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The authors inability to understand this really makes wonder how much of the rest of their story is essentially self-inflicted.
by Lariscus 3mo ago
The authors inability to understand this really makes wonder how much of the rest of their story is essentially self-inflicted.
- WarmWash 3mo agoThey are jealous of the US system where you can create an LLC in one hour for $200, and by the next day be doing business with all your personal assets isolated.
- corford 3mo agoUK's system is very similar too, as is Estonia's.
- _fat_santa 3mo agoThe US system is built to support entrepreneurship while the EU system broadly is to support the consumer and employee. The US will never be able to match the EU's consumer and employee protections and the EU will never be able to match the US's ease of doing business, because to have one you have to fundamentally give in on the other. 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.
- keiferski 3mo agoI think this is a false dichotomy. Consumer return policies, customer service, etc. tend to be much better in the US than in the EU. I would characterize it rather that the US is pro-business and pro-consumer, but somewhat anti-average worker.
- wbl 3mo agoExcept every two weeks when he gets a bigger paycheck than most senior UK government positions
- echoangle 3mo ago> Consumer return policies, customer service, etc. tend to be much better in the US than in the EU. Maybe the ones voluntarily offered by companies, but not the legal ones.
- keiferski 3mo agoNot sure if that matters much. Only the actual end result does. 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.)
- echoangle 3mo agoIt does because for one you can go to court. If a company stops playing nice because they think you’re defrauding them if you tell them your package went missing during transit, company niceness doesn’t get you anything. (That’s a random example btw, I don’t know how this is handled legally in the US. The point is that there are situations where you actually want the law on your side).
- keiferski 3mo agoSuing people and companies is a national pastime in America. I really don't think the EU has an advantage there...
- lazyasciiart 3mo agoYou don’t have to go to court even - there is usually a regulatory body that will enforce these for you. This is the whole reason why there is an image of America as sue-happy: they have chosen a regulatory system of “so sue them” instead of a functioning consumer protection system (or any authority with the ability to enforce the ADA, for example).
- 9dev 3mo agoIs that so? In Germany for example, you have a legal right to return anything you purchased via a remote means of communication - so e.g., the internet, or a phone call - free of charge, within two weeks, and it must be simple to do so; if a vendor tries to obfuscate how to cancel a purchase contract, you can simply write them an email.
- keiferski 3mo agoyeah most US companies have return policies of 30 days or more, no questions asked.
- pwinnski 3mo agoThe word "most" is doing a lot here. Europe guarantees consumer rights by law, while the US relies on companies adopting the practices voluntarily. Most do, but larger companies more universally than smaller, and it's by no means universal.
- keiferski 3mo agoIt's the reality for the vast majority of larger companies. Quibbling with word choice is really not a good argument.
- lompad 3mo agoTry canceling your NYT subscription.
- Saline9515 3mo agoThe same exists in the EU, French Le Monde (NYT local equivalent) required you for a long time to send a registered letter costing 7€ and a trip to the post office to cancel your subscription.
- r4indeer 3mo agoLet me support your argument by telling you what you just reminded me of... 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.
- sandcat_ 3mo agoThat’s not true. From mandatory refunds when selling online, to capped credit card fees, to longer warranties, the EU is clearly better for consumer rights. Some US businesses have realized that openly screwing your customers isn’t good business practice, but they’re somewhat of the exception I hear (and a lot of those companies offer the same policies, or better, in the EU, e.g. Costco) 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.
- keiferski 3mo agoIt seems to me that if there is some sort of law or regulation that can be passed, then that policy will be better in the EU. If the better service is a result of competition, then it will likely be better in the US. 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.
- lazyasciiart 3mo agoI have never received cash compensation for a delayed flight in the US, but I have in the EU. In my opinion, in the EU if the business screws up it’s their problem: in the US it is the customers, unless you shop somewhere large enough to voluntarily cover their mistakes. Which is, indeed, one reason that anybody can run a business with nothing in the US.
