Great that you keep an eye on Swedish Professor Magnus Henrekson! I had him as my teacher. He doesn't (only) "teach" school book stuff. He explains how things actually work, off the top of his head which contains a brilliant mind. A rare resource in the macro economics establishment. He's always very relevant.
That's awesome - I am a bit jealous actually :P It was a breath of fresh air to read his book - few academics and journalists dare go against the established reasoning.
A majority (if not THE majority) of immigrants to the U.K. come in on student visas. They are not skilled or educated when they arrive! Last year only 15% of the 1,4 million immigrants to the U.K. were workers. The rest were, students, family reunification etc. I wish you’d speak of this in your videos.
The increase of GDP in high migrant countries like the U.K. means nothing (it just means more people). It’s GDP PER CAPITA that matters! GDP per capita has been decreasing in the U.K. and has been increasing in Poland (where they have low immigration from non-EU countries). Indeed, Poland will be overtaking the U.K. which is now just a third world country, attached to a rich city (London).
A greatly over-represented percentage of entrepreneurs in the US come from Europe (can’t remember where I saw the stats but easily found). They leave Europe because of high taxes and regulations
In Germany an SME also has to pay taxes upfront, in the beginning based on fantasy numbers and later based on the previous fiscal year. It's killing your liquidity and eventually your whole business in times of economic turmoil. It cost me tens of thousands of Euros discounting invoices to shorten payment terms afterwards. "But next year you'll get your money back." "Yeah thanks, then I won't need to pay upcoming month's rent anymore".
I found this even insulting. Regarding this, thank God I run my small freelance business in Spain and not in Germany. Spanish taxation in this regard is reasonable..just pay every quarter your VAT and that's it. But not in advance.
Finanzamt sent me a letter one day out of the blue that we failed to pay taxes on some numbers that they had made up and they were freezing my company's bank account and forcefully taking the money. That's for a company that has 0% profit that year. Everything came to a hault when this happened. I had no choice but to pay off the tax and then try to claim it later in the returns later. I asked my accountant and he said you could get a lawyer to dispute this but that'll cost more to the business than just waiting it out. Go figure!
As a founder in Europe I scream in agony. Studying theoretical quantum physics was easier than figuring our and following all the weird and bizarre rules Europe has, especially if your clients are not just in your country of residence. Its madness.
Feel you. Started a GmbH in Germany which I still have, but I would never ever recommend founding in Germany/Europe unless the biz case needs it to be somewhere in EU. God, its tiring.
and why our product are such high quality. Why people are not insuring their life, wife, house and children just for opening a buiseness like America. Europe did that before and 98% of buiseness created were in the red and create more issue (fiancialy) on people lives than some ego creation like america :/
@@semikolondev what a bad take. You say its good that oligopoly exists ? That competition has barrier to entry so rich guys can afford lawyer to handle byrocracy ?
As a technology startup owner in Germany, I can personally confirm that most of the topics discussed are spot on. For my company, it took 7 months just to get a tax ID, which meant I couldn’t issue invoices or sell services, and I ended up losing all my clients before I even started. There’s also no real investment opportunity and we were asked to pay taxes upfront based on a made-up number-although we declined and it was accepted, we now pay upfront based on real numbers. On top of that, the high electricity prices make it impossible to compete with other countries. We’re constantly bombarded with additional tax letters and new regulations; every government agency seems to have its own set of rules. As a result, a lot of our time is spent not doing business and verifying ever-changing regulations! Another issue is the political climate, which is a complete disaster at the moment, adding further uncertainty to an already tough environment. If nothing changes in the mid-term, we might seriously consider moving out of the country.
There are other countries in the eu. You should have tried another country to do it! I can guarantee germany is an impossible country if you want to just try a business idea.
There are other countries in the eu. You should have tried another country to do it! I can guarantee germany is an impossible country if you want to just try a business idea.
Don’t underestimate the killing effect of housing prices. As it stands now, my wife and I (both employed and reasonably well payed) can’t yet afford our own property. We will be able to however, in a few years. Given that we’d like to have children, I’m not willing to take the risk of never being able to afford our own house. That fact alone, kills my drive to start my own business…
i'm working six days a week to pay rent for a small apartment to keep a roof over my families head, meanwhile next to me are families of 'asylum seekers' who have been living rent free for many years and even after getting full citizenship they are still not working. this is really beginning to crush my spirit.
This is the same in the USA, and part of the "rich getting richer" scheme. Let's face it - our children won't have a chance of owning property at all. Average people are becoming more and more wage-slaves in the developed world.
@@pondeifywell the Government at first place should be giving them the opportunity to work, not when they have permission for. Nevertheless earning money with such taxation is a real burden.
@@pondeify Fellow human beings deserve just as much a right as us to our European niceties. It's a human right to have EU citizenship, you bigot. Why are you getting depressed? You should feel happy your tax money can be spent on refugees! You're welcome. Good that the government forces you to give money to them so that they can redistribute it to migrants. Otherwise selfish people like you would never contribute. Change your attitude and next time pay your refugee neighbours a visit, and greet them with a "Assalam Aleikum", be kind! These people went through a lot of hardship and so it would be good to talk to them. Invite them as guests! Perhaps even consider donating, especially if they don't have essential items like mobile phones. (An iPhone would make for a great gift!")
I started a business in the Netherlands 23 years ago. The bank denied a loan but family and friends supplied the necessary cash. I avoided hiring help due to all the energy that takes and started working with network entrepreneurs. Last year I sold the business. I could have started up faster and could have hired many people. I still do not regret how it went. Before I started the business I worked at large corporations. I learned that I never wanted to have a large company.
congratulations for your success. will share some tips or pointers for a young man from a third world who is about to start his own software business because every other businesses sucks, they inslave you and give you nothing. most devs are ok and their level isn't much. but i know for fact that my level is way high compared to others here even though is nothing compared to other developed countries i was talking about some ideas and my cousin (much much older than me) heard me and said these idea needs to get to real world you will do them and i will invest and give all the support from cash to hardware you need. that is great but i still need to learn a lot about business
Depends where you are sweden is extremely entrepreneurial. Sweden is built on family businesses, it has more family businesses per capita than anywhere in the world Culture also matters to be more entrepreneurial
Yeah, he talks about welfare making people not want to be entrepreneurial, however having strong welfare means it's also less risk for people who start their own buisness, as they have something to fall back on. Case on point being Sweden.
@@algot34 In Finland you're not allowed the same welfare if you're an entrepreneur because entrepreneurship is considered employment. So it's way more risk to be entrepreneur than just get some low income job.
@@paavoilves5416 I like to compare Finland to Estonia, I believe taxation is the primary reason why Estonia has a stronger business environment, there is no reward to starting your own business if you are going to have to give all your profits to the government. It comes down to countries with strongly established 'responsibilities' which decrease their ability to move quickly. Countries in Eastern Europe and the Baltics are growing faster than everyone else, because they tax business owners less, so the rewards are higher, and they they are able to do this because they do not desperately need every cent of their tax revenue to keep their heavily indebted system functional.
It's all fine until the end. I'm from Poland, you know why we don't need as big cash flow into thr system? Because of very low expectations. Somebody dying out of cancer why waiting for a doctor to take care of it? Well, that's how life is. Little support after losing a job? Just move abroad, like what do you mean you can't get a job while there always is some... And a lot of institutions are just absolutely dysfunctional, like work safety controls and many others. No need to put money into the system if people have extremely low expectations about the system in the first place. Yet still minimal wage worker here is heavier taxed than in Sweden - if companies aren't taxed then others need to be taxed to compensate.
huge country with enormous natural resources with a tiny population. We always have these examples that do not reflect the reality of most other European countries. It's like saying the UK, France or Spain and Portugal during colonial times. Abundance of natural resources help quite a bit
Additionally and very relevant to always comparing the EU to the US, even more so than regulations, is homogeneity. The US is fairly similar linguistically and culturally all over. The EU is not that homogenous, expanding your Dutch business into Poland means a different currency, culture, language, and bureaucratic system. Expanding across borders is not easy or cheap, expanding EU-wide requires a lot of money to be spent just on translation of your documents, UIs and marketing material into that many languages and adapting it to that many individual consumer cultures. French people are pickier and more demanding with their food than the Dutch who prefer simplicity and predictability. Germans are far behind in technology use in everyday life than Dutch even though they border each other. Lithuania is notorious for needing to pay out bribes to get anything done. Having this many differences is very difficult to keep up with at a smaller scale and no amount of "cutting red tape" changes these things.
Honestly, currency. culture and so on is not that much of an issue and most use the euro anyway. The huge difference are the many laws and different bodies of government and bureaucracy. You have to constantly change up everything in every single country. That's been from my experience by far the biggest issue.
Interesting, maybe the Austrian painter was right all along in various aspects, tho maybe too autistic on some others to make them feasible. At least the cultural, linguistic and bureaucratic system would be more homogenous. And it just so happens that wherever there were Germans and Austrians there was more prosperity and progress, while wherever there were Russians and Ottomans, there was just poverty, misery and backwardness.
@@Arathreas There's a similar issue when expanding a business in the US from intra-state to inter-state, but I have to imagine that the regulatory differences between EU countries is bigger than between US states
The data about Poland might be somewhat distorted as regular employees choose/are forced to work on a B2B basis due to much lower taxation. As a result, almost everyone opens up a "business" to avoid the tax progression on a regular contract. This also makes you easier to fire, you don't get the regular contract benefits, etc.
Hi, This is data on companies with 10 or more employees. I specifically chose this parameter to avoid including the self-employed in the stats :) Cheers, Hugo
Come on! The trend to open business for every job has declined a lot. Right now it's mostly IT, where employees prefer to go B2B to pay lower taxes (just 12%) and they don't want to contribute to social welfare. I was doing that myself and most of programmers do that. Compared to rest of EU taxes on business are one of the lowest, regular employment is not taxed high neither.
In Denmark it is also the case, as I understand it is in Italy, that corporation tax is paid in advance based on an estimate. Denmark has the advantage that the labor market is liberal, where it is relatively easy to fire and hire. It is the whole package that must be evaluated. Switzerland is an interesting case. Extremely democratic, extremely successful and low taxes.
Poland's stats are sus - most of those "businesses" are just software developers setting up sole proprietorship LLC for tax reasons and still work like they're full-time employed but officially it counts as B2B.
In Baltics and Scandinavia they do ;) The problem is old Europe and their hubris. If you look at Baltics you see enormous progress, start ups, some ideas implemented better than in USA. The biggest problem is France and Germany with their above all attitude and overregulation and total ignorance that the world has changed and that they are just two small nations.
My interpretation is that it is less about national superiority and more about the structural constraints that come from the large, established systems in places like France and Germany. Their need for high tax revenue to maintain these systems and that can limit entrepreneurial incentives, rather than it being an issue of “above all attitude.” I see the real issue as systemic-those countries have built complex infrastructures that, while functional, aren’t as adaptable or conducive to rapid progress and innovation as, say, the Baltics.
@@arankin2914 As a German, let me tell you there is a lot of hubris involved. Leadership in politics and industries got so arrogant by their economic success that they completely missed digitization for 20ys. And now they're (as groups of people) too incompetent to understand where to start catching up.
Here in Spain 🇪🇸, opening a new business is very difficult due to the high amount of bureaucracy and paperwork that must be completed, the taxes that must be paid and the difficulties in hiring qualified workers. In fact, our large companies were founded many years ago (Inditex-ZARA, Telefónica, Banco Santander, BBVA, Iberdrola...) and most of them obtain their main profits abroad, such as in Latin America 🇦🇷🇨🇴🇲🇽🇧🇷, the USA 🇺🇸 or the United Kingdom 🇬🇧. I think that Spain should not depend so much on tourism and should learn more from the USA or China 🇨🇳 when it comes to starting up and doing business.
