Those do exist in other countries. An LLC in the USA does not generally need to have a certain amount of assets. Such a company is more or less without liability until it has some assets; the worst case for its owners when it comes to a routine business debt is shutting down the company. Exceptions are possible in case of serious misconduct of course.
Of course a company like that will find it difficult to borrow money, but it's not rare for its last bills to go unpaid when it goes out of business.
Whether those should exist or not doesn't have a clear answer. Culturally, Germans tend to be pretty uncomfortable with "sometimes shit happens and debts go unpaid", while Americans tend to find a moderate rate of that sort of thing tolerable, especially if it makes starting a new business viable for a greater fraction of the population.
Which is exactly how it should be handled, IMO: Deal with the abuse situations directly.
Forcing new companies to capitalize with an arbitrary amount of money at time of founding penalizes small players who want to start a company. It's also not a hurdle at all for large players who want to commit large frauds.
That's a barrier to entry; and who likes to perpetrate those? Why big, established companies who lobby the government.
A construction company that pockets ten million dollars and doesn't build anything probably can't shield its owner this way, but a single-developer software consultancy that pockets ten thousand dollars and delivers buggy code can.
"Computers are hard, yo!". It devalues the profession.
And I thought no liability was bad enough... But no. Now its LLMs and " for entertainment purposes only". I take it management and leadership also read that, and don't give one fuck.
The problem is building software to those standards of reliability is expensive and slow. Consumer software never justifies it. Business software rarely does. If you want me to accept liability for the consequences of bugs in code I write, I'm giving you a schedule five times as long and a price twenty times as high.
Is this a joke? There's a major outage effecting flights at least yearly. The Delta one is from May...
[1] https://en.wikipedia.org/wiki/2022_Southwest_Airlines_schedu... [2] https://www.usatoday.com/story/travel/airline-news/2026/05/0...
They should have said aircraft manufacturers, not airlines, but it’s clear what they meant.
It's called phoenixing. There are good few bans for it every year, but almost no convictions for fraud.
If you mean why not register in your state, then Delaware has some tax benefits I believe. Not sure they will apply in MA though, maybe somewhere else?
American LLC taxation is as simple as or even simpler than Anlage EÜR. And you don't need a tax advisor to do it.
You may consider a capital stock of "at least 1€" even significantly less than 25k€. Not sure you are arguing in good faith.
What’s wild is that this is pre-debt. The banks will have their own risk math for you so it’ll be a completely separate set of hoops before you get to be in debt as a company. Most will not even talk to you if you have 0€ in the business account. I don’t feel like a company with no assets or income can do that much damage to their societies.
Also as a small company in the EU I have to have liability insurance for the company for any major clients so the insurance company also will make you jump through further hoops.
Keep in mind that those companies will almost always own some debit to their employees when they blow up.
IMO, $25k is a ridiculous amount of capital to require from a company before they can operate. But capital requirements are good, and they should be proportional to employment, not company existence.
I don't get the "seriousness" memes in Germany, which sound more about gatekeeping than anything else. Why not require 1M€? This is serious! More serious! Meanwhile, they have companies likes Wirecard that went under in a day after it discovered a "hole" of 2 billion (magic!).
Why not just allow people to create a Gmbh with 2k€, and then publicise the amount of share capital so clients can make their mind? It's how it's done in France for instance, allows some flexibility (I know, a swear word in Germany), and sounds less like a social punition (something Germans love).
The hack anyway is to create an Estonian e-company, with almost no maintenance/creation costs. Germans are the largest funder demographic for this reason.
I would suggest that this idea of a GmbH does not actually work the way you think it does. Maybe it once did, but not any more. For instance:
Wirecard Technologies GmbH
Wirecard Sales International Holding GmbH
Wirecard Acquiring & Issuing GmbH
Wirecard Acceptance Technologies GmbH
Spoiler: the bad guys don't care about the rules!
The 25k are intended to ensure liability coverage for very small and young companies, not giant corporate networks with billions in backing (well, theoretically anyway... hah)
Running a business in Germany is for a closed inner circle. The apparatus is not meant for broke college students turning their weekend project into a company.
