility in pay. And it has nothing to do with ability. It’s a cultural thing.

(Also, the deal is typically that you sell your social career progression. So you’ll be doing the same kind of job endlessly.)

> You can't just work your way to wealth. You need to reinvest what you make into other assets and let them compound...

This however is where the real problem starts: there is no way to accumulate and reinvest capital (legally), without paying massive (70-80%) taxes.

[charlesdm]

Consumption yes. But how do you get to 70-80% for reinvesting? Corporate taxes are 20%, dividend taxes 30% on remaining 80? That gets you to 44% net tax. From gross to net. Income taxes are higher but still not 70-80%?

I agree income taxes are high throughout most of Western Europe, but the way to grow wealth is by acquiring assets that can grow without having to sell them and pay taxes.

An investment fund (or a property) can often grow for a long time and throw off cashflows that are taxed more efficiently. So can a business where you build up value in the equity. Cashflow keeps the lights on, but equity (even in a small business) builds wealth.

[bjornsing]

> Corporate taxes are 20%, dividend taxes 30% on remaining 80? That gets you to 44% net tax. From gross to net.

No, there are special tax rules for small companies (the so-called 3:12 rules). You can pay yourself a small dividend ($15k or so), but above that you’re taxed as if it was regular income.

> Income taxes are higher but still not 70-80%?

Payroll tax is 31% and then you pay around 55% marginal tax on what’s left.

It’s debatable how you should count VAT in this context. Your consultant invoices will have 25% VAT on them that you have to pay the government. Your customers can get that back from the government, but will have to pay VAT on any value your services create. Since the name of the tax is value added tax I think it’s fair to say you are adding the value with your labor and are in fact the one paying the tax, but others may disagree.

[xvilka]

Move to Russia with its low tax of 13% (could go as low as 7.5% if you establish a company and enjoy some additional benefits) and work remotely. Or any other country with low taxes and low cost of living.

[cpursley]

It can actually go lower then that if you set yourself up as a contractor. And outside of Moscow basic apartments can be rented for $250 a month.