Ask HN: Best EU country to incorporate a startup?
I was wondering what EU (or non-EU but an EU citizen can legally use) country offers the easiest way to start and manage an online company is.
I know that Estonia with their e-residency program has reportedly made it very easy to do that, has anyone had experience with it?
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[ 4.6 ms ] story [ 46.3 ms ] threadComparing costs of living, salary levels, life-quality data including stuff like business freedom, corruption, startup scene etc.
There is a specific tool https://teleport.org/runway that let's you compare costs for running a tech team compared to 250 cities worldwide.
There's a big caveat though: 5%+ shareholders are considered managing directors (a "DGA": Director/Majority Shareholder), and as such should receive a minimum salary of 48K EUR per year. There's a special startup exempt on the way that lowers this to minimum wages for some years.
Bottom line: if you want to incorporate in NL, as a founder you're ought to receive a salary and pay taxes accordingly.
So if two people want to start a business, they will need to fund their company with at least 2x €48k?
Seems that it'd be hard to start a business.
It's a nuisance for incorporated startups for sure, but there's a catch: if you can show you can't afford it, you don't have to pay up. Problem is that you need a ruling for it, which you can request after incorporating. A classic Catch 22.
Otoh, to put 48K in perspective: if you work 32 hours a week the 48K comes down as well to the level of about 2K/m net income. If you're in Amsterdam you can count on 1+K just for housing so you'll need that kind of income anyway. Of course you don't really work just 32 hours, but your contract can state it without issues. 32-36 hours is considered fulltime in the Netherlands.
The system is designed on liability: when incorporated, you cannot not be held liable as a person, only the incorporation can. This has a cost, so to say. The Dutch systems assumes that if you need that kind of "protection", you have a proven business and revenue to pay for the "luxury".
If you choose the non-incorporated business types (a EMZ or VOF), you are personally liable and you get a LOT of tax rewards for it. I've been a successful freelancer for 15+ years before becoming a founder, and haven't paid more than 20K in taxes in all those years combined. You get so much tax benefits that it doesn't make sense to incorporate before you take home a profit of about 120K/y. With a median income <30K, that is a lot of tax to pay up for accountability.
But, if you want to go with investors incorporating is the way to go. You can't just incorporate in Estonia and have your company in Amsterdam. You'll be taxed like a Dutch company.
Long story short: NL is awesome for startups, just don't incorporate before you have investors or serious profits.
There are at least 2 accounting firms that I found through freshbooks with which you can work remotely and they are fluent in English. I didn't work with them, but exchange a few emails, their rate is about 1.200 EUR/year for up to 20-25 invoices per month AFAIK.
You'll have to pay yourself insurance which is extremely low, I don't know the exact figure but it's a non-issue.
Banks... Banks have higher fees than any Bulgarian country but at the same time they are way more loose. You can open an account with your passport. I did the mistake to go with Raiffeisenbank which gives only Electron Visas to foreigners. Should you choose a bank in BG, go with Unicredit. They'll give you a proper visa (the electron is for children, many websites do not accept the electron VISA).
It's very common for companies in Bulgaria to use a lawyer's address as their official address for paperwork. That's extremely cheap too.
The thing with Bulgaria is that the financial setup is rather stable. Their tax rates doesn't go up and down like an elevator. Banks are considerably easier to deal with compared to Estonia for non-Estonians for example.
If you want more info drop a mail, good luck!