Now wherever that's an issue with the 25k admission fee OR with the fact that wages have stagnated for about 25 years in Germany, consequently mostly wiping out the middle class ... That's debatable.
German median household wealth is 4x that.
This estimate includes things like a car, a partially paid off house and other assets.
Most of that wealth cannot easily be converted to cash which you'd need to start a company.
Also that's median. Germany is a country with a median age of 45. So yeah, someone who likely worked for 20+ years will likely have saved around 100k, I don't think you realize how that's an argument in favor of what I just stated...
Depends on your product and expectations of your customers.
B2C: I don't care what company structure you are.
Depending on who you ask, one system is wildly better than the other, but at the end of they day they are just different systems with different tradeoffs.
I disagree: the EU system broadly is there to support _the incumbants_
"Regulatory capture" is the less kind way to put it.
Regardless US tech monopolies are almost as dominant in the EU as in they are in the US”. At least local companies wouldn’t syphon money to a different continent and could be regulated
This probably also has a lot to do with it's much tighter market integration than the EU, although they seem to be finally addressing that issue with the 28th regime.
A popular theory of Europe's historic economic outperformance relative to the rest of the world, leading up to the industrial revolution, relies on competitive market theory: constant warfare spurring innovation, as well as relatively free movement of the best and brightest to seek greener pastures elsewhere on the continent. These days, the most ambitious Europeans tend to move to America to raise money and find talent, and it seems many EU countries are finally waking up to the fact that they need to do better to support entrepreneurship.
I would characterize it rather that the US is pro-business and pro-consumer, but somewhat anti-average worker.
Apple is another good example. Their base warranty is two years in the EU versus one year in the US, and there’s additional protection on top in many EU countries that extends it to the expected life of the product, in some cases as long as 5-6 years.
And again, all of these are backed up by the law, not just a policy that the company can revoke or decide not to enforce.
In general though, culturally, the US is much more "the customer is always right", whereas in the EU, it's considered a hassle to cater to customers that much. This mentality translates across the economy as a whole.
At least that's in my experience of being American and living in the EU for the last 10 years.
We can argue about the consumer friendliness of the regulations in the EU but they also add demonstrably to the cost of tech products (and likely other categories).
So if you bother comparing apples to apples that MacBook starts at around $1,145 in Germany… if you actually want that 1 extra year of warranty and get Apple Care in the US it actually becomes cheaper in Europe
Nope, they don't. You'd have to compare with some countries that are 1. Not the US 2. Have less consumer protections than the EU. And guess what? Apple products are also significantly more expensive than the US there. But hey, half your comments on here are this kind of EU bashing based on grade school reasoning.
It's surprising to see on HN of all places people unaware that Apple products (and almost all other tech products) have been a lot cheaper in the US than elsewhere for decades.
So much FUD here, same for the Bunny thread. It doesn't feel organic anymore.
It's not word choice, you are just making the wrong argument.
I was briefly subscribed to the NYT from Germany. To my surprise, I couldn't cancel online, but had to call. (The EU has a law which requires that if you can subscribe online, you must be able to cancel online.)
They have national numbers for many countries, but they're just forwarders to the same call center, with notably mangled audio quality presumably due to multiple lossy compression algorithms applied at each hop of the call.
Additionally, there was lots of background noise when I got connected to a rep. Over this barely usable line, I was now asked to spell out my email address, which naturally took multiple attempts of painfully slow spelling before the rep was able to locate my account. (My very limited knowledge of the NATO alphabet didn't help.)
Of course, I then had to go through the spiel of declining alternative offers and providing a reason for my cancellation (all of which I never had to do in Germany before) before they finally confirmed it. Yeah, I'm glad about consumer protection law in the EU.
There's a lot of overlap between protecting consumers and enabling scammers.
The customer almost always wins those. And the merchant always has to pay a fee for the chargeback, even when they win, so they're incentivized to avoid them.
The merchant agreement isn't as effective as a well enforced law, but it's pretty close.
