[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…

[alexdoesstuff]

I am actually not sure if the investor assessment still stands after Covid forced just about any startup to be remote-work-heavy. I don't think most investors care anymore where companies are based or incorporated as long as it is within reason (don't incorporate in Australia unless you are an Australian company) and has a solid and well supported legal system.

The issue in Europe from an investor perspective is that scaling is tougher than in the US. You have to most likely make changes to your product to cover a sufficient number of European countries due to a combination language, currency, regulation, customs, etc.. Your sales and marketing materials needs to at least be in different languages. Your German sales rep needs to speak German and most likely be German, your French sales rep needs to speak French and be French, etc. Add to that the fact that in B2B European companies tend to be less open to innovation. Also, you may encounter workers-councils at your potential clients discouraging changes to processes, etc.

[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...