What's strange is in the UK it's incredibly easy to start a corporation, fill in a web form, pay a small fee and file accounts every year and that's it. But there's clearly some other issues.
Yep, companies like CRISPR end up getting incorporated in low tax Zug, Switzerland other than Spain. Spanish minds contributed to its success but Spain won’t be able to keep them without changing. And Spain has more positive things to look forward to than other Western European countries!
@@Croz89the problem with UK is not having the capital to scale the businesses up But having said that what we don't see if the businesses in America that fails and not make it A venture capital would bet on like 200 start up and maybe only 1 of it make it big
@@Croz89UK has far too many unproductive people who have to be paid for. They have to train adults and teenagers better. Those who don’t want to work after that should be encouraged to emigrate.
You have only 3 routes to success in Spain: 1) Become a civil servant: Good working conditions, less than 40 hours/week, being unfirable (there have been cases of people not going to work at all for years and still getting their salary), better pension, and a parallel healthcare system that avoids the mess of the public one. I know school teachers that earn more than an engineer while working 25 hours per week and having twice their amount vacation days. All is financed with ever-increasing taxes and debt (let's kick the can down the road). 2) Become a congressman (of the state or an autonomous region) or an appointed high-level civil servant: You earn 4-5 times the median salary, plus most of the perks of the previous point. 3) Emigrate.
Bureaucracy can be streamlined, like in Estonia. That should be the way forward. After we reach that, only then should we talk about cutting the welfare state.
Sorry, but is this some kind of European problem I'm too Estonian to understand? I had my sole trader company registered in 5 minutes, and we set the world record for registering an LLC - 15 minutes from filing application to being entered into the business register
Estonia is pretty good for European standards and as long as your structure is plain vanilla. If you want to set up a bit of a more complex structure (business owning business) then it gets tricky. Not to mention you need to apply and wait for e-residency. My co-founder and I were in that boat a few weeks ago and we decided to incorporate a US LLC instead, even though the two of us are Europeans.
So true. Im Portuguese, tried to do something in Europe a few years back, and getting clients as a startup was super difficult. Joined a startup in the US, not only was the amount of VC backing enormous without any clients, got clients and solid revenue in just 3 months after funding. It breaks my heart
My best friends sister is from Mexico, actually there entire family is from Mexico. But anyways, my best friends sister started a business in Chicago. It's actually very easy, we have a large Latin American population in Chicago, and they value their small businesses. In fact, I think Latin American migrants value their small businesses in general.
I'm a self-employed Brit who runs a business that would probably benefit from a second person working in it, but I just can't be bothered to deal with all the paperwork I assume that'd include.
@@TheSquidPro He named an EU one in the video but I'll give you some easy ones to look into. Australia, Singapore and yes even the USA. China though not free has an economically funded welfare state. It's only Europe that's lagging behind.
@@StickmanA "and yes even the USA" Said like the U.S "welfare" is not a complete nightmare from veteran support to healthcare to general social safety net.
The recent EU report on the economic stagnation and failure is very telling. However, in typical EU fashion, the suggested solution is more of the same, which means no solution
This is why so many lack any hope for the EU, as the very solutions they suggest to fix the very problem they created are the smallest of changes/tweaks to the system. And even then it seems radical to many Europeans. The solution for many problems facing Europe now is going to take a more drastic and urgent approach. Otherwise, they will miss out on economic growth AND slowly lose their social benefits (which are only possible in strong economies).
In fact the report is wrong, both on solutions and on the problem, the problem being lack of productivity, which is not happening, if you cared about real world(PPP) data.
I'm not sure I buy the social security disincentivizes entrepreneurship argument. Starting a business is a risk and I'm much more inclined to take risks if it doesn't result in losing my entire livelyhood. Henreksens assessment about equal access makes sense though
But you might loose you entirely livelyhood, that is the whole point of the argument. As an entrepreneur not only you can loose the money you invested in the business, but you also get no unemployment insurance. That is why it is so much safer to stay an employee.
@@louissch5955 That's not even true across Europe though. Here in Austria you pay unemployment insurance when you're self employed too. And if you own a ltd that you work in, your company pays unemployment insurance for you by law. It's next to impossible to work and be uninsured. Meanwhile when nobody gets unemployment benefits, I'd think very hard about quitting my job to start a company, no matter how good my business case is.
In Ireland the housing crisis causes a massive problem , its easier to be a landlord than starting a business. A solid return for no work . There is a cultural hangover of money in land.
North America and East Asia already passed Europe in economic competitiveness, the Arab Gulf would be next as it’s looking to have way more free digitalized economies with harsher capitalism than the EU
I'd like to mention the Dutch American friendship treaty. This program actually makes it "easier" For Americans to get visas and start a business in Netherlands
The real reason Europe doesn't have multi-billion dollar unicorns is that we don't have heaps of money lying around, waiting to be poured on any student with an idea. And the reason we don't have that, is that the Euro is not a global reserve currency that we can print at comparable scales and pump into financial markets to inflate them. Uber didn't earn a dime for over 10 years and burned more money than Warsaw's (Poland's capital) entire budget over the same period. So one company doing taxis used more resources than a city of over 2M inhabitants (metro area population). Europe operates a mid-20th century model of capitalism: you start a business, you get some earnings, you scale accordingly. America operates a totally different version of capitalism where insane heaps of money are thrown at projects that PROMISE returns and then competition is outspent by VC's. I leave it to readers to decide how that serves the general American population in terms of quality of life.
When it comes to cutting regulation, often the wrong ones get cut, ones that ensure people's safety. Then something bad happens, like a train crash or a tower block fire, a lot of people are killed and injured, and they get reintroduced. This has happened a number of times in the UK.
@@dioniscaraus6124 Because policies are contextual contingent plans/operational guidelines (or rules). They are not a universal tool, a policy can be perfect in one place but be batshit in another. A policy banning cars in large parts of a city? Generally likely to work and accomplish its goals, apply the same policy to a rural area and youve just stranded the population of said area if they are not one of the few rural areas that forgot public transit links (like trains) exist. And this is before the next issue, institutional efficacy. Basically, the institution has to be competent enough to fulfill the policy, it has to want to do said policy, and it needs a society thats willing to cooperate with it too. This latter part is the stickler for alot of places, i.e broken institutions, severe endemic corruption etc. I remember someone covering how alot of poor countries in the global south on paper have similiar policies to the EU on many things, but the actual enforcement of said policies does not exist etc.
I started my business in Italy in 2010. I am closing it this year. High taxation, excess bureaucracy and heavy regulations. These are the 3 main issues that keep European youth to start businesses. In my case it was the first one, after 2020 I could not pay taxes anymore. I had to pay salaries, electricity and minimal things to keep working as a priority. This decision was a no-return path because I could never recover from the tax debt, after all I had to keep food on the table for the employers and also myself during almost one year with no income in my business. Now I have a huge tax debt and it is not sustainable to keep a business running only for paying taxes and to eat. The incentives and financial help is available only if you are a tax up-to-date company, so no money for us during covid lockdowns. I had 12 employers, now I have only 1 and I will close in December. By the way, 6 from my ex employers are still unemployed since one year already. In my opinion Europe is not looking for small business as it should. Similar to my case, I know at least another 10 small companies that closed in the last 4 years.
true!they expect us to work just to pay their taxes and their large employee workforce :)) sure, that is why all the small and medium businesses get bankrupt with large tax debts that will never be pad, but their owners are not bankrupt at all and just start another business and large companies are registered in ireland and luxembourg and declare no profits :))
@@strigoiu13 not that simple for normal people. It costs a lot to open and run a company abroad (on paper). Big companies can afford to invest on such structured offshore operations. Normal people with traditional businesses, if we fail, we are fated to never have a business again. Off game forever. I might migrate to the US with my family...
The integration of the service sector, the better development of financial markets but also reduction in regulation are the most important elements. If you compare total wealth in the EU and US it is not far apart. The higher share in low risk assets is one problem but one of the "advantages" of the US is the high wealth concentration. So there are a few people that can take a lot of risks, because they have vast wealth. The vast majority is poor though. In Europe, you have a lot of people with some money. But they invest more in real estate and lower risk assets. Also real estate is cheap in the US in most places except for a few big cities.
Ukraine is a best place for self employed. Also they have their Dia City for start-ups and bigger companies with English law practice. They are keeping on pace with economics despite the war
@@zesky6654 the flat tax part would probably send many bigger countries into bankrupcy if implemented, the estonian flat tax also works cause its rare, wouldnt really work if everyone had It.
@@tomi213 this 100%. Abolish all taxes and introduce a 1% yearly wealth tax. 1% of all your assets are taxed yearly so your goal should be to somehow be able to get 1% return on those assets. In case you can't sell it... If you tax productivity, you destroy productivity which is why our system is so bad. Just tax hoarding and that's how you create insentives for young and upcoming, hungry people.
I would argue the welfare state is Europes stongest asset. If people feel comfortable there is a safety net they are more likely to take risks like starting a business. The best thing Europe can do is to focus on reducing bureaucracy, digitising government services, unleashing the power of EU wide capital markets, deepening the single market, and keep investing in our human capital
There are 2 main problems, lack of VC funding and culture, lack of VC funding is self explanatory, but the cultural mindset in many European nations is that people are risk averse, people don’t like taking the risk because they don’t want more, and there’s nothing wrong with that but it does create a culture of stagnation
as an Polish American who got caught up in our legal system with no support whatsoever I think you are right on some level. I look at the EU and it looks very appealing to me. I'm not proud to live in a place that has the most prisoners in the world, lowest animal welfare practices, no sidewalks, and chemical food. Frankly, the only thing that US has going for it for me is money (which is kind of a big thing since with money one can eat better food, live somewhere with sidewalks, etc.) and I guess freedom in some ways, but not others. The US has been very rich 'historically' I think because it's very safe from 'threat,' has many natural resources, has been unified, and has more of an open mindset. There are other factors too. But the last of those things I listed, an open mindset can, I think, can be overcome with education. Europeans are better educated. As for the other problems; those are definitely real, but maybe somewhat independent... The US is just 'naturally advantaged?' And I agree that with more time and more security people are more likely to explore and take risks. Maybe Europe can make it safer to be an entrepreneur instead somehow. That guy in the video pointed out how he did not have the comforts people in europe get while working steady jobs.
@@Victor-tl4dk "Europeans are better educated." By what measure? The US colleges and Universities is where the world comes to get the best education money can buy. The EU had good intentions but it's dying due to regulations and social welfare. People aren't motivated to work and innovate. I give it 10 years before it busts apart at the seams. Brexit is just the beginning.
In Denmark you will have to pay tax on a gain in the value of the stocks even before you sell the stock. So, if you thought you were going to keep the good stock that you invested your money in then you better be so well off to start with that you can pay those taxes continously every year. If not, you are forced to sell your stock before you intended to in order to pay that tax. It gets worse. If the stock falls in the second year you still have to pay that tax on last year’s gain. So, you might end up with a stock that is the same value as when you bought it but you have to pay tax on the gain that once existed on paper. And you are not allowed to deduct losses before calculation of that tax. You are only allowed to subtract a loss from a gain within the same year. The tax on gains is the same rule as income tax: highest margin is 60% tax - because the deductions you have has already been used on your salary, and thus you pay the max on gains from stocks
I didn’t know that. The situation sounds significantly worse than in Norway. With a holding company or a special investment account, you essentially don’t pay any taxes on stock gains from companies based in the EU until you withdraw the money (losses are, of course, non-deductible as well; full symmetry). You only pay 3% tax on dividends.
I don't quite buy into the theory of "entrepreneur by necessity": starting a company is a risky business which requires some level of savings and being aware of the high possibility of losing them all. It's hardly something born out of desperation or necessity. Why would welfare hinder that? In fact having a good cushion to fall back into in the case the venture does not succeed should actually foster entrepreneurship and not hamper it, giving one more comfort in risking their savings. This theory felt quite forced and without any factual evidence, not even at correlation level. Sorry you lost me right at n.1 on this one!
