[academia_hack]

It's inordinately difficult and expensive to start an LLC or SA in some EU countries. It's even difficult and expensive to _stop_ an LLC and dissolve it. Huge amount of risk and cost on founders and a huge distraction from running a business.

I think that EU-Inc _could_ be an improvement, but it needs to avoid the committee laundry list of ideas/requirements/form fields that plagues the EU startup ecosystem. My worry is that the end result will require notarized declarations of honour, financial plans stretching decades into the future, 30 page business plan documents, reams of corporate governance documents, and tons of other nonsense to protect against the perceived risk that someone who failed at starting a business once fails a second time.

There needs to be UX requirements on the process from day one against which the end result is judged. (E.g. "a company should be able to register in x days", "a complete application should be no longer than y pages", "application costs should be less than z euros").

[egorfine]

> a company should be able to register in x days

Which EU bureaucrats will fully pass by treating this as "a company should be able to register in x days once the full set of documents has been collected".

[moritzwarhier]

Companies are treated like persons legally and while I'm sure there is too much bureaucracy in many places, I'm also sure that there are important documents that should be required.

For example to make sure that a company can be held responsible when it breaks the law.

There are already enough loopholes to disconnect legal responsibility from profit-taking, and not every company is benign.

Sure, if the documents cannot be acquired in X days for other reasons, that would undermine the tagline.

But I don't think that's the main risk.

Let's not forget that some requirements make sense.

In Germany, the government recently decided that some minor applications to local governments must be answered within X days or else are automatically approved.

But "minor" is important here... great for a small business that applies for a permit to renovate there outdoor seatings or whatever.

I wouldn't want for company foundings to be auto-approved without submitting the legally required documents.

[sbacic]

Which in itself wouldn't even be a problem if lack of said documents caused your submission to automatically fail validation right at the start. Instead, a real, live person will need to review your request to verify that it indeed includes a full set of documents, said documents are genuine and "correct" (despite most of them already being issued by the government!) before approving your request.

[miki123211]

I think what's even more important is that the costs for founding and maintaining such an LLC should scale with revenue, including scaling to 0.

In many EU countries, you still have to pay social security and/or health insurance, even if your company brings in no revenue. This isn't supposed to be a problem, as you're not really supposed to officially start a business unless you cross specific revenue thresholds. However, that doesn't work in practice if you're offering your services online, as many payment gateways in Europe will not deal with non-business accounts.

[Xylakant]

Social security gets paid on wages. Revenue doesn’t play into it.

[dv_dt]

If they were being pragmatic about it, the more universal healthcare systems offered by many EU nations should be a massive advantage for startups vs nations like the US, but the wrong regulations around company operations negates it or worse.

[trueismywork]

Startups but definition have no revenue.

Its also a chicken and egg problem. Having a revenue means having a company and vice versa. Unless you're in very old fields, which explains lack of new tech companies in Germany

[stevenally]

In the USA California, Texas, Delaware etc all have different company registration and compliance processes. This has not damaged the business environment.

It should be left to each EU country to decide how to manage their company compliance processes. Those companies can then easily trade all over the EU.

You can easily set up a company in Ireland.

The EU does not to over reach with one-size-fits-all regulations. That will eventually lead to it's dissolution. It needs to concentrate on maintaining a free trade area.

[adamcharnock]

Well yes and no.

Yes you can form a company in Ireland while living in France. But you cannot get an Irish VAT number without a physical presence in Ireland.

And if – for example – France learns that you are running an Irish company from France (i.e. you have a 'permanent establishment' in France), they'll want you to file and pay French corporation tax. Which is likely sufficiently annoying that you may as well have formed a French company in the first place.

[bootsmann]

Its almost impossible for a fund from Germany to invest in a company from France and vice-versa. It is a significant problem!

[lazide]

Each of those places (besides Delaware, kinda) has economies larger than a large chunk of the EU.

