Startups · Taxes

UK vs Germany - Startup laws/taxes/culture/finance?

Travis Wentworth

July 10th, 2016

Not trying to start a political discussion, but just wondering if anyone who's familiar with both the UK and German startup scenes could comment on what a UK founder should expect if we were to move operations to Germany (presumably Berlin). The single market and free movement are important for our business. But what about things like German taxes, employment laws, culture, access to investment, prevalence of English (must speak German?), etc? 
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Howard Postley Advisor / Investor / Designer / Entrepreneur

July 10th, 2016

My experiences doing a startup in Germany were generally positive. I never had an issue with language and found most of my German hires spoke English at least as well as a lot of my American hires did. Work ethic is strong. Technical skills are strong. Moving people and product around the EU is relatively easy.

In my experience, the culture of risk taking is fairly conservative. The good news is that when people commit to something, they almost always deliver it. The bad news is that it's often challenging to get people to attempt things that are not known to be achievable. There is definitely a different attitude about "failure" in Germany than in the US.

Taxes are somewhat high, but not unreasonably so and they rarely has much impact on startups. Employment taxes are sort of a swap relative to the US. On the one hand, they are higher in German. On the other hand, many things (like health insurance) are included in the German taxes where they are not in the US, but are still a required cost.

Employment laws are definitely challenging. It is hard and expensive to get rid of people. However, there are many ways around that and you should plan accordingly. It is important to have a good advisor/lawyer in Germany.

Access to investment is a mixed bag. It depends on your track record and your business. Definitely much harder than in the US. Having said that, especially in Berlin, it is decidedly available if you meet the criteria.


Alan Devlin CEO at eDot Invest

July 11th, 2016

Have you thought about Ireland, Dublin has a very rich pool of talent with major US companies such as Google, Facebook, Linkedin, Twitter etc. calling Dublin their European HQ. In addition, there will be far less of a cultural adjustment for your business. There are loads of grants, tax incentives and opportunities to partner and market globally with companies that are on your door step.  

Katherine CPA Founding Partner at Xcelerate Financial

July 11th, 2016

Investors in the UK get a direct tax deduction, kind of like the 401k deductions american employees get. They are doing a big push to jump start investment into the market, so that may be something you want to keep in mind. I'm pretty sure that the startups need to be UK based for that. Just one more consideration.

Joanan Hernandez CEO & Founder at Mollejuo

July 11th, 2016

Hello Travis,

"The single market and free movement are important for our business"

Given what we know today about the Brexit, I think you just answered yourself.

Cheers!

Claus Lehmann Publisher at P2P-Banking.com

July 10th, 2016

In my opinion you'll find that you can buy the needed expertise (tax, legal, ...). While German is a plus, I know several German startups that use English as internal communication language as their workforce is international.
Berlin has some advantages like cheaper office rent and cheaper cost of living over London. Access to investment might be easier in London (at least more potential choice).
Depending on sector (e.g. fintech) regulation in UK will be much more business friendly.

Gordon Rae Publisher at Another Crowd

July 10th, 2016

Two useful sites to visit are:

The Berlin Partnership for Business and Technology http://www.berlin-partner.de/en/ and

Silicon Allee http://www.siliconallee.com/ (Slogan: Connecting Berlin's technology companies with the world since 2011)

You will need to learn to speak German pretty quickly. 

By the way, the people who paid for that bus to drive around London saying  "Keep Calm and move to Berlin" aren't going to help you. They are the Free Democrats (FDP), a small centre right party that believes in economic liberalism but has no seats in the Bundestag (the German parliament.)   

Bodi Picras ex. property entrepreneur. Avid cyclist.

February 23rd, 2017

  1. Berlin is cheaper, Germans have a different culture though. So you might need to adjust a bit.
  2. Ireland has far more cultural and linguistic similarities, and isn't too bad price wise outside of Dublin(Which is still cheaper than London)
  3. Ireland has more investment breaks than Germany/ but less than UK
  4. Also might want to look at Brussels