I think it does happen for smaller businesses like restaurants and shops, but maybe not for tech companies indeed. If you go to poorer countries like Mexico you'll see everyone is basically an entrepreneur, selling things they make on the streets etc.
That first point only applies to small, hustle-sized "entrepeneurship" - I doubt he was trying to translate that to larger scale companies. The "i-have-welfare-so-why-risk-it" argument still applies to the comparatively less amount of capital invested in the EU.
In Germany an employee receives 35% of the money s/he cost to the company (26% if paying church tax). And you pay extra 24% tax average on living expenses, there is an extra tax for dogs, if you have assets tax rate is 28%. If a company gives you free shares as a part of employee program, you have to pay taxes on that as well. Takes 2 months to open a bank account on a traditional German bank, takes 2-3 months for them to connect internet to you. On top of that you have to pay always an extra when using insurance services, not everything is covered, dental care is not covered at all. Also you are not allowed to work overtime and receive money for it
I thought they changed the employee share options, mainly to help startups hire talent while paying average salaries. I thought this was implemented quite recently. Am I wrong?
@@MrLonelybusinessI agree, it’s a joke how much legal, administrative and account costs a startup has to bear here even before making a single penny in profits. This was the frosting on the cake, making sure no startup could hire talent, because realistically of course we cannot pay salary and benefits as much as a large cooperation. Now they fixed at least this…
@@toom2141 how long did it take to get your notar, court registry, tax id when in US all these combined is about 15 minutes. Also you are paying more in accounting compared to US companies in general which has access to a significantly larger market. If you are talking about personengesellschaft instead of kapitalgesellschaft, you dont even have a startup, you have something else and are trading in your name. However startups need to be in GmbH or UG form, to be able to get investments and so on. And bureaucracy is very heavy on them
It’s really heartbreaking to see how inflation and recession impact low-income families. The cost of living keeps rising, and many struggle just to meet basic needs, let alone save or invest. It’s a reminder of the importance of finding ways to create financial opportunities. You've helped me a lot sir Brian! Imagine i invested $50,000 and received $190,500 after 14 days
Some persons think inves'tin is all about buying stocks; I think going into the stock market without a good experience is a big risk, that's why I'm lucky to have seen someone like mr Brian C Nelson.
Laws are strict and it does not help that atleast in Finland people are so jealous that we have even saying that people are ready to pay 100€ just so their neighbour can not get 50€💀.
When you're young, you'd prefer more "American model". Otherwise you'd prefer current model. And since EU population is aging and majority of votes belong to not young, no one will vote for cutting their own source of money.
You have the problem where you are measuring company size by public stock price market cap, this heavily biases for countries where "investing" in the stock market is more prevalent. It's like comparing government success or size based on how many bonds are purchased. It's just extremely dependent on how common it is to engage in that system. Japan isn't more successful or larger just because it sells so many more bonds. And american companies arent more successful or larger just because their stock market sells so much more stock. Other examples from the opposite argument direction can be found in countries that have very little stock market yet still have large and successful companies, yet you wouldn't know that if you we're measuring by public stock price market cap. The stock market is very much not a thing that just springs up and links itself to reality, just look at Hong Kong which pushes the stock market extremely heavily. Hong Kong doesn't have larger and more successful businesses just because there is more attention put on expanding the amount of investment in its stock market.
The main problem is that here in europe we dont have thousands of billionaire oligarchs and investment funds that are willing to throw the gdp of countries at any random startup. Here in eastern europe we also have a unique issue where its impossible to start many types of companies unless you have friends in the bureaucracy.
We shouldn't reduce safety for employees. We should increase the resources for entrepreneurs... Pensions need to go into a system that is more like the 401k. Meaning that our pension payments get sent into the eurostoxx 600 basically. That money basically goes into companies. The birth of new companies should be a direct transfer from large companies into little seedlings. I'd say it should come from capital gains tax.
401K is ironically heavily criticised and alot of americans want to shift towards the pension systems seen in the EU (namely because 401k's are both rather high risk for a pension fund, and most of them don't cover the pension properly either, and not marginally but but a substantial margin). The USA also does not have the same problem regarding a grey population, i.e the USA still has healthy demographics to sustain a pension system etc. The issue in the eu on that regard is, well, collapse in labour pool while huge spike in pension costs simultaneously.....and said collapse in labour pool threatens the entire economy for some countries, germany nearly fell into recession before covid primarily because of said labour pool problems, its worse now.
@@davianthule2035 oh that's neat to know. It probably is still better to not have a fully pay as you go pension system, because that requires stable or growing population. Havign the pensions at least partly be investment Fonds is going to be more likely payouts that are covering what the person has paid in, because of inflation making past payments into pensions become super worthless. Meanwhile having the pensions in a Fonds the pension management can at least recoup some of the value through capital gains.
@@ayoCC Oh yeh no, that is the future of pensions regardless, i.e pushing them away from the pay as you go system towards a system that is self sustaining. This transition however, itself will take time we don't have (at least in terms of the retirement issue becoming a crisis) in most eu states (and reopens the conversation on what is the nature of retirement, i.e is it a state benefit or a personal savings fund).
"Planes falling out of the sky?" I'm really not too keen on defending Boeing, but the last crash of a 737 max i know of was like 5 years ago, and it wasn't in the US. The current problems are a disgrace, but hardly "falling out of the sky." If the make of plane is what were going by, the recent crash in Brazil was a Euro built plane, i believe.
Cowboy, I discovered you today and love your work, but you gotta get better lighting! Or just up the exposure setting. Cheers and please keep it up! From the US
If feeling happier about your life and owning your house comes at the cost of living in a place with less consumerism, at the end of the day I’m better off this way
as an European, unless you live in eastern Europe and have an ok salary for that place,you won't own a house and you won't be happy. I have a moderately sized house with a ploy of land and I got it for a 500 euro/ month mortgage in a very nice city in Romania. But try getting what I have in Germany, it's 7-8 times more, IF you can find anything. All happiness charts are skewed, as Finland , you cannot be both the happiest country in the world and have an extremely high suicide rate. It's all about culture,if you ask a Finn if he/she is happy or not he/she will tell you that they are, because they don't want to show off negativity,as that's how they are brought up. So you have all this pent up frustration/depression because you can't really tell anyone how you feel and end up deleting yourself. Meanwhile, Romanians who always talk bad about themselves and cry about their situation have more fun,laugh much more and have much larger friend and family groups than the Finns
i absolutely think that having services be a given instead of reliant on certain jobs is key, in norway for example if you work for a company a certain percentage of your employers profits from you are taxed and put into your pension, but there is also a lower limit so no one will starve if you haven't worked for a company, health is a universal right, though our healthcare system is stretched kind of thin these past years.
1. You paint with too wide a brush. Europe is VERY diverse and incentive-structures vary greatly across different countries. 2. Starting a business isn't hard at all (at least not in the countries I'm familiar with). Growing the business from local to national to multi-national is much harder. 3. Your view of the welfare state as a hindrance to entrepreneurship is imo flat out wrong as is your take on the difficulties in hiring personnel. 4. Digitization, at least in the Nordics and Baltics, is way ahead of the US.
Yea I have to say that starting a business here in Finland at least is really easy and you will also get all kinds of help for free if you aren't sure how to do something. Finnish tax system also highly favors entrepreneurs. But as stated on the video, hiring workers for small businesses comes with massive risks as you are required to pay for long time if worker is on a sick leave. Or simply if you make a wrong hire and the employee decides to not work properly, does poor work or little work on purpose. At least in Finland firing an employee is super hard and very expensive for companies. You gotta be very careful who you hire, which isn't good for anyone not the business or workforce.
1. Is very diverse, but EU parliament is trying to enforce ECO laws that kill the compentitivness. 2. Isn't, but nobody cares about starting, but holding ;) 3. Hiring is not hard, but when it comes to maternity leave or paid sick-days, you're fk up ;) 4. Nordics and Baltics.. Yeah, ahead, especially in the inflation (Baltics) and Nordics (in terms of migration - migration of lazy people from Africa & electricity bills rises)
I own a business in Romania. People say "oh so write all expenses off on your company right?". I tell them I would gladly give the state all that money if I knew it was going somewhere where it mattered.
no one doing stocks pays their taxes like that, anyone seriously investing in stocks will use tax harvesting (basically writing off losses from stocks that lost value against tax burden), in most countries this HEAVILY reduces the real tax burden in stocks, the netherlands in particular being one of the best places around for it.
@@davianthule2035 In summary, while traditional tax-loss harvesting isn't currently viable for most investments in the Netherlands due to the deemed return system in Box 3. So, doesnt work
Forgot to mention that even when one has money to invest a little of it will be invested in the European market. Foreign exchange funds are so much more profitable and stable (New regulations aren't coming all the time).
the problem doesnt lay with a welfare state if anything it encourages people to start their own company since the risks are much lower. The problem europe has is funding and regulations, american investors can easily invest while europe cant since its split between multiple countries and same can be said about the regulations which yes the eu has some but it isnt the problem. Sweden doesnt have a regulation problem and neither does the baltics and that can be seen with a lot more localised tech solutions and companies
I'm no corporatey or financey person, but the main obstacle seems to be the EU market itself, which needs better integration. Have to break it down by the individual countries and their output, and their inability to offer services across the EU market. If it really is an ''EU'' market...then shouldn't there be a way to ease the doing of business across the borders with other countries there? Like you pointed out, the US does it better since it's a single entity with a shared culture, language, and a single government...and fairs better despite having 340 million people vs. Europe's 750 million people. The EU needs to find a way to 'streamline' businesses that wish to do 'cross border' services. While each country has its own culture, laws, and taxes that make it more ludicrous...it at LEAST could deal with the 'bare minimum' in English, with it being the 'language of business'. That welfare state also puts a damper on business start ups, not to mention the high taxes and loony bureaucracy. While US employees don't have the safety nets that Europeans tend to have, the whole 'abuse of employees' here isn't really a huge thing, it can happen sometimes but action can be done against the company usually to fix this problem like being public about it. What I can surmise from this is that the EU has 5 main issues, 3 of which are cultural it seems. The first 2 are...large bureaucracy, and taxes. That puts a damper on ANYone in the world. The last 3 are...nothings open on sunday, siestas, and 2h closing of businesses for lunch (which seems to be a southern European thing). Sorry guys but you can't have a major economic output with these obstacles in the way. You want to increase your economies but maintain your very comfy lifestyles...not sure the 2 exactly jive together, it's like oil and vinegar. Also...how difficult is it for a country there to have their services, like on their websites, translated?
Just for comparison, I have a Limited Liability Company (LLC) in Colorado, USA. Establishing my company took about 45 minutes to do the paperwork online, as well as $60 in fees.
As Estonian, its quite long time for that. Takes me 15min max, and most of time spent looking for "next" button and cheking that name is not allready in use.
While on one hand you might be less incentivized to start a business because of the welfare state, on the other hand you can also use the welfare to support you while you start your business and help bridge the gap before you're able to make any revenue. In Germany there are even special programs for this as an extension to unemployment benefits that help people get out of unemployment and into entrepreneurship.
First of all, it is worth realizing that despite the proposals presented in the film, there are no easy solutions in the area of improving European competition. It is as it is not because someone came up with it, but because it is the result of difficult, hard-won political compromises made over several decades as part of the process of integrating very diverse national economies, first in the European Communities and later in the European Union. The integration process is by no means complete, because it still encounters barriers from various oppositions. Therefore, the facilities for European business will be introduced with resistance and rather through rather twisted paths than hitting the target straight. However, I am optimistic: as long as there is intra-European economic competition between member states and their societies, and the EU structures do not seek to suspend it, there will be constant pressure to introduce good improvements for businesses. Whatever comes out, there will be no point in abandoning the current development model. People vote with their feet and the balanced flow of US-EU migrants, with an indication of the EU, shows that we are probably winning in this competition of life models.