[egorfine]

> My worry is that the end result will require

Yes it will.

The vast army of bureaucrats in any country does whatever is in their power to make sure their specific requirements are included into the process. What do you mean they would like to open a 3D printing workshop with no Environmental Impact Study done?!

[whynotmaybe]

You know that EU bureaucrats do what each country want them to do right?

Each time the Commission comes with a new rule, most countries agree with it. And if its an "unpopular", the game for each gov is to blame the EU.

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

http://news.bbc.co.uk/2/hi/europe/6481969.stm

[jandrewrogers]

> It's even difficult and expensive to _stop_ an LLC and dissolve it.

In my experience this is at least as important. Everyone focuses on the process of creating companies, which is now relatively streamlined in many European countries.

The real, massive difference between the US and EU is how hard it is to shutdown a company and the legal implications of that. I was shocked at how unreasonably slow and painful it can be to shutdown a company in Europe the first time I did it. Many countries effectively treat it as a criminal proceeding. Sometimes startups just fail, that is the nature of startups.

In the US shutting down a company is almost as easy as creating one.

[jan_Inkepa]

I've been told by a lawyer that a common sensible step in closing companies in Germany is to first...reseat the company in the UK ... (at least pre-brexit - not sure if things have changed). Think of how bad and expensive the process has to be for this extra step to be worthwhile.

[melenaboija]

I am a European living in the US and my god I am tired of hearing this over and over again. If your biggest hurdle to start a company is the paperwork you’ll have to do for one week, you better think of something else.

And yes, there are other way bigger issues in my opinion, such as financing and even social support.

[nickff]

If the paperwork ended after one week, it wouldn’t be so bad, but it’s just the tip of the iceberg.

[baby]

Having a startup in the US is a huge mess due to all the states and taxes, if Europe can make everything digital AND easier, it's a no brainer for us to move our company there.

[zdragnar]

Why would moving to the EU mean you don't have to deal with states and taxes? Would you abandon the US market completely?

[glimshe]

There are many companies that deal with this complexity for you. Online payment processors and e-store services for instance. Source: I have an US company, sell products to all states and don't deal with this.

I think you're the first person I've ever seen in my life saying "I moved my company from the US to the EU and now my business owner life is so much easier"...

[ExoticPearTree]

> Having a startup in the US is a huge mess due to all the states and taxes

Not really, there are services like Avalara that give you the exact tax amount you need to collect from your customers once they fill in the shipping address.

[tick_tock_tick]

> Having a startup in the US is a huge mess due to all the states and taxes

Not really there are literally companies as a service that take care of everything for next to nothing. It's actually kinda crazy how you can be up and running in under a week in the USA.

[bluecalm]

>>Having a startup in the US is a huge mess due to all the states and taxes,

In EU you will need to deal with VAT basically from day one (10k EUR of revenue). In US you will not deal with it until you can afford it as thresholds are very generous.

[seec]

They won't be able to solve the problem. The only reason all those roadblocks exist is to control/regulate everything in a way to ensure the maximum possible taxation. At the same time, bureaucrats get to justify their existence, pretending to do meaningful work while they only take from productive people.

You can't even say they manage to regulate actual problems; they only reinforce the big players. The cookie consent banner nonsense and ongoing legal fight with Apple (and GAFAM in general) didn't bring anything of value to end consumers.

Cookies haven't disappeared; they have just become a major annoyance that you have to spend a lot of time clicking on and tracking hasn't been reduced, quite the contrary. The iPhone is still a locked-down device, with Apple maintaining a monopoly on software access as well as repairability (their repair program is such a joke that they should be tried for contempt if the EU actually had any power).

Bureaucracy is just cancer, and the EU is fully metastasized; there is not much that can improve until a major failure happens.

If you want to create a business, you have to pay the bureaucracy before you even make a single cent. Business has become more profitable to the government than the actual business owners; those thriving are the big ones who can afford to play the lobbying game and engage in regulatory capture and offload most of the cost on the taxpayers while profiting overseas.