- throwaway-blaze 3mo agoAnd all of Apple's products are much more expensive in the EU. In Austria, a MacBook Air starts at EUR1199, and the same device starts at USD1099. At today's exchange rate, that European device costs USD1360, or nearly 20% more. 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).
- frugalmail 3mo agoThis is the result of the US embracing capitalism more than Germany. The market has set minimum expectations, but outliers with other benefits can have an opportunity to thrive until they have an opportunity to meet those minimum expectations. Although, this is rapidly changing. Places like California are putting in similar regulatory barriers and excessive minimum taxation.
- logifail 3mo ago> The US system is built to support entrepreneurship while the EU system broadly is to support the consumer and employee I disagree: the EU system broadly is there to support _the incumbants_ "Regulatory capture" is the less kind way to put it.
- organsnyder 3mo agoThe US system is biased this way, as well.
- watwut 3mo agoUS system seems to facilitate quick creation of monopolies and then keeps them in power long term. There is quick competition, winner takes it all and then it is it forever.
- hyhatqtv 3mo agoThere are plenty of similar “monopolies” in the EU they just value safely exploiting consumers more than rapid growth. 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
- watwut 3mo agoAmerican monopolies are not much regulated, they are entirely above the law. The legal system heavily biased toward rich corporations. I did not said europe does not have monopolies. I said America has "winner takes all" economy that systematically creates monopolies everywhere you look. It does not create competition, it creates what you call "incumbent". Americans look down on markets where middle sized companies constanty fight for customers. Great company is the one that has say in goverment, cornered market and trying to make it comply to law is seen as attack.
- hyhatqtv 3mo ago> American monopolies are not much regulated, they are entirely above the law Yeah exactly and they are only barely more regulated in the EU. Apple, Google, Microslop and FB almost completely control their respective markets in the EU to a comparable degree they do in the US. Its still winner takes all. EU might fine them occasionally but that’s just the cost of doing business with hardly any consequences (remember the third part iOS app stores in the EU? I barely do…) Outside of tech there are plenty of homegrown conglomerates and oligopolies in the EU, I don’t see how is there meanimgfully more competition outside of low value added sectors where small/medium companies are fighting for scraps. > Great company is the one that has say in goverment Yeah, exactly the same as in Europe (and unlike in the US there are hardly many alternatives besides going that route if you want to grow signficantly). > trying to make it comply to law is seen as attack. That might be a differentiator, of course companies generally find it less objectionable to comply with laws they had a significant say in writing like in much of Europe.
- petesergeant 3mo ago> the EU system 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.
- bloppe 3mo agoIn a healthy market economy, entrepreneurs are meant to support the consumer, and they do so partly by competing with one another for talent, which requires supporting the employee. We could argue ad nauseam about the health of the US's market economy, but ultimately is has resulted in unignorably higher wages than in Europe, even at the lower end of the economic ladder. 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.
- throwaway-blaze 3mo agoI would posit that many EU citizens are still living with the idea of their historic economic outperformance even though it has not been true for many years.
- glad_duck 3mo agoIt depends on the means of production (Marx had the point). One thing is if you want to open a factory, then those regulations and limitations may protect the market, consumers and reduce fraud. If you want to start a software company and sell a smartphone app, that's a very different story. I assume Germany is still in 19th century in this regard, favoring big businesses who don't mind to wait 152 days or more and pay 10K. Modern economy, or at least a big part of it, is more about agility though, for good or for bad.
- danmaz74 3mo agoEven when the UK was in the EU, you could create a limited liability company (LTD) for something like 200 pounds or less, no capital needed. So it's not true at all that setting up a business at a low cost is somehow against EU legislation.
- blks 3mo ago25k requirement doesn’t protect anyone, just prevents regular contractors from easily registering limited liability company.
- hyhatqtv 3mo ago> the EU system 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.