Saying the welfare state is purely anti entrepeneurial is rather shortsighted I'd say, sure it takes away incentive, but also massively lowers risk, if you start a business and it fails you still have the welfare state to fall back on. this is obviously an effect that is really dependant on the specifics of the welfare state, but it isn't a pure negative for entrepeneurs
Can I ask what welfare self-employed people can fall back on when they fail? Generally, they are not entitled to unemployment benefit or sick leave (though there are increasing mandatory insurance systems for this). In my personal experience, Into Europe as an entrepreneurial activity is a risk because if I can't make videos, I don't make money -it's a risk I can take because I am young. But I have often thought at how easier my life would have been following the 'regular path'. Sure, I have (subsidized) health insurance, but that doesn't cover all my other expenses - rent, food... Am curious if I missed something. Cheers Hugo
@@IntoEurope So you should appeal to extend welfare to self -employed people and not to cut it, we Europeans are risk averse compared to USA , the Western Europeans are known to be cheap,investing in my country is taxed high including savings accounts and bonds, like the Chinese here we invest in real estate and nowadays with the Europeans tourism a lot of lucky homeowners with inherit houses or foreigners with higher purchasing power than locals are making bank so the money is in hospitality and the housing market, a lot of countries like mine also have monopolies or olygopoly in certain industries probably making it difficult for new comers, I would say we also are people of habits on average and in my country we are loyal to brands we are even known to be used for market testing for prices meanwhile a German will go for the cheapest Japanese style. Let’s use Spotify for example they grew because of the usa market, WhatsApp is popular but from my understanding also doesn’t make money and is subsidized by meta, also despite people complaining until recently established European companies were always innovating and improving their products making the need for new companies to appear probably lower, having a lot old people also make certain businesses to pivot a slow process, young people are more Americanized but they have lower purchasing power unless they use loans and bnpl , the most European country to the usa is the uk imo with high adherence to app payments,ride sharing,delivery companies,a thriving financial and fintech sector ect. Younger people have a different mentality to old people but old people still rule Europe and the status quo benefits them
"Saying the welfare state is purely anti entrepeneurial is rather shortsighted I'd say," especially since businesses actually backed it heavily in the 50s-80s,
In my experience starting a business in germany is very frustrating and we would benefit a lot if it was easier/less complicated to start a small business. Regulations and all are very important but i think we can make it easier for personal businesses. I was very impressed that in poland if you have a business that makes less than minimum wage per day you don't have to declare it. I would have really enjoyed such a thing in germany. Also the welfare state does have an incentive for business cause if you don't have a job you are poor in comparison, but the barriers for personal businesses need to be easier to pass
The thing is like in Poland... when you have basic income or less you can get social housing but the moment you earn a little more you get kicked out of it and you pay twice or triple the amount you did for renting it from private person. So there is literall financial barrier set up by the system to keep you poor and to not try to better your life. There are similar barriers all over the place. So the more you risk and work the bigger the hammer of the system to keep you poor and unmotivated. Small buissnesses have it the hardest in Poland as they have the most burden on single person. Let it be a plumber.. you need to pay accountant to keep your books, pay taxes, pay 2000 zł per month so almost the minimum wage in flat taxes then on top of that you need to pay taxes from what you earnt etc. So being a startup buissness you need to have funds for at least a year or more without profit. Which is damn long..
ah, this is called the welfare trap in english and its an extremely common problem in welfare systems across the world. Its also the actual explanation behind "lazy welfare scroungers" who are, frankly a myth. Fixing this problem isnt easy however as its, more or less, a cost of living problem, i.e working should by default pay enough to live as an independant adult if working full time, but what often ends up happening at lower tier pay, is that its not enough to cover cost of living, and that person ends up being subsidized by the state etc. This is a particularly visible issue in the USA where you have full time workers needing state support like food stamps to feed themselves etc. When this cost of living issue emerges, there are usually 2 causes 1. Pay is not enough and does not reflect the real cost of labour/living in the area, I suspect this is likely in poland given poland is not a heavily unionised country. 2. There is some factor or set of factors that is heavily pushing up the cost of living in the region, this is the case in ireland where housing is so insanely expensive that it literally obliterates the real wealth of the population (as building costs bleed onto everything, shops, pubs, services all cost more because they are paying extortionate rents etc). If housing in ireland cost the amount it does in what is considered a healthy housing and rental market (20% of income to housing costs), ireland would be in real terms, by lived person experiance, the wealthiest country on earth, its cost of living would also be in an amazing ratio too. Now, theres more (I can go into how pay not being enough is tied to wealth inequality) but Im not writing a book today.
Data is misleading if taken without context. That graphic shows that Greece and Romania don't have missing entrepreneurs. However, anyone who's lived in either Greece or Romania would tell you that their entrepreneurs are utter pieces of sh1t, to put it mildly, who are overworking their people with the smallest possible wages. Hell, Greece even adopted recently the 6-days work week. So maybe don't judge everything on data alone. P.S.: What I said is literally confirmed at 7:43.
I visited sicily last year and befriended some business owners with a nice cocktail bar on the main street. Once I learned about how they are taxed in Italy and how much he struggles to pay the employees my jaw dropped. No wonder it was Draghi of all people that stepped up. We need a giscal reform across the whole union. Yurop Stronk!!
In my country East EU most of the businesses are the politicians one or guy who makes money on black market and now they clean it. Competition is so weak the standards are low. We don't build tools to create competition and only the good to stay in industry or to have overflow because not all of them will survive. Right now in the era of technology , paper is the most used thing in the system. The Birocraty kills the creative part of having a business.
I think benefits of less regulated systems like high paying wages are looked at too much in isolation. Between a high paying job with bad benefits and a low paying job with good benefits, I'd choose the low paying job if it covers my expenses and provides enough to save, because the time saved in not having to do admin on all necessities is important. Vacation is important. Time free from work is important. Safety nets are important. There are some issues comparing income between EU and places that don't, for instance, offer proper healthcare insurance to their workers - what the EU needs to do more of is stabilising housing, food prices, among others, relative to wage growth. You're definitely making some valid points, but I feel like the idea that being 'friendly' to businesses is a terrible idea for society at large long term - you're supposed to be neutral for businesses, expecting them to take responsibility for what they do and deliver on what they claim. Some countries in Europe are truly harsh for businesses, but from what I hear, most are just neutral and some people just expect the American treatment. I think all the ideas that are supposedly 'hostile' to businesses seem to be.. good things. Maybe the problem is that other countries are recklessly allowing the employees of their businesses and the general population to suffer in favour of good conditions for the business owners. Starting a business is not supposed to be easy. It's not supposed to be everyone's job. It's supposed to be for people who have ideas and can deliver on them in such a way that they can provide good livelihood for their employees. I hear stories from work from my friends in the US. What they have, I would never want. They get paid much more and live a poorer life. Their economy is moving so fast with lax regulations, it crashes head-first into a brick wall and causes a global market crash every 15-30 years. Over-investment, wage stagnation, and at times overly easy lending conditions that cause disastrous consequences. I don't claim I know what the European economy needs, but whatever it does need, I would never want it to come at the cost of me feeling like I have a safety net not just in the work I do have, but also the work I could get without much trouble if what I have doesn't work out or I lose interest in it.
I think taxes are the key... If taxes are too high, like above 40% overall ( Income Tax, Social Security and VAT ) people cant save, and if they cant save they will could compete with major players already established on the market. So new business will fail, and old business with a lot of bureaucracy, lots of corruption, many people doing nothing still prevail. This makes everything less efficient. But I cant see central planners drop taxes so much... The machine tend to defend itself.
Oh, in Portugal we also pay company taxes on advance, based on future projections. Today is September and I already paid half of my company projected profit for next year. Even VAT can be very harmful for a company. P.e. We have to pay VAT every trimester to the central state based on the sells, but some clients ( p.e. the central state ) only pay you somewhere in the future. So a very healthy company may go bankrupt just because they dont have cash flow to pay taxes. And if you go bankrupt, the central state is the first one to receive the money from the assets, no the ones that provided goods or services, but the central state, lol. What could possible go wrong here... xD
Most taxes are mandatory costs for society to exist, you will be paying them, to a government or a company, it does not matter. And in the case of infrastructure and services like healthcare, more often then not, taxes as the means of payment usually ends up cheaper then private market solutions. Its been well known for example that the USA is overpaying substantially on its medical services and that transitioning to a european universal model, such as the german model (germany is a federation after all) , would be substantially cheaper for both the US gov and citizens then its current market form. This isnt also unusual either, i.e americans pay more for alot of things that, effectively round back to them not making it a state service like in the eu. "if taxes are too high like above 40% overall" does seem awfully arbitrary, but im amongst the top 5% income earners in austria yet im able to save thousands. "if they cant save they will could compete with major players already established on the market" Except thats not how that works, in general, only 1/7 enterprises go anywhere in general, in some industries its as low as ten percent. Most buisnesses are not founded off savings but business credit/ a loan, all of the big IT companies we saw for example had this kind of origin. Personal savings are genuinely not relevant at all (and for another reason, namely, even if people could save, it would take many years before a saving could viably begin a buisness when said credit can be obtained in months). Most eu states also exempt small enterprises from heavy bureaucracy and even labour standards are usually lower for them too. You will often find when checking out xyz workers regulation, that said rule/law only applies to enterprises of 50+ people (which for context is a business that already has a turn over of millions of euros already). Central planners, pfft
Going to banks for small business loans is a huge barrier to starting a small business in EU. e.g. you must have a minimum amount in an account to start a limited company, ~20,000 euros minimum dep. on country.
In Romania the economy is made for the secrete services which are allowed to create, own and develop private business. They have businesses in key industries and if you want to compete them they can have a lot of leverage over you. You have to work with them or go bankrupt.
It is simpler than it looks. Starting and developing businesses depend on capital - in the form of loans. In the USA, the FED just prints money if it is decided that the economy needs a boost. This is lent out to businesses at around 0% interest - and the cost is covered by the WHOLE WORLD, the USD being the world's reserve currency. Now in Europe, there is just no equivalent of FED. There is a central bank, but it can't just print EUR and hand it to companies. The EUR is the world's second reserve currency, but its prominence is measured by low single digits, so printing more would be paid for, well, Europe. So, in short - the USA cheats by providing endless capital. That is why European companies just can't compete. Still, it might not be an all-bad thing. The US has huge companies that doesn't even promise to be profitable in the future. Like Tesla. Or even Amazon. These companies are just full of hot air - they might be valued high today, but their real worth is less than 0. So far the US have avoided the collapse of these rotten tomatoes - but it might have trouble coming out of this.
Another thing in Germany is, that the culture is straight up hostile to you if you want to have a successful career or have your own business. Among acquaintances, I always get comments for being greedy and antisocial, because I have a comparatively good paying job and now started a business. A lot of people don't tell when they are successful because you are always met with a lot of envy.
in portugal i also pay these advance payments in IRS. ridiculous. suposedly it lowers the burden as the government assumes (probably correctly) that people will not have the money if it is all in one lump sum. But if invested that money can help grow the business. Also ridiculous that i will get fine because they deduct these payments automatically but sometimes dont. And i can never tell what will be deducted and what wont. so now i get a late payment fee when i applied for automatic payments and had money in account
To be honest, starting and running your own business in Poland is already so simplified that if we simplify it even more, pets will start their own businesses. It seems to me that the main problem is to pick out innovative businesses from among them and support their development through funds (which is to some extent) but also, above all, by creating demand for their services in this initial period. Europe is unfortunately more focused on tourism, agriculture or infrastructure construction. There is not much innovation in these industries and this is where a lot of money is invested. We need to think about how to encourage private capital to invest in new technologies and ambitious startups.
try make a simple company in germany and you will understand immediately what these guys are talking about. in romania, too, we can register a company in 2-3 days, even foreigners are allowed to start any company whatsoever, you get a banking account right away without any hassle and a debit card. but the guys from bruxelles are trying hard to cancel all the small companies created this way with useless regulations like in their countries and, if ignored by local governements, they push harder taxation for small companies in exchange for european funds!
there are some good points here, but also others are way too far from being correct as it seems this is being looked at from naïve or American stance. please take this video with a grain of salt
In the US, you can start a business for as little as $25 dep. on the state. Bureaucracy is also a breeze compared to EU. Taxes are low. Bankruptcy is easy if you get in over your head. But... you can still end up homeless living on the street because there is no social safety net.