[lossolo]

> There needs to be UX requirements on the process from day one against which the end result is judged. (E.g. "a company should be able to register in x days", "a complete application should be no longer than y pages", "application costs should be less than z euros").

It was announced you will be able to create company fully online and will have it ready in max 48h.

[adamcharnock]

Agreed. The one bastion of sanity in all this is (/was) the UK. I formed my first company there, 18 years ago, online, in 30 minutes, for around £20.

I then moved to Portugal and started not one but two companies there. The whole process is so clearly setup to discourage people from actually forming companies. Everything from the attitude of all involved ("are you sure?!"), to the practical bureaucracy and costs involved.

I thought perhaps Portugal was just an outlier. But then I moved to Germany. And just wow. Definitely worse. Rounds of paperwork, notary offices, and fees. A process taking weeks. And for a GmbH a minimum investment of €25k. Sure you can form a UG. company for €1, but that effectively just announces "don't trust us, we're tiny" (IMHO).

It is something that really saddens and frustrates me with the EU.

Edit: And sure, you can form an Estonian company. But then you have to try and fly under the radar with regards to the 'permanent establishment' rules.

[notpushkin]

> And sure, you can form an Estonian company. But then you have to try and fly under the radar with regards to the 'permanent establishment' rules.

It depends on what you’re trying to achieve. If you want to do some tax optimization shenanigans, then yeah, don’t think it’ll work for you (if you’re in the EU, at least). But if you just want to set up a small to mid-sized company without dealing with German bureaucracy, I think Estonia is your best bet right now. I don’t think (IANAL) you would get into trouble for having a permanent establishment – you’ll just have to still deal with the DE tax office. But if EU-INC really can unify the processes for all countries, I’m all for it!

> The whole process is so clearly setup to discourage people from actually forming companies.

By the way, it’s really backwards in Estonia. I’ve seen zero sole proprietors when I was living there – everybody just opens an LLC.

[torginus]

Is this a true problem in EU (or indeed anywhere)? I don't think starting a company is the bottleneck, it's mostly the inordinate amount of regulations one has to comply with, as well as the strenuous laws around letting workers go, while making people work as contractors being also frowned upon.

I'm not sure how any one these is going to change.

[wolvoleo]

Those things are as designed. This is good. We don't want "at-will" employment like in the US. We want to have rights as employees. We want to have social welfare. We want our free healthcare.

It's not a bug it's a feature. We don't want an American-style society. Current developments should be enough reason to understand why (and the understanding that Trump's backers are part of a huge group of people on the low side of the wealth gap). If anything we have too much of that already hence the rise of extreme right here too. It's a result of the austerity movements after the 2007 crash.

But this new regulation doesn't invalidate employee rights no. It's just about registration and incorporation.

[xattt]

> a complete application should be no longer than y pages

The monkey’s finger curls. All contract text is now sized at 2 points.

[mytailorisrich]

There really is no reason for it to be longer, more expensive, and more complicated than what exists today in, say, the UK where you can do it all online for about £20 (or is it £50 now?) and complete in a matter of hours.

This is really down to individual countries' red tape and suspicion.

The risk element is also not at all attached to forming a company (hence why it can be so simple and quick), it is with funding and finance. So banks will want to see a business plan but the company registration office does not, or should not, care.

[te_chris]

Truly, this is one of the greatest losses of the UK leaving. For both parties. Advising EU startups on where to incorporate that isn’t London could be so much simpler.

[whateverboat]

What about Luxembourg?

[erispoe]

You don't need business plans and all that stuff. The problem in Germany for instance is that a GmbH needs 25k of capital + expensive notarization. These are the only two things that need improvement.

[rmoriz]

You can start an Unternehmergesellschaft (UG) within days with a template. However tax filing burdens will costs you around 2000€ baseline a year without having a single Euro of revenue let alone profit.

