[0xfaded]

If I did another startup in Europe, I would incorporate in Delaware and raise US money from the get go.

It's cool to see the YC terms borrowed directly, and hopefully that would be a shot across the bows of European investors. But to really give European founders leverage they need access to US valuations and terms.

I think semi-philanthropic incubators like these could really help by guiding founders to form US entities or reincorporate as early as possible.

[L_226]

I am doing this right now, Stripe Atlas Delaware C-corp but operating in Germany. I could have incorporated a GmbH for €25,000 (goes into an account to act as collateral against future liability) - which uses all my savings basically, or a UG for €1 - but then I can't add other shareholders until I pay an additional €25k to convert it to a GmbH. For my startup, which is capital intensive, I have no choice but to use the US system.

[tluyben2]

London could work depending on your business. Hope you involved an international tax lawyer; there can be a lot of issues with the German taxes in this setup if you did not do this carefully.

[L_226]

London probably won't work for me. I have not pulled the trigger yet, tbh I am less worried about German taxes than I am running a C Corp from outside the US. Mainly because of the litigation heavy US culture, opaque paperwork overhead etc.

[alexdoesstuff]

As a German having gone through the experience, I feel I am reasonably qualified to give a perspective: The US setup is a breeze administratively, but fairly costly. You definitely need a tax accountant onshore ($3-5k per year at least, more if the setup is more complex) but that will take care of a good share of the minutiae. You probably also eventually need somebody helping you in Germany to take care of employment, taxes, VAT, etc. even though that may not yet be the case. When I've done it a few years ago I found it easier to have a German subsidiary of the C Corp doing that eventually.

If you want a more nearshore solution you may want to contemplate the Netherlands or Ireland which both have fairly well developed support systems in case you ever need help.

[L_226]

Thanks, I was expecting to have a German subsidiary eventually. Also considering Netherlands

[tluyben2]

Netherlands is good as it’s not too expensive (we dropped the 9k ltd thing you also have for gbmh quite a while ago) but the rules and taxes and lack of investors is quite hard; similar things to Germany. You would be bound to those anyway though if your employees are not freelancers and are in those countries…

[tluyben2]

The problem with taxes and capital and incorporation is that usually fixing it beforehand is easy while after you start to make money, you are perhaps too late. We went for London because not as litigious, light on paperwork, cheap to incorporate and there is a lot of money slushing around. Not America sized investments but close enough. And easy ramp to the US if you wish. Taxes are quite high once money starts poring in but it is startup and investor friendly pre money.

[L_226]

I'll have a look again, got any useful links? I need to relocate to south EU anyway to build my thing, so I am not specifically tied to incorporating in Germany beyond being a citizen.

[tluyben2]

If you want you can email me (see Hn profile); I moved from NL to the south so maybe I can help.

[monkeydust]

London probably has most generous tax incentives for startups to offer their investors. S/EIS.

[tluyben2]

Yes, exactly. And the grant process, albeit through no cure no pay orgs, is quite good.

[hkt]

Why not Estonia? Their digital e-residency stuff sounds great and their laws (including tax laws) seem pretty business friendly.

[L_226]

I have the e-residence, however from what I understand I still need to pay a local resident to act on my behalf for all company matters. Probably OK for a bootstrapped SaaS but I need to raise significant capital and want to make that process as streamlined as possible.

[trh0awayman]

Can you talk about this a bit more? Or have any guidance?

I'm in Germany and wanted to do this with my cofounders, but couldn't wrap my head around the legality.

Don't you also have to maintain a German presence basically? And what are the implications in regard to exit taxes?

[L_226]

> Don't you also have to maintain a German presence basically? Probably easiest, with all the required trips to the notary

> And what are the implications in regard to exit taxes? No idea

[dgellow]

> or a UG for €1 - but then I can't add other shareholders until I pay an additional €25k to convert it to a GmbH.

Could you elaborate on this, or point to a source? The way I understand the mini-GmbH model (UG) there is no limitations regarding shareholders versus a standard GmbH.

Not saying you’re wrong, I’m by far not an expert but I looked into creating a Unternehmergesellschaft ~1 year ago and don’t remember reading about that type of thing.

[L_226]

> The way I understand the mini-GmbH model (UG) there is no limitations regarding shareholders versus a standard GmbH.

This is correct, however from my understanding this is only at time of incorporation. If I was to incorporate and then get a term sheet from an investor, I would struggle to then make them a legal shareholder in my UG.

Perhaps I am also misunderstanding, re-reading [0] you could be correct. I did reach out to firma.de for clarification in February but never got a response.

[0] - https://www.firma.de/en/company-formation/what-is-a-ug-haftu...

[dgellow]

Have you tried contacting a “Handelskammer”? I had quite good experiences in the past with hk24.de for example, even asking questions in English.

Edit: I feel it’s always so complicated to understand the German system for anything related to company administrative stuff :p

[ed_balls]

Can you not say that "this macbook and that car are company's property" and fulfil the capital requirement? the minimal capital in Poland is 5000PLN(1100EUR) and you just buy a laptop.

