Founding a company in Germany: €9600, 152 days and I still can't send an invoice

Original Article ↗ Hacker News Discussion ↗

Choice of Legal Structure

  • Many argue the OP deliberately chose a very complex structure (UG & Co. KG = a limited partnership with an LLC/UG as general partner), mainly for tax optimization and anonymity, not for basic limited liability.
  • Others note this structure is common for larger or investor-heavy businesses but overkill for a one-person SaaS or consulting shop.
  • Several point out that a plain UG or GmbH gives the same limited liability with far less cost and delay; a UG + holding UG/GmbH is a typical “startup-friendly” pattern.
  • Some see the OP as badly advised by lawyers/tax consultants who profit from complexity.

Limited Liability, Capital and Risk

  • Strong disagreement over the €25k GmbH capital:
    • One camp: it protects creditors/customers by ensuring some minimum assets; if you don’t want that, operate as a sole proprietor.
    • Another camp: it’s a high, outdated barrier that stifles small founders and is often symbolic (quickly eaten by fees or insolvency costs).
  • Clarifications: only €12.5k must be paid in; capital can be spent on business expenses, including reasonable salaries, not locked in the bank.
  • Some suggest using liability and professional indemnity insurance instead of complex entities.

Bureaucracy, Notaries, VAT IDs

  • Many complain about German bureaucracy: mandatory notaries, physical paperwork, slow registers, and especially long waits for VAT IDs (weeks to months, worse in Berlin).
  • Others counter that a simple UG/GmbH with standard templates can be founded in ~2–4 weeks and ~€600–2,000, and that much of the OP’s delay was self-inflicted via structure choice and advisors.
  • Running and especially closing companies is described as even more painful than founding.

International Comparisons & “Incorporate Elsewhere”

  • Multiple comparisons: US, UK, Estonia, Netherlands, Poland, Sweden, Ireland, etc. are described as far faster, cheaper, and more digital.
  • However, several warn that if you live and manage the company from Germany, foreign entities (Delaware LLC, Estonian OÜ, etc.) are often treated as German tax residents (“place of effective management”), creating dual compliance and possible tax issues.

Exit Tax and Mobility

  • Exit tax on unrealized gains when leaving Germany with valuable shareholdings is heavily criticized as a “hostage” mechanism.
  • Defenders argue it’s necessary to prevent founders from building value in Germany and cashing out elsewhere tax-free; liquidity and thresholds are seen as the real pain points.

Cultural and Structural Critiques

  • Recurrent theme: German system is precise, rule-bound, and risk-averse, favoring incumbents and employees over new founders.
  • Some see bureaucracy as a deliberate filter against rapid change; others emphasize consumer/employee protection as the tradeoff.
  • Many stress that “Germany ≠ Europe”: several EU countries are cited as smooth and entrepreneur-friendly, while Germany, France, Spain, Italy are seen as bureaucracy-heavy.

Practical Takeaways from Commenters

  • Start simple: sole proprietorship, GbR, or UG with Musterprotokoll; upgrade later if needed.
  • Avoid exotic KG+GmbH/UG shells unless you truly need their tax or ownership properties.
  • Use standard notary templates, online founding services, or shelf companies to cut cost/time.
  • Expect substantial ongoing costs: tax advisors, mandatory memberships (IHK, etc.), and complex insolvency/liquidation rules.