I would be fine with waiving my right to returns but this is not possible on purpose, so my only options are to shop somewhere else (often not possible) or found a company (not possible because it would be Liebhaberei - "Running a company without intent to make profits").
Maybe the ones voluntarily offered by companies, but not the legal ones.
The better policies given by US companies is also likely driven by competition, so by definition they wouldn't be something that a government regulation could accomplish (other than to incentivize more competition.)
Although, this is rapidly changing. Places like California are putting in similar regulatory barriers and excessive minimum taxation.
Well in this specific case there is no such thing. Laws and regulations vary wildly and there are countries in the EU where you can register a company almost immediately at low cost.
The issue in question is a Germanic system, not an EU one. Outside of Germany, Austria, Luxembourg, most EU countries are far more sensible with capitalization requirements.
In Finland forming a non listed stock company is 240€ in fees without any requirement for capital/assets.
I think Estonia is even cheaper.
Public limited liability company (Oyj) still has 80 000€ capital requirement.
1. Any debt the business needs will require your personal guarantee. Even something as simple as getting a business cellphone.
2. They don’t protect you from liability for your own negligence. If you’re a very small company with no employees, almost everything someone would sue you for (for which you aren’t already personal guarantor) will arguably be down to personal negligence on your part.
It’s different if you have employees or other members because an LLC protects your personal assets against liability caused by their negligence.
But I constantly hear the advice that people operating as freelance devs should start an LLC as the very first thing they do and that’s silly in most cases.
What most people who start a single member LLC are really looking for is liability insurance.
It had got us "more credibility" with our clients, and 12,500EUR less in each other's bank accounts.
Thanks for your insults.
But yeah, obviously, the more capital you pay in, the more “credible” your company looks. The whole concept of limited liability means that if your company capital is X €, the creditors can only get the X € (unless you do something stupid, see https://en.wikipedia.org/wiki/Piercing_the_corporate_veil).
The fact that the minimum capital amount is so high in Germany is bonkers to me.
The intended path for the upgrade from UG to GmbH is that once the UG makes a profit, this should be used to save up the 25k€ and convert to a GmbH once it's reached.
So why not to the same here, instead of going with this more complicated setup?
The combination of "no personal risk whatsoever, minimal funds/risk coverage, maximal profit extraction" doesn't lend itself well to places with basic regulations.
Capital investments in Europe are definitely not as easy to obtain as in the US for various economic, cultural, and historic reasons, which all led to some pretty weird laws here and there, but the extra week it takes to set up a business isn't the cause.
The reason this all took so long and was so expensive is simple. As the author states:
> I wanted real limited liability
They wanted two different companies with different setups to get out of having to save up the funds or find investors while also paying the least amount of tax possible. They set up a two-company system with all the risk in one and all the earnings in the other. It's like one of those tax dodging schemes the multinationals like, except within a single country. That comes with overhead.
Funnily enough, they then end with:
> Which leaves the only real question. Why 25,000 at all? It is my company and my risk.
Weird to think it would be their own risk if they spend so much time, money, and effort setting up a system that explicitly removes all the risk from them.
All of this feels like it was based on a business plan generated by some over-eager AI that tried to optimize to tick as many boxes as possible, ignoring the real-world consequences of those choices.
Is realistic in the Netherlands to try and fulfill all formal paperwork requirements?
In my native Belgian city, outsourcing that be from ~3k€ excluding VAT/year for the very simplest CIT liable structure. That's excluding 409.3€ corporate social security contribution and 148€ provincial tax. That makes for about 300€ ex. VAT before you can start to earn anything at all. Unless you can fulfill all accounting yourself.
If you want to start a business and you don't need to pay for an office or whatever (because you can actually use those 25k for something), you can literally start over night. If you need a proper company that limits your liability, you can literally start in 2 weeks.
[1] https://service.wirtschaft.nrw/unternehmensgruendung/gewerbe...
The 25.000€ hasn't been raised since the early 1980s. (50.000 DM back then) So to have the same liability today, you would have to put down 65.000€.
So it has gotten increasingly cheaper to start a GmbH in Germany.