[anonzzzies]

In NL at least some of that changed; no more payment. It used to be 19k guilders and after about half in euros. Now nothing. The rest still the same.

[Jean-Philipe]

Came here to say the same. Founding a company in Germany is way to complicated and expensive... same for dismantling a company. I don't understand why you need a notary for everything.

[sschueller]

I agree on application costs to be less but I believe a company needs to bring some capital. In Switzerland you need to pony up 20k in startup capital for a GmbH or 100k for an AG (ignoring the 50k work around), it belongs to the company but guarantees some security for customers and vendors that you aren't just going to take their money and run.

In Switzerland you don't even need to collect VAT until you make at least 100k a year so I find requiring some capital ok.

[jaggirs]

You can pony up however much money you want and show customers the founding document that says the amount the company was started with. I believe it's usually publically available even.

Forcing certain minimum amounts is just arbitrary gatekeeping and prevents companies that don't need that 'trust' and don't have the money from being created.

[logicchains]

>My worry is that the end result will require notarized declarations of honour, financial plans stretching decades into the future, 30 page business plan documents, reams of corporate governance documents, and tons of other nonsense to protect against the perceived risk that someone who failed at starting a business once fails a second time.

That sounds like a really good use for AI.

[amunozo]

It is, it is what I used in my PhD for dealing with the Spanish bureaucracy and university.

[mminer237]

You mean to process it or to make up stuff to satisfy the regulators?

[regularfry]

"It is a mistake to optimise something that should not exist in the first place." - Elon Musk (apparently, although I would be astonished if Deming or Ohno hadn't said something similar)

[ThePowerOfFuet]

>That sounds like a really good use for AI.

No, it is not a really good use for a word prediction engine.

[truekonrads]

You can start a business in Estonia in 2-3 days and get e-residency there. Sample incorporation business (no affiliation): https://enty.io/en/incorporate-estonia

Go Estonia!

[dzonga]

UK has been the easiest place to form a LTD

but UK sucks with reporting requirements - now they even require IDs for directors

if EU-inc can have incorporation costs of less than 30£ - then no reporting requirements if say revenue is under 200k then yeah its a win and no other BS like notaries etc

[breakingcups]

What's bad about requiring IDs for directors? Surely you'd want to verify their identity?

[Gravityloss]

Yeah, since there's lots of countries and some are very dynamic and modern, maybe they could act as early adopters. But don't stop there: if it works for the early adopters, others could also apply their lessons. For example Estonia is often mentioned in electronic government etc.

[wicharek]

In my experience it is very easy and pretty cheap to start a LLC in Poland.

[ErikBjare]

Those requirements should include "estimated setup & recurring administrative costs for businesses of size x to comply should be lower than y" in some way.

[Daniel_sk]

Dissolving an LLC is a in ideal case a multi month process. It's often easier and cheaper to just keep the LLC as zombie instead of trying to dissolve it.

[trollbridge]

Didn't Estonia solve this problem?

[TacticalCoder]

> It's inordinately difficult and expensive to start an LLC or SA in some EU countries.

Totally.

One of the biggest and most horrific aspect of it is the KYC/AML. We regularly read articles explaining that drugs are so out of hand that several EU countries, like Belgium, are becoming narco-states: these are front page, major newspaper, stories. We also read articles explaining that cash bills from petty drug dealing are "necessary for the underground economy of the poor oppressed people".

Official numbers say 2% to 5% of the world's global GDP is tied to criminal activities.

So major drug trafficking is ongoing and that money is definitely being laundered.

Yet when regular people like myself want to open a company, the gates of the KYC/AML hell do open.

Bureaucrats and many people at various institutions like banks, notary, etc. do believe that the KYC/AML meant to catch actual criminals is actually a greenlight to go full stasi-mode on everyone.