- bildung 3mo agoThere are not quite as easy, but still ways easier types to choose from in Germany, OP just decided to go for one of the very complex ones.
- petesergeant 3mo agoNot if you want both limited liability and the ability to take your hard won profits out of the company
- doikor 3mo agoA lot of places in Europe are around the same. In Finland forming a non listed stock company is 240€ in fees without any requirement for capital/assets. I think Estonia is even cheaper.
- notpushkin 3mo agoState fee is 265 € now in Estonia. But the tax system is cool [1] and admin is a breeze (if your passport colour is right and you can get e-residency – not a problem for any EU/EEA citizen, obviously). [1]: https://news.ycombinator.com/item?id=48660856 https://news.ycombinator.com/item?id=48660856
- ruicraveiro 3mo agoHere in Portugal the legal requirement is 1€ for an LLC (lda) and it took me a few hundred euros in fees only, all in morning to take care of everything.
- buzer 3mo agoWorth noting is that there was 2500 € capital requirement until 1st of July 2019 and it was reduced to 0 €. Public limited liability company (Oyj) still has 80 000€ capital requirement.
- hdgvhicv 3mo agoSame in the uk, well it’s “same day” costing about $200. The normal approach is 24 hours and costs about $130
- sarchertech 3mo agoSingle member LLCs provide much less protection than most people imagine. 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.
- glad_duck 3mo agoWhoa, not that fast. It will take a few days at least, depending on your state. Surely not 152 though.
- selfmodruntime 3mo agoIt's easier in any EU country. Not in Germany though. The EU is coming up with special EU LLCs thankfully.
- earcar 3mo agoI have founded a UG and upgraded to a GmbH before. It had got us "more credibility" with our clients, and 12,500EUR less in each other's bank accounts. Thanks for your insults.
- wi5eif6E 3mo agoI get that this gives you less liquidity personally, but (a) you're only required to pay in half, i.e., 6,250 EUR each, and (b) this money isn't gone, and you don't lose the ability to recover it should you decide to liquidate the company later. As others have pointed out, you can use that money to pay costs associated with the founding (e.g., the notary) and also expenses required to maintain the company (IHK dues, bookkeeping, etc.).
- gchamonlive 3mo agoHN commenters are acid, but from one author to another don't let them get to you because they'll shun you for losing your temper even if it's totally justified.
- freehorse 3mo ago> I have founded a UG and upgraded to a GmbH before. So why not to the same here, instead of going with this more complicated setup?
- lazyasciiart 3mo agoBecause they want the credibility with clients, but for free.
- Saline9515 3mo agoHow do entrepreneurs achieve to be considered as credible in other countries? By repeatedly providing value, not by having a high share capital. Anyway, in case of a problem the 25k€ will be eaten by lawyer fees.
- notpushkin 3mo agoDon’t let the insults get to you. 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 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.
- rapatel0 3mo agoIn america, we have liability insurance. Is this not a thing in germany?
- mindjiver 3mo agoIt is, I guess it's depending what you wish to achieve. I'm a independent software consultant based in Germany (no employees etc, also not selling any SaaS or anything) and I've got a liability insurance to cover any mess ups.
- selfmodruntime 3mo agoIt is, but you won't get it if you're not a GmbH (a limited company). They are more often for company directors to avoid excess personal damage.
- ecshafer 3mo agoThe author can surely understand it. And this system is what is keeping Germany and many European countries from propelling their economies forward by reducing market dynamism. Its not a coincidence that China, US and many other countries, which have more dynamic markets and large GDP growth let you set up a company in a day.
- jeroenhd 3mo agoRegistering a private limited liability company in the Netherlands costs around 400 euros. If you can file all of the taxes and other legally required paperwork yourself, you can be set up in a week or two. You will be a salaried employee of your own company, though, with a minimal salary you will need to rake in. 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.
- markvdb 3mo ago> If you can file all of the taxes and other legally required paperwork yourself, you can be set up in a week or two. 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.