Comment by mishaker
2 years ago
great post! having been through it I can confirm that it is a really bad idea to start your startup business in Germany with a GmbH. You end up doing more paperwork than your own business.
However I have one question in your proposed schema. Germany Holding UG ... it owns the Delaware C-Corp right ? how would you deal with the paperwork and taxes of that Holding UG ? isn't it also time consuming and painful ?
I am asking myself the same question - how would you actually solve this issue? https://news.ycombinator.com/item?id=31620700
The thing is: even if your company is abroad, if you live in Germany then that constitutes "Permanent Establishment". So that means that Germany considers that the company is in its own juridiction so german laws would apply.
This also should be true about the holding (although I am not sure). You cannot simply have a German holding which contains foreign operating companies and not get involved with German bureaucracy. Logically you should report operations of those foreign companies (thus declaring taxes) in Germany. That would be an even more painful headache ...
While I generally agree I am wondering if this still applies if you have multiple founders in multiple countries.
Eg the founders are living in Germany, Australia and the US. The company is a German GmbH. You’d probably not automatically create PEs in Australia and the US just some of the founders living there?
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