Things go, literally, a bit like this:

stasi agent: "Source of funds: where do the 50 K EUR of capital come from?"

honest person: "I sold at 600 EUR shares of Meta I bought at 60 EUR in 2015 (making that up), here's a printed copy of both the buy order at the bank in 2015 and the copy of the sell order, at the same bank, 10 years later."

stasi agent: "Nice try! Where did the 5 K EUR you bought those Meta shares with in 2015 come from?".

The above is, literally, happening. It happened to me. It happened to people I know.

At one point I had no trace because I had to go so much back in time that the bank wouldn't give the proofs anymore: and it cost something insane like 25 EUR / month per account to get old infos. So for say four accounts we're talking 1 200 EUR per year to ask for old bank statements.

I'll remind everyone that a principle in many EU countries is that if there is no suspicion of fraud there's a delay after which the IRSes cannot legally go back. They have to prove that there's potential fraud to be able to go back more than, e.g., 7 years.

But the stasi-agents working in KYC/AML at banks, notary, etc.? They believe they have a mission to make regular's people life hell.

Oh and a good one: you think it's bad that legitimate citizens to denounce illegals? You wanna me to tell you about the phone numbers the governments put in place in many EU countries so that citizens can denounce other fellow citizens "because they believe they're frauding the IRS"? How's that one? Where's the outrage?

In my native country of Belgium I heard that at least one in every four solo-preneur ("independant") / entrepreneur has been the subject of at least one such denunciation.

Stasi.

Also totally counter-productive: when everybody is a suspect, nobody is.

I see on LinkedIn people whoring their profiles to would be employers by boasting about how many SARs denunciations they made (Suspicious Activity Reports).

Stasi agents.

And then don't get me started on people who are just bitter and sour because, in the EU, they may be net 3 K to 5 K EUR a month, and yet are authorized to KYC / AML on people owning Porsche and Ferrari, hundreds of thousands or millions of EUR worth of equities/investements, expensive real estate, etc.

These people cannot comprehend, in their own little minds, surrounded by people limited the same way they are, that there are people out there who are just legitimately more succesful than they'll ever be in life.

Their bitterness and jealousy turns them into little stati agents.

Bank menaced to not only not open my company's account but to close not just my account but also my wife's account. I had then to spend three weeks, full time, while my wife was on vacation (I sent her on vacation and stayed to produce the papers for the stasi), to produce a 49 pages (49 fucking pages) document full of proofs going back more than 10 years. Only to create a company and bring 50 K EUR in capital.

Just fuck this entire system.

You simply cannot hate bureaucracy enough.

> It's even difficult and expensive to _stop_ an LLC and dissolve it.

It's some countries it's near mission impossible. A friend of mine who had the equivalent of a LLC in Belgium who was then acquired by an US company spent 10 years to close the belgian entity. And it's much worse than that: while they refuse to do what's necessary to close it, many taxes are due and keep on coming each year. But of course those did manage to close a company or who know someone who closed a company are going to say: "I had no issue, so there's no issue".

All of this really does feel like a dystopian bureaucratic nightmare, in the style of the Brazil movie. It'd be nice if more movies were produced in that genre for it's badly needed to at least be able to vent off with some well-deserved satire.

[Tangurena2]

All this "know your customer" stuff is fallout from 911. We in the US went bonkers as a result of 911 and what used to be tinfoil hat conspiracy thinking ended up becoming national policy.

[direwolf20]

As a reminder, KYC/AML is imposed by the USA on every other country in order to access the USD banking system, and the USA uses any excuse to cut off entities it doesn't like.

[PurpleRamen]

> Huge amount of risk and cost on founders

Better than potentially putting risk and costs on other companies, the country and/or it's citizens.

> nonsense to protect against the perceived risk

It's not a perceived risk. No rule is made without cases.

[pjc50]

> No rule is made without cases

I can generally reverse engineer from the UK Companies Act what the cases were, but many EU countries have much more onerous requirements for what seems like no good reason? Perhaps the cases were too long in the past and things work differently now? What risks are we talking about, anyway?