As an American I can say creating a business has always seemed like a scam to me almost entirely because all you hear about are those who are opening business is saturated sectors (retail/restaurants/mechanic). All you hear about are 12+ hour work days for a decade before they finally make a decent amount of money.
I think regulations like the GDPR scare a lot of people. In my country, Norway, it’s very easy to set up a limited company. In fact, the government has agencies that make the process extremely simple and guide you every step of the way. The minimum share capital is 30,000 NOK (2,500 EUR). However, there are numerous reporting requirements, and fines in the first year alone can easily exceed four times the minimum share capital - and, of course, they’re not tax-deductible. While it’s easy to establish a company, I’m almost certain that an average person without a background in business or accounting will need help navigating the first year’s requirements. In Norway, this issue has worsened in recent years. The frustrating part is that the fines aren’t used for proper controls, which allows criminals to easily take advantage and defraud the state.
gdpr requirements don't apply to most enterprises until they have already reached a substantial size where they will already have some accountancy and HR and compliance focused employees present, this is something that is explained pretty easily when googling up gdpr (and alot of gdpr rules are practically speaking, the formalised cultural practices of places like germany, norway sweden etc regarding privacy). So, if your company is able to get over 200 employees in less then a year, it more then likely can handle the basic requirements of gdpr (as they ramp up as you get bigger).
@@davianthule2035 You might be right; I've just worked in organizations with over 200 people. Most service providers, such as accounting or web service providers, likely emphasized it because this segment is an important part of their customer base.
@@rolf7135 Oh, IT companies and companies with alot of IT processes present have alot of GDPR requirements, but yeh, 200 is the usual benchmark figure, it varies from eu state to state (I don't know how eu directives apply to norway, for context an eu directive is an instruction law, i.e the eu tells its states to make up laws/rules that implement said instructions, most GDPR law is in directive form meaning the minimums on employee numbers and other such details do vary). It was 200 in ireland and germany, etc.
@@davianthule2035 There's another issue as well. Sometimes it seems that even the Norwegian government isn’t entirely sure how to interpret EU directives, and we’ve had a few cases like that. For example, some welfare recipients who were outside Norway but within the EU-and lied about it-have previously received prison sentences. Recently, they've been cracking down on 'distressed companies,' where having negative booked equity is considered a very serious problem, even if the accounts include guarantees and are prepared under going concern accounting.
As a European, I believe Europeans tend to dislike businesses. Heck not even businesses, simply people making a good income - wherever that income comes from. That creates an environment where everyone wants the benefits of having large businesses (the welfare system is expensive and only works if your country is rich. Nordic countries don't have good welfare systems because they have high taxes, they have good welfare because they're rich), without wanting new businesses to flourish. And of course politicians will just do whatever gets them the most votes.
huh, its impossible to bypass employment laws, via a fairly obvious bypass, who would have thought a government doesnt want its laws easily being unfollowed.
@@davianthule2035 it is possible... but it's usually illegal. In three EU countries (that I know of), the taxman turns a blind eye on people working "on the side", such as a cleaner, odd jobs, painting, etc. But even then you must be careful not to add too much cash to your bank account. My point is that when starting out, e.g. a small video production business, you need to hire in freelancers who take care of their own taxes. This is possible but the insurance coverage is prohibitively expensive for someone with virtually no capital. Even with a demonstrable track record in another country, getting a bank loan to cover start up costs is extremely difficult. Catch 22.
While the european pension system based on redistribution is straining with demographic changes, the american pensions system based on investments will struggle when real growth will be impossible due to ressource shortages and climate change.. We are at the end of prosperity, and it will affect both welfare and capitalist systems
The impact of the welfare state is overstated though. Back when it was all the rage in the 1950s and 1960s, European businesses had no trouble to be innovative and grow. It's essentially about finding what we lost sight of. Allowing once again a massive exchange of capital is very much what makes for a dynamic economy. Reshaping tax incentives and pairing them with simplified regulations is what we need, but also for certain countries, business taxation should be moved onto the outcome, not the process.
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Great that you keep an eye on Swedish Professor Magnus Henrekson! I had him as my teacher. He doesn't (only) "teach" school book stuff. He explains how things actually work, off the top of his head which contains a brilliant mind. A rare resource in the macro economics establishment. He's always very relevant.
That's awesome - I am a bit jealous actually :P It was a breath of fresh air to read his book - few academics and journalists dare go against the established reasoning.
A majority (if not THE majority) of immigrants to the U.K. come in on student visas. They are not skilled or educated when they arrive!
Last year only 15% of the 1,4 million immigrants to the U.K. were workers. The rest were, students, family reunification etc. I wish you’d speak of this in your videos.
The increase of GDP in high migrant countries like the U.K. means nothing (it just means more people). It’s GDP PER CAPITA that matters! GDP per capita has been decreasing in the U.K. and has been increasing in Poland (where they have low immigration from non-EU countries). Indeed, Poland will be overtaking the U.K. which is now just a third world country, attached to a rich city (London).
A greatly over-represented percentage of entrepreneurs in the US come from Europe (can’t remember where I saw the stats but easily found). They leave Europe because of high taxes and regulations
In Germany an SME also has to pay taxes upfront, in the beginning based on fantasy numbers and later based on the previous fiscal year. It's killing your liquidity and eventually your whole business in times of economic turmoil. It cost me tens of thousands of Euros discounting invoices to shorten payment terms afterwards. "But next year you'll get your money back." "Yeah thanks, then I won't need to pay upcoming month's rent anymore".
I found this even insulting. Regarding this, thank God I run my small freelance business in Spain and not in Germany. Spanish taxation in this regard is reasonable..just pay every quarter your VAT and that's it. But not in advance.
having to pay your taxes in advance is crazy
Finanzamt sent me a letter one day out of the blue that we failed to pay taxes on some numbers that they had made up and they were freezing my company's bank account and forcefully taking the money. That's for a company that has 0% profit that year.
Everything came to a hault when this happened. I had no choice but to pay off the tax and then try to claim it later in the returns later. I asked my accountant and he said you could get a lawyer to dispute this but that'll cost more to the business than just waiting it out. Go figure!
@@ChetanBhasinlittle despots in Finance Offices .. cannot say it differently
Netherlands is doing the same thing. Many SME are moving to Spain, Cyprus and other countries as a result.
As a founder in Europe I scream in agony. Studying theoretical quantum physics was easier than figuring our and following all the weird and bizarre rules Europe has, especially if your clients are not just in your country of residence.
Its madness.
how can it be simplified on an EU level?
Feel you. Started a GmbH in Germany which I still have, but I would never ever recommend founding in Germany/Europe unless the biz case needs it to be somewhere in EU.
God, its tiring.
and why our product are such high quality.
Why people are not insuring their life, wife, house and children just for opening a buiseness like America.
Europe did that before and 98% of buiseness created were in the red and create more issue (fiancialy) on people lives than some ego creation like america :/
@@semikolondev what a bad take. You say its good that oligopoly exists ? That competition has barrier to entry so rich guys can afford lawyer to handle byrocracy ?
@@Victor-tl4dk Unified VAT. Unified company registration. Unified company tax. Unified workers regulation. Unified traffic rules. etc
As a technology startup owner in Germany, I can personally confirm that most of the topics discussed are spot on. For my company, it took 7 months just to get a tax ID, which meant I couldn’t issue invoices or sell services, and I ended up losing all my clients before I even started. There’s also no real investment opportunity and we were asked to pay taxes upfront based on a made-up number-although we declined and it was accepted, we now pay upfront based on real numbers. On top of that, the high electricity prices make it impossible to compete with other countries. We’re constantly bombarded with additional tax letters and new regulations; every government agency seems to have its own set of rules. As a result, a lot of our time is spent not doing business and verifying ever-changing regulations! Another issue is the political climate, which is a complete disaster at the moment, adding further uncertainty to an already tough environment. If nothing changes in the mid-term, we might seriously consider moving out of the country.
There are other countries in the eu. You should have tried another country to do it! I can guarantee germany is an impossible country if you want to just try a business idea.
There are other countries in the eu. You should have tried another country to do it! I can guarantee germany is an impossible country if you want to just try a business idea.
@@strigoiu13 Like what?
I am self-employed it Poland. It should be easier
I heard Luxemburg is really good for startups.
Don’t underestimate the killing effect of housing prices. As it stands now, my wife and I (both employed and reasonably well payed) can’t yet afford our own property. We will be able to however, in a few years.
Given that we’d like to have children, I’m not willing to take the risk of never being able to afford our own house. That fact alone, kills my drive to start my own business…
i'm working six days a week to pay rent for a small apartment to keep a roof over my families head, meanwhile next to me are families of 'asylum seekers' who have been living rent free for many years and even after getting full citizenship they are still not working. this is really beginning to crush my spirit.
This is the same in the USA, and part of the "rich getting richer" scheme. Let's face it - our children won't have a chance of owning property at all. Average people are becoming more and more wage-slaves in the developed world.
@@pondeifywell the Government at first place should be giving them the opportunity to work, not when they have permission for. Nevertheless earning money with such taxation is a real burden.
@@pondeify Fellow human beings deserve just as much a right as us to our European niceties. It's a human right to have EU citizenship, you bigot. Why are you getting depressed? You should feel happy your tax money can be spent on refugees! You're welcome. Good that the government forces you to give money to them so that they can redistribute it to migrants. Otherwise selfish people like you would never contribute. Change your attitude and next time pay your refugee neighbours a visit, and greet them with a "Assalam Aleikum", be kind! These people went through a lot of hardship and so it would be good to talk to them. Invite them as guests! Perhaps even consider donating, especially if they don't have essential items like mobile phones. (An iPhone would make for a great gift!")
@@pondeify asylum seekers are not the ones that caused the housing crisis - it's those who should've built houses but haven't
I started a business in the Netherlands 23 years ago. The bank denied a loan but family and friends supplied the necessary cash. I avoided hiring help due to all the energy that takes and started working with network entrepreneurs. Last year I sold the business.
I could have started up faster and could have hired many people. I still do not regret how it went. Before I started the business I worked at large corporations. I learned that I never wanted to have a large company.
Congrats on the sell!
congratulations for your success.
will share some tips or pointers for a young man from a third world who is about to start his own software business because every other businesses sucks,
they inslave you and give you nothing. most devs are ok and their level isn't much. but i know for fact that my level is way high compared to others here even though is nothing compared to other developed countries
i was talking about some ideas and my cousin (much much older than me) heard me and said these idea needs to get to real world you will do them and i will invest and give all the support from cash to hardware you need.
that is great but i still need to learn a lot about business
It is not only in relation to starting the company, but also when you are up and running.
@@AB-zl4nh Interesting information, but what is the relevance to the comment I made?
Also, it's easier to start a business and close a business in US. So difficult to close a business in France as an example.
@@eile4219 I don't envy the French. There are big challenges and important choices to be made.
Depends where you are sweden is extremely entrepreneurial. Sweden is built on family businesses, it has more family businesses per capita than anywhere in the world
Culture also matters to be more entrepreneurial
Yeah, he talks about welfare making people not want to be entrepreneurial, however having strong welfare means it's also less risk for people who start their own buisness, as they have something to fall back on. Case on point being Sweden.
