alt Hacker NewsFounding a company in Germany: €9600, 152 days and I still can't send an invoice
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The mantra has always been to only create the company after sending the first invoice.
Edit: oh it's setup like this to cheat on taxes.
As others commented already - the author does not seem to understand principal idea behind running a business - a company is not something "yours", because you can just simply sell your shares or be moved out from the company by other partners.
Company is a state's legal entity given to designated people to manage (the forming person/partners) and profit from doing it successfully. If those people fail they have to follow strict rules (liquidation) or they will be sued personally for misconduct. That entity gives much more possibilities because it is limited liability - part of which is held by the state, and part by the running founders.
If you want something yours, you go with the sole proprietorship.
honest question, what sane person outside Europe start a business/company in Europe? what possible benefit is there ?
This guy gets it completely wrong. You are allowed to use the 25k, but only for business expense. Not as salary to yourself.
I've setup my own company in Poland in 2015, by submitting a web form, 30 minutes later I could issue a fully VAT compliant invoice. This was not an incorporation however - that was a sole proprietorship, but I could still hire people full time, issue invoices etc.
it seems absurd that they would reject a plain and simple name? i imagined company names would be available on first come, first serve basis. why is that not the case?
the real problems with administration dome starts after founding in many but not all European countries.
There is light at the end of the tunnel as an EU Inc. is proposed.
However the bureaucrats in probable but all countries will try to water it down to pointless to keep or extend their responsibility territory and duties.
Wait until you want to convert the UG to a GmbH and realize that it's not simple or cheap at all.
It's not enough to have had properly filed tax returns every year, have a large enough profit-collection-line item in your books (25k EUR+) and then fill out a form.
No, if you want to use the profit your UG was required to accrue to raise your capital stock to 25k and rename it to a GmbH you need to get your annual accounts audited.
Or alternatively, you can pay in the difference between your current capital stock (e.g. 2k) and the 25k minimum for the UG and then rename the company and "just" have to pay for the notary, publishing to public records, court, ...
Can confirm, starting and running a business in Germany is miserable.
The processes are all non-digital, and have many steps like Notaries for example.
Outside of some kleptocracies, Germany has long had a reputation as the hardest place to found a firm.
Start a limited liability company in Latvia or Estonia. It will take you 1 business day, you can do it remotely, and, because of EU laws, you can do business everywhere in EU. Basically nothing you can do with Gmbh that you cannot do with Latvian or Estonian equivalent
(2026)
1.) Yes, it took 3 months to switch the company hq + IRS + Notar etc.
2.) But it really does depend a lot on the city, state etc.
3.) UG is 500 EUR - changing to GmbH is then also quite cheap
Do you really need for the legal process to be completed before invoicing?
In France you can do it as soon as you started the process.
Is it as tortuous to open a self-trader account with VAT ID, or is it just to found a company (the German equivalent of an ltd)?
Just a little taste of the European bureaucracy.
The whole reality is much worse.
Europe will suffocate under the weight of its own bureaucracy. The sad thing is that it is not new to me, I've heard so many stories like this one. This is the kind of friction that makes founders incorporate elsewhere.
Also, a founder spending months coordinating lawyers banks and tax advisors is not talking to customers or building the product. The opportunity cost here is huge.
Anyway, you are pretty close. One more push, don’t give up. :)
[ outside of Germany ]
As much as I would like to agree with you about how non-digitized and rotten and crooked the whole notary etc system is - as someone who has incorporated and invested in dozens of German companies (UGs, GmbHs, and GmbH & Co. KGs), I’d seriously reconsider the UG & Co. KG structure for a one-person software business.
The tax explanation in the post is oversimplified.
Examples: With a KG, if the business earns €100k, that profit is attributed directly to you and taxed as personal income, whether you distribute it or not. At higher income levels, that’s roughly 45% including solidarity surcharge (and potentially church tax).
With a UG or GmbH, the company pays Körperschaftssteuer plus Gewerbesteuer, typically around 30% combined (depending on where its incorporated). On €100k profit, about €70k remains inside the company. If you later distribute it, you’ll pay capital gains tax based on the Halbeinkünfteverfahren on the distribution - which is 25% + Soli, bringing the total tax burden to roughly the same level as the KG.
The key difference is that with a UG/GmbH you can leave profits inside the company. That money can be reinvested into the business, other startups, ETFs, stocks, etc. - most often with only 1,5% effective tax while the money is working for you. You defer the second layer of taxation until you actually take the money out.
Also, you can pay yourself a salary. Whatever portion you pay out as salary is taxed personally just as it would be in the KG structure - but this time its company expenses, so no double taxation here either.
A few other points:
* A GmbH no longer requires €25k - its only 12,5k€ - and its also not to be locked away forever. The money can be used for legitimate business expenses immediately after incorporation.
* A decent tax advisor can usually get a VAT ID much faster than described in the article.
* A UG is widely accepted in the startup ecosystem. I’ve never seen customers reject an otherwise attractive startup because it started life as a UG. For investors, it's routine.
* Converting a UG into a GmbH later is routine, if you want to start small. If you have the 12,5k€ money, do a GmbH to save administrative hassle.