[riccardomc]

If capital is the problem you could also consider the Netherlands which requires EUR 0.01. You will need to pay a notary for the incorporation tho.

https://business.gov.nl/starting-your-business/choosing-a-bu...

[inductive_magic]

From someone who hasn't interacted with the startup world much yet: what are some problems companies in Europe would have to deal with? What liberties are exclusive to the US? I'd imagine lots of complications of running a US-based company within Europe.

I can't imagine moving to the US, and I'm sure that lots of smart people in the EU are in the same camp. At the same time, I'd be very interested in providing high value to and being part of a company with the velocity and dynamics of a start-up -- I just wouldn't move to the US to pursue the opportunity, as in: I'd not even consider it below ridiculous/unrealistic pay.

[dmitriid]

> what are some problems companies in Europe would have to deal with? What liberties are exclusive to the US?

1. Market

US: a rather unified single English-speaking market of 300 million people.

EU: 27 different markets in the EU + half a dozen markets in countries freely associated with the EU (e.g. Norway and Switzerland) in different languages, cultures and expectations

2. Money

US: unlimited unchecked runaway money. All the "unicorns" we keep hearing about can easily lose hundreds of millions and even billions dollars a year for decades, and still considered a success

EU: less money, and you are expected to actually turn a profit at some point

[danijelb]

I don't think that the 27+ EU markets are a problem. I'm not even sure if there are 27+ different markets in the EU in the context of startups/tech, because if there were then each country would have their own isolated tech ecosystem which is not the case. Most EU countries are dominated by US tech companies.

If different cultures and languages are not a problem for US startups in spreading to Europe I fail to see why it would be a problem for EU companies

[oblio]

You're missing the bigger picture.

US startups <<grow>> in the US, the huge single market with a single language, then once they're big and can tackle the bureaucracy in order to get to the huge chunks of cash also available in Europe, they <<move>> into the EU.

A not-so-huge startup by US standards can have hundreds of millions of dollars very early in its life, allowing it to switch to international expansion, while most of the equivalent EU startup would probably raise tens of millions by the same stage, if they're lucky.

[sbacic]

> EU: 27 different markets in the EU + half a dozen markets in countries freely associated with the EU (e.g. Norway and Switzerland) in different languages, cultures and expectations

That's understating the issue. There are only 5 (!) EU member states with a population higher than that of the NYC metropolitan area and _none_ with that kind of population concentration or purchasing power.

[jason0597]

> half a dozen markets in countries freely associated with the EU (e.g. Norway and Switzerland) in different languages, cultures and expectations

Well, it isn't half a dozen, it's more like 3 countries (Iceland, Switzerland and Norway). 4 if you count Liechtenstein with its population of 38k people.

[gpderetta]

Well there is also Monaco, Andorra, San Marino and of course Vatican City with its population of 800!

[dmitriid]

Well, we can also count the UK now :)

[dgellow]

> I can't imagine moving to the US, and I'm sure that lots of smart people in the EU are in the same camp. At the same time, I'd be very interested in providing high value to and being part of a company with the velocity and dynamics of a start-up.

I personally do this via contracting. I’m in Europe and work for people in the US. I’m currently working with two companies, both are very early stage startups, it’s very dynamic, everything has to be built from scratch and I feel I have lot of influence over products and devices which is something I enjoy.

And I still have all benefits from Western European countries.

Not sure how things will evolve if they start to focus on hiring employees and move to a more standard company structure but so far things are going well.

[dgellow]

I meant “services”, not “devices”… My autocorrect is a bit too zealous…

[andy_ppp]

Yes same, even if I don’t get into YC I’ll be trying to raise on US terms. I’ve seen some really stupid startups in Europe end up with crazy dilution to the point where if they thought about it they’d realise they just had a job working for some rich people. US valuations are twice the amount for half the equity from what I’ve seen so why I wouldn’t do that rather than be screwed over I don’t know…

[0xfaded]

Make sure you incorporate in a form that US investors are comfortable with. Few investors are going to want to figure out what an ApS or GmH is just to make a seed investment in your tiny startup.

It also gives tou better exit potential in the event of a M&A.

[andy_ppp]

I’ll probably do whatever Clerky tells me to, which is the service YC tells founders to use I believe…

[antupis]

yeah and then go after European engineering talent, try to get best of both worlds.

[macco]

This sounds interesting. Are there any prominent European startups who did go that route?

Would you like to write a blog post about it?

[znpy]

Depending on where you’re doing that and your nationality and fiscal residence, that might be illegal.

[Luc]

Surely not? Could you name a specific combination of those 3 factors that make it illegal?

[znpy]

Italy, being Italian, not being fiscally resident somewhere else for more than six months.

Esterovestizione is the specific term for that kind of fiscal crime.

[Luc]

Esterovestizione = "The fictitious location abroad of the residence of a person who lives or works in Italy, in order to enjoy a more advantageous tax regime."

Yes, that is fraud. But one can do it legally by not lying about ones residence and paying taxes locally. It's complicated, so accountants will love you, but it's not illegal as far as I know.