@@algot34 In Finland you're not allowed the same welfare if you're an entrepreneur because entrepreneurship is considered employment. So it's way more risk to be entrepreneur than just get some low income job.
@@paavoilves5416 I like to compare Finland to Estonia, I believe taxation is the primary reason why Estonia has a stronger business environment, there is no reward to starting your own business if you are going to have to give all your profits to the government. It comes down to countries with strongly established 'responsibilities' which decrease their ability to move quickly. Countries in Eastern Europe and the Baltics are growing faster than everyone else, because they tax business owners less, so the rewards are higher, and they they are able to do this because they do not desperately need every cent of their tax revenue to keep their heavily indebted system functional.
It's all fine until the end.
I'm from Poland, you know why we don't need as big cash flow into thr system? Because of very low expectations. Somebody dying out of cancer why waiting for a doctor to take care of it? Well, that's how life is.
Little support after losing a job? Just move abroad, like what do you mean you can't get a job while there always is some...
And a lot of institutions are just absolutely dysfunctional, like work safety controls and many others.
No need to put money into the system if people have extremely low expectations about the system in the first place. Yet still minimal wage worker here is heavier taxed than in Sweden - if companies aren't taxed then others need to be taxed to compensate.
huge country with enormous natural resources with a tiny population. We always have these examples that do not reflect the reality of most other European countries. It's like saying the UK, France or Spain and Portugal during colonial times. Abundance of natural resources help quite a bit
Additionally and very relevant to always comparing the EU to the US, even more so than regulations, is homogeneity. The US is fairly similar linguistically and culturally all over. The EU is not that homogenous, expanding your Dutch business into Poland means a different currency, culture, language, and bureaucratic system. Expanding across borders is not easy or cheap, expanding EU-wide requires a lot of money to be spent just on translation of your documents, UIs and marketing material into that many languages and adapting it to that many individual consumer cultures. French people are pickier and more demanding with their food than the Dutch who prefer simplicity and predictability. Germans are far behind in technology use in everyday life than Dutch even though they border each other. Lithuania is notorious for needing to pay out bribes to get anything done. Having this many differences is very difficult to keep up with at a smaller scale and no amount of "cutting red tape" changes these things.
Honestly, currency. culture and so on is not that much of an issue and most use the euro anyway. The huge difference are the many laws and different bodies of government and bureaucracy. You have to constantly change up everything in every single country. That's been from my experience by far the biggest issue.
Interesting, maybe the Austrian painter was right all along in various aspects, tho maybe too autistic on some others to make them feasible.
At least the cultural, linguistic and bureaucratic system would be more homogenous. And it just so happens that wherever there were Germans and Austrians there was more prosperity and progress, while wherever there were Russians and Ottomans, there was just poverty, misery and backwardness.
@@Arathreas There's a similar issue when expanding a business in the US from intra-state to inter-state, but I have to imagine that the regulatory differences between EU countries is bigger than between US states
It's funny that you explicitly mentioned Lithuania....
What's the problem with Lithuania?
The data about Poland might be somewhat distorted as regular employees choose/are forced to work on a B2B basis due to much lower taxation. As a result, almost everyone opens up a "business" to avoid the tax progression on a regular contract. This also makes you easier to fire, you don't get the regular contract benefits, etc.
Hi, This is data on companies with 10 or more employees. I specifically chose this parameter to avoid including the self-employed in the stats :)
Cheers,
Hugo
Come on! The trend to open business for every job has declined a lot. Right now it's mostly IT, where employees prefer to go B2B to pay lower taxes (just 12%) and they don't want to contribute to social welfare. I was doing that myself and most of programmers do that. Compared to rest of EU taxes on business are one of the lowest, regular employment is not taxed high neither.
@@michalbicki6196regular employment is hella taxed considering payments for welfare
@@blessedsnake8246 it is taxed more heavy but nothing to compare with other EU countries
In Denmark it is also the case, as I understand it is in Italy, that corporation tax is paid in advance based on an estimate. Denmark has the advantage that the labor market is liberal, where it is relatively easy to fire and hire. It is the whole package that must be evaluated. Switzerland is an interesting case. Extremely democratic, extremely successful and low taxes.
Poland's stats are sus - most of those "businesses" are just software developers setting up sole proprietorship LLC for tax reasons and still work like they're full-time employed but officially it counts as B2B.
He included only "companies above 10 employees", so opened sole proprietorship doesn't change much.
In Baltics and Scandinavia they do ;) The problem is old Europe and their hubris. If you look at Baltics you see enormous progress, start ups, some ideas implemented better than in USA. The biggest problem is France and Germany with their above all attitude and overregulation and total ignorance that the world has changed and that they are just two small nations.
My interpretation is that it is less about national superiority and more about the structural constraints that come from the large, established systems in places like France and Germany. Their need for high tax revenue to maintain these systems and that can limit entrepreneurial incentives, rather than it being an issue of “above all attitude.” I see the real issue as systemic-those countries have built complex infrastructures that, while functional, aren’t as adaptable or conducive to rapid progress and innovation as, say, the Baltics.
Well, Germany might be small but it's got a decent population and the worlds 3rd largest economy.
"Hubris"
Accurately describes central European culture. As a foreigner living in Austria, I can see it everywhere.
@@arankin2914 As a German, let me tell you there is a lot of hubris involved. Leadership in politics and industries got so arrogant by their economic success that they completely missed digitization for 20ys. And now they're (as groups of people) too incompetent to understand where to start catching up.
as an American I don't know whether you are right, but looking at what Germany did with nuclear I think you are.
Here in Spain 🇪🇸, opening a new business is very difficult due to the high amount of bureaucracy and paperwork that must be completed, the taxes that must be paid and the difficulties in hiring qualified workers. In fact, our large companies were founded many years ago (Inditex-ZARA, Telefónica, Banco Santander, BBVA, Iberdrola...) and most of them obtain their main profits abroad, such as in Latin America 🇦🇷🇨🇴🇲🇽🇧🇷, the USA 🇺🇸 or the United Kingdom 🇬🇧. I think that Spain should not depend so much on tourism and should learn more from the USA or China 🇨🇳 when it comes to starting up and doing business.
What's strange is in the UK it's incredibly easy to start a corporation, fill in a web form, pay a small fee and file accounts every year and that's it. But there's clearly some other issues.
Yep, companies like CRISPR end up getting incorporated in low tax Zug, Switzerland other than Spain. Spanish minds contributed to its success but Spain won’t be able to keep them without changing. And Spain has more positive things to look forward to than other Western European countries!
@@Croz89the problem with UK is not having the capital to scale the businesses up
But having said that what we don't see if the businesses in America that fails and not make it
A venture capital would bet on like 200 start up and maybe only 1 of it make it big
@@Croz89UK has far too many unproductive people who have to be paid for. They have to train adults and teenagers better. Those who don’t want to work after that should be encouraged to emigrate.
You have only 3 routes to success in Spain:
1) Become a civil servant: Good working conditions, less than 40 hours/week, being unfirable (there have been cases of people not going to work at all for years and still getting their salary), better pension, and a parallel healthcare system that avoids the mess of the public one. I know school teachers that earn more than an engineer while working 25 hours per week and having twice their amount vacation days. All is financed with ever-increasing taxes and debt (let's kick the can down the road).
2) Become a congressman (of the state or an autonomous region) or an appointed high-level civil servant: You earn 4-5 times the median salary, plus most of the perks of the previous point.
3) Emigrate.
Bureaucracy can be streamlined, like in Estonia. That should be the way forward. After we reach that, only then should we talk about cutting the welfare state.
Such a banger of a vid
Unlike your name 😬
judgmentcallpodcast covers this. Starting business in Europe difficult.
People should be aware that the time period where inequality was at its lowest point is during the second world war, where everyone was equally poor.
TWO videos in one week?! Into Europe team putting in that work 😤 keep up the great work
Sorry, but is this some kind of European problem I'm too Estonian to understand?
I had my sole trader company registered in 5 minutes, and we set the world record for registering an LLC - 15 minutes from filing application to being entered into the business register
i'm jelous
Whatever takes 15 mins in Estonia takrs 15 years in Germany
Estonia is pretty good for European standards and as long as your structure is plain vanilla. If you want to set up a bit of a more complex structure (business owning business) then it gets tricky. Not to mention you need to apply and wait for e-residency. My co-founder and I were in that boat a few weeks ago and we decided to incorporate a US LLC instead, even though the two of us are Europeans.
Same in Poland. My company got registered in 30 minutes (about 10 minutes work online + 20 min confirmation wait time)
this video clearly wasn't about sole proprietorships.
So true. Im Portuguese, tried to do something in Europe a few years back, and getting clients as a startup was super difficult.
Joined a startup in the US, not only was the amount of VC backing enormous without any clients, got clients and solid revenue in just 3 months after funding.
It breaks my heart
My best friends sister is from Mexico, actually there entire family is from Mexico. But anyways, my best friends sister started a business in Chicago.
It's actually very easy, we have a large Latin American population in Chicago, and they value their small businesses. In fact, I think Latin American migrants value their small businesses in general.
As a American yall definitely don't want to scrap your welfare state stuff at all. It's horrible here.
@@baronvonjo1929win big lose big. There’s no reward without risk..
Yea, USA is much better versed into burning cash then EU. High risk - high reward mentality.
@@baronvonjo1929 what difference does it make if many EU countries can hardly afford to pay for it now and they won't be in 10 years.
I'm a self-employed Brit who runs a business that would probably benefit from a second person working in it, but I just can't be bothered to deal with all the paperwork I assume that'd include.
Sub contract? B2B?
The most functional welfare state is funded by successful economic policy not social.
Name one.
@@TheSquidPro He named an EU one in the video but I'll give you some easy ones to look into.
Australia, Singapore and yes even the USA.
China though not free has an economically funded welfare state.
It's only Europe that's lagging behind.
@@StickmanA "and yes even the USA"
Said like the U.S "welfare" is not a complete nightmare from veteran support to healthcare to general social safety net.
@@StickmanA As a Norwegian i chuckled a little when i saw you claiming the US as a welfare state
@@StickmanA China has no social welfare whatsoever. Common misconception, probably because they call themselves communist/socialist
Understanding incentive structures is an important filter to have in one's toolbox.
The recent EU report on the economic stagnation and failure is very telling. However, in typical EU fashion, the suggested solution is more of the same, which means no solution
This is why so many lack any hope for the EU, as the very solutions they suggest to fix the very problem they created are the smallest of changes/tweaks to the system. And even then it seems radical to many Europeans. The solution for many problems facing Europe now is going to take a more drastic and urgent approach. Otherwise, they will miss out on economic growth AND slowly lose their social benefits (which are only possible in strong economies).
Central Europe is dying slowly economically and culturally
In fact the report is wrong, both on solutions and on the problem, the problem being lack of productivity, which is not happening, if you cared about real world(PPP) data.
@@persiathiest1963You're polish aren't you?
@@joaoruxa No, I'm not from Europe but live in Austria.
The EU should look into Australia or Sweden on how to combine a US style business focus while keeping the welfare state
Yeah just leave kt to dianne abbott and David lammy the two geniuses
I'm not sure I buy the social security disincentivizes entrepreneurship argument. Starting a business is a risk and I'm much more inclined to take risks if it doesn't result in losing my entire livelyhood. Henreksens assessment about equal access makes sense though
completely agree
But you might loose you entirely livelyhood, that is the whole point of the argument. As an entrepreneur not only you can loose the money you invested in the business, but you also get no unemployment insurance. That is why it is so much safer to stay an employee.
@@louissch5955 That's not even true across Europe though. Here in Austria you pay unemployment insurance when you're self employed too. And if you own a ltd that you work in, your company pays unemployment insurance for you by law. It's next to impossible to work and be uninsured.
Meanwhile when nobody gets unemployment benefits, I'd think very hard about quitting my job to start a company, no matter how good my business case is.