* A UG & Co. KG creates significantly more administration: two entities, two annual accounts, additional bookkeeping, additional filings, and additional advisor costs.
Of course there are valid reasons to use a GmbH & Co. KG, especially for complicated co-investment arrangements, but from what you wrote, that's not the case here. Therefore, for a solo software founder, I’d question whether the additional complexity buys you anything meaningful.
Bonus tip: You MIGHT want to consider owning your share in the Software UG not directly but through another UG, paolino UG or so. When you foresee to sell your business for significant money later, then you'll have exactly the same advantage, the money can stay in the company for reinvestment and you don't have to give up 50% of your capital gains in the moment you sign the sellers agreement. You CAN't do this easily later.
Not legal or tax advice. Just my personal experience.
When these threads show up it is always funny that Germans are shocked anyone expects anything else and everyone is shocked at Germany.
Luckily with how the current German economy is doing this is a problem that will solve itself. It's like the last half a dozen German governments look at the Morgenthau Plan plan and thought it was an amazing idea they must implement.
Yeah very relatable unfortunately!
Well, create a company in Ireland. 5 days, €300 and you can send your invoices.
Fascinating, and useful for those of us considering starting up in DE.
Created an LLP, We spend around 30k INR, that is roughly 300USD.
Germany is slow. The simplest possible purchase of an appartment, without any hurdles took me almost half a year.
Germany is a nightmare of red tape.
It all makes sense when you understand that this is deliberate, to crush the economy and innovation.
You're lucky. After that you will have to run it!
Come to Poland. You can get this done in less than a week
Similar story in the UK\u2014registered a company online in about 24 hours and had a business bank account within the week. The gap between the best and worst EU jurisdictions for this is staggering.
I founded my Estonian company within 3 days, that includes when the court rejected the name because a similar name already existed. Everything was online.
I just started an LLC in Oregon and I did it in the evening and got a confirmation by the next morning and an ein next afternoon
I was waiting for 3 months for my VAT ID to arrive. Then I just called my finanzamt and told them why I have no vat ID. I think they just forgot, finanzamt said over the phone that "they opened a ticket" and 2 weeks later exactly as promised in the beginning it was in my post.
Try firma.de
There's so many things that are plain wrong in the European ancient and bureaucratic commercial and corporate law.
It's insane that giving stock options (core to attract talent) or raising capital for equity is so difficult across Europe.
And don't get me started on how difficult it is to fire people that just don't work and only pretend to, spreading doing jackshit across the company.
Europe has the talent and even the capital, but the incentives are just not here, neither to attract talent nor serious investments.
The continent is old and politicians keep trying to band aid the system, consistently claim regional-national policies over common European rules, they will claim Europe makes it difficult to do business, just to reinvent their own commercial, import/export rules, tax rules non stop.
I don't want to say it's a disaster, but we really need some party that looks at commercial, trade and corporate law across Europe.
European 28th regime can't come quick enough.
I have heard it is also more difficult to get married in Germany.
god bless america. cost me like $90 for a llc. all online.
this sounds like a total nightmare. those germans need to wise up
now try closing your company for less than several thousand. lol.
you should consider UK company, enormously better. or sweden. continental EU is mostly backwards.
The saddest thing is that bureaucracy will stay, grow and flourish until the point of breakdown, when the system is not able to pay bureaucrats their salaries.
Or maybe even until they can't physically get to work (read with accent: "that I need to do even if I don't get paid")
Wait until you find out about electronic invoicing mandates rolling across Europe.
Yeah, for many clerks the purpose of their lives is only to improve and enhance bureaucracy, and make the applicant's life miserable.
just hop the border and set up a learing center.
The EU is a single market, just form an entity in the quickest and easiest state to form it, open a bank account, payment processor and you’re off to the races, as long as you can accept Euros directly people are fine?
Who are these people that care
“Oh you don’t have a GmBH, oh your share capital is so low ohhh ho ho ho ho”
"Standard" German people have an deeply ingrained, culturally inflicted belief that administration is inherently a good thing, and that the more of it there is of it, the better the system functions.
Worse, when you try to gently and constructively engage them on the topic, their mind is so deeply dyed with the idea, that they either simply don't understand what you're talking about or when they do, refuse to engage because they find you so weird, it's a waste of time to discuss with you.
"Was nicht dokumentiert ist, ist nicht passiert". Yeah, right, except that "Alles erstickt im Papierkram" and nothing ever fucking happens.
The only way to start a company in Germany is Societas Europaea and have lawyer parents. Otherwise don't bother.
I wonder what's the reason. Poland used to have horrible bureaucracy. You could argue this was due to lack of funds, or communist baggage. Yet, over the last decade digital administration has become a norm, rather than exception.
Germany doesn't have such excuses, yet there it is.
Honestly why go through all these hoops? Is the Wyoming LLC + Wise account route shut off for most Europeans?
So question is, why are you starting company in Germany, this is EU, start in better country.
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You can just buy a ready made GmbH.
This costs about 28k€, 25k€ are deposited in the company.
That is called Vorratsgmbh and takes very little time.