Not sure about Germany, but e.g. in Estonia it’s essentially public info (albeit unaudited, usually), as part of the annual report. The company has to maintain at least the declared capital amount in their bank accounts (or other assets), but the amount can be pretty much any number, so the business owner can decide what sum makes sense in their case.
25k € is way too much for most small businesses, yeah.
(IANAL)
The €25k are not a liability insurance or anything like that. It's a starting capital to make sure that the company can honor its bills. Liability is covered via separate insurances.
You are now limited in liability for what the company does, to no more than the capital you put into it.
You then have to supply yearly accounts, may have to register for corporation tax, VAT, register as an employer for paying national insurance, you'll probably need business insurance, etc.
- https://assets.publishing.service.gov.uk/media/5a7da236e5274...
- https://www.gov.uk/guidance/model-articles-of-association-fo...
Edit: And these days you don't even need two people - used to be that you needed two directors or director and company secretary.
You can also declare that you’ve paid the capital in, without any proof required for small amounts (up to 50k € IIRC). If you lie about it, I suppose you’ll be personally liable for everything, so definitely not worth risking it. Just put in like 500 €, set it aside on the business account, and don’t touch it.
(IANAL)
You could put in 2500 € in capital – then your personal exposure will be zero. In practice, I don’t think it’s a meaningful difference, you will just have to keep the whole 2500 € on the company balance by the end of each FY. (Unless you wanna deal with non-monetary contributions!)
If you put in 500 €, you’re liable for 2000 € personally, but you don’t have to keep them for your annual report. (It also means your company looks a bit riskier, since you might not have the 2000 € personally, so you might have trouble getting credit or whatever, but otherwise I don’t think it’s a big deal.)
---
Edit: to the author: you should really look into Estonia (or any other sane jurisdiction mentioned elsewhere in the thread). You can still set up a KG (or a sole proprietorship), then put an Estonian OÜ in front of it. Costs something like 300 €, can be done online (you’ll probably need an e-residency card, an Estonian e-signature thing for foreigners, which is another ~150 €). Annual reports are fairly easy if you keep your books properly. And you’ll need an address in Estonea which is also like 125 €/yr. No additional taxes most likely (but check with a real accountant).
Why would I otherwise pay 66% in taxes in Belgium when I could just set up an Estonian ltd, get limited liability and pay 0 until I take anything out?
Edit: I'm not a lawyer either!
And reading the article, he does found a UG! This isn’t even about GmbH!
Also: I've always used a ZZP structure (one man company - Dutch version) for mine, not a BV (LLC), because there's a thing called Professional Liability Insurance. But maybe it's different in Germany? I can't imagine that doesn't exist there though.
I'd guess that the German economy may actually suffer more from dissuading young people to start LLCs.
Is this actually true?
Can't the company just loan out the 25k immediately?
What's the good reason? In the UK I can started a Ltd with £1 of share capital, about £100 of fees, and filling out a form online. I will be shielded from personal liability if it goes tits up unless I've broken the law, knowingly traded insolvent, or otherwise been an idiot.
The wider thread appears to be Germans commenting that it's unthinkable that such a thing could exist, and thus it's all the author's fault.
That's what Germany calls an "UG". Which is what OP actually ends up doing.
If you're a startup, you won't be making a profit anyway.
Once you make a profit, 25k€ on the books (not necessarily cash) isn't a lot, especially as it doesn't have to remain in the company, you can use it to pay wages once converted to a GmbH.
In the end, this is a question about whether you need something to be exactly the same for some ideological reason, or whether it's enough that two things are practically the same for all intents and purposes.
And while in this case the German system requires a codified workarounds, in many other cases the US/UK/Commonwealth systems use significantly more complicated workarounds than the German system.
Apparently the author -- and every none-German in this thread -- thinks so.
If you just want to start a business, without any associated shell companies or liability transfers, it costs $0 and requires filing one sheet of paper. It is very easy!
https://www.formulare-bfinv.de/ffw/form/display.do?%24contex...
nevertheless it is very easy to start a business, and this man is complaining about an entirely separate problem (it is difficult to create and incorporate two shell companies)