Incorporating a limited company in Germany
Germany is one of the worst options in Europe to incorporate, except you reside in Germany.<p>My top 10 list of why not to incorporate in Germany:<p>1. Yearly accountant costs of a limited (UG&#x2F;GmbH) is around €2,000; you need this accountant, he is kind of an API to the German tax system which is super complicated and even native Germans wouldn&#x27;t be able to handle its requirements or to file in all the paperwork themselves; AND it&#x27;s not so easy to find good accountants&#x2F;tax consultants, once you found one you are locked-in and they happily charge you for every extra things; the pricing is regulated but still they find ways to get all your money<p>2. &#x27;Protection money&#x27;, you have to pay to IHK which should help business owners (but they nothing) and to ARD&#x2F;ZDF which are Germany&#x27;s public TV stations; the costs depend on your headcount and are not that high but once ARD&#x2F;ZDF have your name they never ever again let you out, so it&#x27;s impossible to cancel this &#x27;subscription&#x27; and you might pay additional fees for you &#x27;personal self&#x27;; it&#x27;s a mafia which creates additional mental clutter and mail<p>1. + 2. Just the operating costs of a limited which doesn&#x27;t make any money is €2,500 to €3,000<p>3. Germany has probably the most friendly labor law; at the end of the day employees have in Germany super powers; e.g. if you have more the ten headcount it&#x27;s impossible to lay off people (there are many, many more, I could give you 20 more examples); 30% of your time is spend on how to work around German labor law with German lawyers at €300&#x2F;h<p>4. They try to get everybody to pay into their social system, once you are under 49% shares you must join them leaving most of your personal salary to the state; the only benefits is an ok health system and an ok unemployement insurance<p>4.a) Having freelancers is risky because the state always suspect you to circumvent their social system; one mistake and the freelancer can blackmail you<p>5. Super strong consumer protection but which is applicable to all European countries; consumers get it all (money-back guarantee, ...)<p>6. Setup of the limited is unnecessary slow and bureaucratic, takes 6 to 8 weeks and all the momentum out of the founding team<p>7. You need at least €12,500 share captial for the GmbH, forget about the UG, doesn&#x27;t have any reputation and to migrate to a GmbH later is a PITA<p>8. Taxes are cluttered, you have VAT, corporate tax and &#x27;Gewerbesteuer&#x27;<p>9. German labor is ok but not as good as e.g. US labor; non-tech labor is in general too expensive and education is limited, especially English skills are not on par with other Northern European countries, still better than southern European countries; tech labor is good but expensive compared to rest of Europe, but cheap again compared to the US; still it&#x27;s very hard to find affordable native German devs so people look for foreign tech talent which are good and easy to attract in bigger cities (Berlin)<p>10. Political situation is ok and stable compared to US and UK but could tip with elections in summer, right wing is strong but not as strong as in other countries<p>Some more:<p>11. Shutting down your limited takes one year<p>12. Insolvency is covered in its own law and is super complicated, don&#x27;t apply to early, don&#x27;t apply to late<p>13. In general all German laws are very cryptic written and even for native German hard to understand without experts; even simple tax stuff is hard to grok and other countries have much more accessible laws (just look at gov.uk as an example); calling your tax guy helps here and there but costs money; researching stuff yourself takes days<p>14. You have to save documents and even mail which led to business for 10 (!!!) years; after few years you need to rent a space just for all the folders<p>Who knows about better options in Europe? Happy to hear alternatives, also from a relocation perspective, so which country is founder-friendly AND nice to live?