In Ireland the housing crisis causes a massive problem , its easier to be a landlord than starting a business. A solid return for no work . There is a cultural hangover of money in land.
North America and East Asia already passed Europe in economic competitiveness, the Arab Gulf would be next as it’s looking to have way more free digitalized economies with harsher capitalism than the EU
Estonia and the Netherlands are the exception
I'd like to mention the Dutch American friendship treaty. This program actually makes it "easier" For Americans to get visas and start a business in Netherlands
Those U.S.A. have that with almost every country in the world.
The real reason Europe doesn't have multi-billion dollar unicorns is that we don't have heaps of money lying around, waiting to be poured on any student with an idea. And the reason we don't have that, is that the Euro is not a global reserve currency that we can print at comparable scales and pump into financial markets to inflate them.
Uber didn't earn a dime for over 10 years and burned more money than Warsaw's (Poland's capital) entire budget over the same period. So one company doing taxis used more resources than a city of over 2M inhabitants (metro area population).
Europe operates a mid-20th century model of capitalism: you start a business, you get some earnings, you scale accordingly.
America operates a totally different version of capitalism where insane heaps of money are thrown at projects that PROMISE returns and then competition is outspent by VC's.
I leave it to readers to decide how that serves the general American population in terms of quality of life.
When it comes to cutting regulation, often the wrong ones get cut, ones that ensure people's safety. Then something bad happens, like a train crash or a tower block fire, a lot of people are killed and injured, and they get reintroduced. This has happened a number of times in the UK.
No clue why it's so hard to copy policy that's proven to work abroad
@@dioniscaraus6124because a society isn't only politics. It's also mindset and culture.
@@dioniscaraus6124 Because policies are contextual contingent plans/operational guidelines (or rules). They are not a universal tool, a policy can be perfect in one place but be batshit in another.
A policy banning cars in large parts of a city? Generally likely to work and accomplish its goals,
apply the same policy to a rural area and youve just stranded the population of said area if they are not one of the few rural areas that forgot public transit links (like trains) exist.
And this is before the next issue, institutional efficacy.
Basically, the institution has to be competent enough to fulfill the policy, it has to want to do said policy, and it needs a society thats willing to cooperate with it too. This latter part is the stickler for alot of places, i.e broken institutions, severe endemic corruption etc. I remember someone covering how alot of poor countries in the global south on paper have similiar policies to the EU on many things, but the actual enforcement of said policies does not exist etc.
I started my business in Italy in 2010. I am closing it this year. High taxation, excess bureaucracy and heavy regulations. These are the 3 main issues that keep European youth to start businesses. In my case it was the first one, after 2020 I could not pay taxes anymore. I had to pay salaries, electricity and minimal things to keep working as a priority. This decision was a no-return path because I could never recover from the tax debt, after all I had to keep food on the table for the employers and also myself during almost one year with no income in my business. Now I have a huge tax debt and it is not sustainable to keep a business running only for paying taxes and to eat. The incentives and financial help is available only if you are a tax up-to-date company, so no money for us during covid lockdowns. I had 12 employers, now I have only 1 and I will close in December.
By the way, 6 from my ex employers are still unemployed since one year already. In my opinion Europe is not looking for small business as it should. Similar to my case, I know at least another 10 small companies that closed in the last 4 years.
true!they expect us to work just to pay their taxes and their large employee workforce :)) sure, that is why all the small and medium businesses get bankrupt with large tax debts that will never be pad, but their owners are not bankrupt at all and just start another business and large companies are registered in ireland and luxembourg and declare no profits :))
@@strigoiu13 not that simple for normal people. It costs a lot to open and run a company abroad (on paper). Big companies can afford to invest on such structured offshore operations. Normal people with traditional businesses, if we fail, we are fated to never have a business again. Off game forever. I might migrate to the US with my family...
The integration of the service sector, the better development of financial markets but also reduction in regulation are the most important elements. If you compare total wealth in the EU and US it is not far apart. The higher share in low risk assets is one problem but one of the "advantages" of the US is the high wealth concentration. So there are a few people that can take a lot of risks, because they have vast wealth. The vast majority is poor though. In Europe, you have a lot of people with some money. But they invest more in real estate and lower risk assets. Also real estate is cheap in the US in most places except for a few big cities.
Ukraine is a best place for self employed. Also they have their Dia City for start-ups and bigger companies with English law practice. They are keeping on pace with economics despite the war
A simple recommendation is to release spontaneity. Copy Switzerland it works.
They should adapt the Estonian model for taxation
Which is?
@@TheSquidPro They digitalized heavily, reduced the bureaucracy, and implemented a flat tax.
@@zesky6654 the flat tax part would probably send many bigger countries into bankrupcy if implemented, the estonian flat tax also works cause its rare, wouldnt really work if everyone had It.
They should shift taxation to land values instead of income and sales.
@@tomi213 this 100%.
Abolish all taxes and introduce a 1% yearly wealth tax. 1% of all your assets are taxed yearly so your goal should be to somehow be able to get 1% return on those assets. In case you can't sell it...
If you tax productivity, you destroy productivity which is why our system is so bad. Just tax hoarding and that's how you create insentives for young and upcoming, hungry people.
I would argue the welfare state is Europes stongest asset. If people feel comfortable there is a safety net they are more likely to take risks like starting a business. The best thing Europe can do is to focus on reducing bureaucracy, digitising government services, unleashing the power of EU wide capital markets, deepening the single market, and keep investing in our human capital
There are 2 main problems, lack of VC funding and culture, lack of VC funding is self explanatory, but the cultural mindset in many European nations is that people are risk averse, people don’t like taking the risk because they don’t want more, and there’s nothing wrong with that but it does create a culture of stagnation
If that were true, Europe would be doing better. It's not.
Clearly it's working out so well
as an Polish American who got caught up in our legal system with no support whatsoever I think you are right on some level. I look at the EU and it looks very appealing to me.
I'm not proud to live in a place that has the most prisoners in the world, lowest animal welfare practices, no sidewalks, and chemical food.
Frankly, the only thing that US has going for it for me is money (which is kind of a big thing since with money one can eat better food, live somewhere with sidewalks, etc.) and I guess freedom in some ways, but not others. The US has been very rich 'historically' I think because it's very safe from 'threat,' has many natural resources, has been unified, and has more of an open mindset. There are other factors too.
But the last of those things I listed, an open mindset can, I think, can be overcome with education. Europeans are better educated. As for the other problems; those are definitely real, but maybe somewhat independent... The US is just 'naturally advantaged?'
And I agree that with more time and more security people are more likely to explore and take risks. Maybe Europe can make it safer to be an entrepreneur instead somehow. That guy in the video pointed out how he did not have the comforts people in europe get while working steady jobs.
@@Victor-tl4dk "Europeans are better educated." By what measure? The US colleges and Universities is where the world comes to get the best education money can buy. The EU had good intentions but it's dying due to regulations and social welfare. People aren't motivated to work and innovate. I give it 10 years before it busts apart at the seams. Brexit is just the beginning.
In Denmark you will have to pay tax on a gain in the value of the stocks even before you sell the stock. So, if you thought you were going to keep the good stock that you invested your money in then you better be so well off to start with that you can pay those taxes continously every year. If not, you are forced to sell your stock before you intended to in order to pay that tax.
It gets worse.
If the stock falls in the second year you still have to pay that tax on last year’s gain. So, you might end up with a stock that is the same value as when you bought it but you have to pay tax on the gain that once existed on paper. And you are not allowed to deduct losses before calculation of that tax. You are only allowed to subtract a loss from a gain within the same year. The tax on gains is the same rule as income tax: highest margin is 60% tax - because the deductions you have has already been used on your salary, and thus you pay the max on gains from stocks
I didn’t know that. The situation sounds significantly worse than in Norway. With a holding company or a special investment account, you essentially don’t pay any taxes on stock gains from companies based in the EU until you withdraw the money (losses are, of course, non-deductible as well; full symmetry). You only pay 3% tax on dividends.
I don't quite buy into the theory of "entrepreneur by necessity": starting a company is a risky business which requires some level of savings and being aware of the high possibility of losing them all. It's hardly something born out of desperation or necessity. Why would welfare hinder that? In fact having a good cushion to fall back into in the case the venture does not succeed should actually foster entrepreneurship and not hamper it, giving one more comfort in risking their savings.
This theory felt quite forced and without any factual evidence, not even at correlation level. Sorry you lost me right at n.1 on this one!
I think it does happen for smaller businesses like restaurants and shops, but maybe not for tech companies indeed. If you go to poorer countries like Mexico you'll see everyone is basically an entrepreneur, selling things they make on the streets etc.
@@tobiascornille sure?
That first point only applies to small, hustle-sized "entrepeneurship" - I doubt he was trying to translate that to larger scale companies. The "i-have-welfare-so-why-risk-it" argument still applies to the comparatively less amount of capital invested in the EU.
@@juana.torrente9908 exactly
100% agree with you Claudio.
Not sure how anyone could reach that conclusion tbh. Seems like a very outdated view to me.
In Germany an employee receives 35% of the money s/he cost to the company (26% if paying church tax). And you pay extra 24% tax average on living expenses, there is an extra tax for dogs,
if you have assets tax rate is 28%. If a company gives you free shares as a part of employee program, you have to pay taxes on that as well.
Takes 2 months to open a bank account on a traditional German bank, takes 2-3 months for them to connect internet to you.
On top of that you have to pay always an extra when using insurance services, not everything is covered, dental care is not covered at all.
Also you are not allowed to work overtime and receive money for it
I thought they changed the employee share options, mainly to help startups hire talent while paying average salaries. I thought this was implemented quite recently. Am I wrong?
@@ROBOROBOROBOROBO To be fair, they changed it 3-5 months ago. But it did enough damage
@@MrLonelybusinessI agree, it’s a joke how much legal, administrative and account costs a startup has to bear here even before making a single penny in profits. This was the frosting on the cake, making sure no startup could hire talent, because realistically of course we cannot pay salary and benefits as much as a large cooperation. Now they fixed at least this…
it took me 30 minutes to open a bank account at three differnet german banks each.
So stoo talking this nonsense.
@@toom2141 how long did it take to get your notar, court registry, tax id when in US all these combined is about 15 minutes. Also you are paying more in accounting compared to US companies in general which has access to a significantly larger market.
If you are talking about personengesellschaft instead of kapitalgesellschaft, you dont even have a startup, you have something else and are trading in your name. However startups need to be in GmbH or UG form, to be able to get investments and so on. And bureaucracy is very heavy on them
keep up man, great research as always
The right choice of an investment has always been a big problem for me I know picking a wrong investment will leave a big scar in the future.
It’s really heartbreaking to see how inflation and recession impact low-income families. The cost of living keeps rising, and many struggle just to meet basic needs, let alone save or invest. It’s a reminder of the importance of finding ways to create financial opportunities. You've helped me a lot sir Brian! Imagine i invested $50,000 and received $190,500 after 14 days
Absolutely! Profits are possible, especially now, but complex transactions should be handled by experienced market professionals.
Some persons think inves'tin is all about buying stocks; I think going into the stock market without a good experience is a big risk, that's why I'm lucky to have seen someone like mr Brian C Nelson.
Finding yourself a good broker is as same as finding a good wife, which you go less stress, you get just enough with so much little effort at things
I'm surprised that you just mentioned and recommend Mr Brian Nelson. I met him at a conference in 2018 and we have been working together ever since.
Laws are strict and it does not help that atleast in Finland people are so jealous that we have even saying that people are ready to pay 100€ just so their neighbour can not get 50€💀.
💀💀
When you're young, you'd prefer more "American model". Otherwise you'd prefer current model. And since EU population is aging and majority of votes belong to not young, no one will vote for cutting their own source of money.
Plenty of older people live in the US, and younger who move elsewhere
You have the problem where you are measuring company size by public stock price market cap, this heavily biases for countries where "investing" in the stock market is more prevalent. It's like comparing government success or size based on how many bonds are purchased.
It's just extremely dependent on how common it is to engage in that system.
Japan isn't more successful or larger just because it sells so many more bonds.
And american companies arent more successful or larger just because their stock market sells so much more stock.
Other examples from the opposite argument direction can be found in countries that have very little stock market yet still have large and successful companies, yet you wouldn't know that if you we're measuring by public stock price market cap.
The stock market is very much not a thing that just springs up and links itself to reality, just look at Hong Kong which pushes the stock market extremely heavily. Hong Kong doesn't have larger and more successful businesses just because there is more attention put on expanding the amount of investment in its stock market.
I agree. They should be looking at gross revenues or net free cash flow. That's how the Fortune 500 is calculated.
Yes from my union most businesses in Europe are private and small to medium size including the power house of Europe Germany
The main problem is that here in europe we dont have thousands of billionaire oligarchs and investment funds that are willing to throw the gdp of countries at any random startup. Here in eastern europe we also have a unique issue where its impossible to start many types of companies unless you have friends in the bureaucracy.
We shouldn't reduce safety for employees. We should increase the resources for entrepreneurs...
Pensions need to go into a system that is more like the 401k. Meaning that our pension payments get sent into the eurostoxx 600 basically.
That money basically goes into companies. The birth of new companies should be a direct transfer from large companies into little seedlings. I'd say it should come from capital gains tax.
401K is ironically heavily criticised and alot of americans want to shift towards the pension systems seen in the EU (namely because 401k's are both rather high risk for a pension fund, and most of them don't cover the pension properly either, and not marginally but but a substantial margin). The USA also does not have the same problem regarding a grey population, i.e the USA still has healthy demographics to sustain a pension system etc. The issue in the eu on that regard is, well, collapse in labour pool while huge spike in pension costs simultaneously.....and said collapse in labour pool threatens the entire economy for some countries, germany nearly fell into recession before covid primarily because of said labour pool problems, its worse now.
@@davianthule2035 oh that's neat to know. It probably is still better to not have a fully pay as you go pension system, because that requires stable or growing population. Havign the pensions at least partly be investment Fonds is going to be more likely payouts that are covering what the person has paid in, because of inflation making past payments into pensions become super worthless.
Meanwhile having the pensions in a Fonds the pension management can at least recoup some of the value through capital gains.
@@ayoCC Oh yeh no, that is the future of pensions regardless, i.e pushing them away from the pay as you go system towards a system that is self sustaining. This transition however, itself will take time we don't have (at least in terms of the retirement issue becoming a crisis) in most eu states (and reopens the conversation on what is the nature of retirement, i.e is it a state benefit or a personal savings fund).
"Planes falling out of the sky?" I'm really not too keen on defending Boeing, but the last crash of a 737 max i know of was like 5 years ago, and it wasn't in the US. The current problems are a disgrace, but hardly "falling out of the sky."
If the make of plane is what were going by, the recent crash in Brazil was a Euro built plane, i believe.
i need to say it, you create a really good thumbnail
simple, relatable, attracting to click
Cowboy, I discovered you today and love your work, but you gotta get better lighting! Or just up the exposure setting. Cheers and please keep it up! From the US
If feeling happier about your life and owning your house comes at the cost of living in a place with less consumerism, at the end of the day I’m better off this way
as an European, unless you live in eastern Europe and have an ok salary for that place,you won't own a house and you won't be happy. I have a moderately sized house with a ploy of land and I got it for a 500 euro/ month mortgage in a very nice city in Romania. But try getting what I have in Germany, it's 7-8 times more, IF you can find anything. All happiness charts are skewed, as Finland , you cannot be both the happiest country in the world and have an extremely high suicide rate. It's all about culture,if you ask a Finn if he/she is happy or not he/she will tell you that they are, because they don't want to show off negativity,as that's how they are brought up. So you have all this pent up frustration/depression because you can't really tell anyone how you feel and end up deleting yourself. Meanwhile, Romanians who always talk bad about themselves and cry about their situation have more fun,laugh much more and have much larger friend and family groups than the Finns
Great video as always
i absolutely think that having services be a given instead of reliant on certain jobs is key, in norway for example if you work for a company a certain percentage of your employers profits from you are taxed and put into your pension, but there is also a lower limit so no one will starve if you haven't worked for a company, health is a universal right, though our healthcare system is stretched kind of thin these past years.
1. You paint with too wide a brush. Europe is VERY diverse and incentive-structures vary greatly across different countries.
2. Starting a business isn't hard at all (at least not in the countries I'm familiar with). Growing the business from local to national to multi-national is much harder.
3. Your view of the welfare state as a hindrance to entrepreneurship is imo flat out wrong as is your take on the difficulties in hiring personnel.
4. Digitization, at least in the Nordics and Baltics, is way ahead of the US.
100% right. He is advertising a view of how to create a company as US or China imagine it, i.e. a terrible way.
Yea I have to say that starting a business here in Finland at least is really easy and you will also get all kinds of help for free if you aren't sure how to do something. Finnish tax system also highly favors entrepreneurs. But as stated on the video, hiring workers for small businesses comes with massive risks as you are required to pay for long time if worker is on a sick leave. Or simply if you make a wrong hire and the employee decides to not work properly, does poor work or little work on purpose. At least in Finland firing an employee is super hard and very expensive for companies. You gotta be very careful who you hire, which isn't good for anyone not the business or workforce.
1. Is very diverse, but EU parliament is trying to enforce ECO laws that kill the compentitivness.
2. Isn't, but nobody cares about starting, but holding ;)
3. Hiring is not hard, but when it comes to maternity leave or paid sick-days, you're fk up ;)
4. Nordics and Baltics.. Yeah, ahead, especially in the inflation (Baltics) and Nordics (in terms of migration - migration of lazy people from Africa & electricity bills rises)
europe is white
Why would I risk my life over a failed company? Would rather have house over my head than struggle with company.
I own a business in Romania. People say "oh so write all expenses off on your company right?".
I tell them I would gladly give the state all that money if I knew it was going somewhere where it mattered.
In the Netherlands, you basically have a 36% tax on stocks. Hardly worth the risk...
no one doing stocks pays their taxes like that, anyone seriously investing in stocks will use tax harvesting (basically writing off losses from stocks that lost value against tax burden), in most countries this HEAVILY reduces the real tax burden in stocks, the netherlands in particular being one of the best places around for it.
@@davianthule2035 can you explain how cuz we have unrealized gains tax here
@@davianthule2035 In summary, while traditional tax-loss harvesting isn't currently viable for most investments in the Netherlands due to the deemed return system in Box 3. So, doesnt work
Forgot to mention that even when one has money to invest a little of it will be invested in the European market. Foreign exchange funds are so much more profitable and stable (New regulations aren't coming all the time).
the problem doesnt lay with a welfare state if anything it encourages people to start their own company since the risks are much lower. The problem europe has is funding and regulations, american investors can easily invest while europe cant since its split between multiple countries and same can be said about the regulations which yes the eu has some but it isnt the problem. Sweden doesnt have a regulation problem and neither does the baltics and that can be seen with a lot more localised tech solutions and companies
I'm no corporatey or financey person, but the main obstacle seems to be the EU market itself, which needs better integration. Have to break it down by the individual countries and their output, and their inability to offer services across the EU market. If it really is an ''EU'' market...then shouldn't there be a way to ease the doing of business across the borders with other countries there? Like you pointed out, the US does it better since it's a single entity with a shared culture, language, and a single government...and fairs better despite having 340 million people vs. Europe's 750 million people.
The EU needs to find a way to 'streamline' businesses that wish to do 'cross border' services. While each country has its own culture, laws, and taxes that make it more ludicrous...it at LEAST could deal with the 'bare minimum' in English, with it being the 'language of business'. That welfare state also puts a damper on business start ups, not to mention the high taxes and loony bureaucracy.
While US employees don't have the safety nets that Europeans tend to have, the whole 'abuse of employees' here isn't really a huge thing, it can happen sometimes but action can be done against the company usually to fix this problem like being public about it.
What I can surmise from this is that the EU has 5 main issues, 3 of which are cultural it seems. The first 2 are...large bureaucracy, and taxes. That puts a damper on ANYone in the world. The last 3 are...nothings open on sunday, siestas, and 2h closing of businesses for lunch (which seems to be a southern European thing). Sorry guys but you can't have a major economic output with these obstacles in the way. You want to increase your economies but maintain your very comfy lifestyles...not sure the 2 exactly jive together, it's like oil and vinegar.
Also...how difficult is it for a country there to have their services, like on their websites, translated?
Cutting red tape report will come in and indicate: now every company has to report in their findings weekly about how we can cut the red tape.
Nice video, thorough and interesting. Well done
Just for comparison, I have a Limited Liability Company (LLC) in Colorado, USA. Establishing my company took about 45 minutes to do the paperwork online, as well as $60 in fees.
As Estonian, its quite long time for that. Takes me 15min max, and most of time spent looking for "next" button and cheking that name is not allready in use.
Found your yt today!
Golden stuff.
Welcome aboard!
While on one hand you might be less incentivized to start a business because of the welfare state, on the other hand you can also use the welfare to support you while you start your business and help bridge the gap before you're able to make any revenue. In Germany there are even special programs for this as an extension to unemployment benefits that help people get out of unemployment and into entrepreneurship.
First of all, it is worth realizing that despite the proposals presented in the film, there are no easy solutions in the area of improving European competition. It is as it is not because someone came up with it, but because it is the result of difficult, hard-won political compromises made over several decades as part of the process of integrating very diverse national economies, first in the European Communities and later in the European Union. The integration process is by no means complete, because it still encounters barriers from various oppositions. Therefore, the facilities for European business will be introduced with resistance and rather through rather twisted paths than hitting the target straight. However, I am optimistic: as long as there is intra-European economic competition between member states and their societies, and the EU structures do not seek to suspend it, there will be constant pressure to introduce good improvements for businesses. Whatever comes out, there will be no point in abandoning the current development model. People vote with their feet and the balanced flow of US-EU migrants, with an indication of the EU, shows that we are probably winning in this competition of life models.
Saying the welfare state is purely anti entrepeneurial is rather shortsighted I'd say, sure it takes away incentive, but also massively lowers risk, if you start a business and it fails you still have the welfare state to fall back on. this is obviously an effect that is really dependant on the specifics of the welfare state, but it isn't a pure negative for entrepeneurs
Can I ask what welfare self-employed people can fall back on when they fail? Generally, they are not entitled to unemployment benefit or sick leave (though there are increasing mandatory insurance systems for this).
In my personal experience, Into Europe as an entrepreneurial activity is a risk because if I can't make videos, I don't make money -it's a risk I can take because I am young. But I have often thought at how easier my life would have been following the 'regular path'.
Sure, I have (subsidized) health insurance, but that doesn't cover all my other expenses - rent, food...
Am curious if I missed something.
Cheers
Hugo
@@IntoEurope So you should appeal to extend welfare to self -employed people and not to cut it, we Europeans are risk averse compared to USA , the Western Europeans are known to be cheap,investing in my country is taxed high including savings accounts and bonds, like the Chinese here we invest in real estate and nowadays with the Europeans tourism a lot of lucky homeowners with inherit houses or foreigners with higher purchasing power than locals are making bank so the money is in hospitality and the housing market, a lot of countries like mine also have monopolies or olygopoly in certain industries probably making it difficult for new comers, I would say we also are people of habits on average and in my country we are loyal to brands we are even known to be used for market testing for prices meanwhile a German will go for the cheapest Japanese style.
Let’s use Spotify for example they grew because of the usa market, WhatsApp is popular but from my understanding also doesn’t make money and is subsidized by meta, also despite people complaining until recently established European companies were always innovating and improving their products making the need for new companies to appear probably lower, having a lot old people also make certain businesses to pivot a slow process, young people are more Americanized but they have lower purchasing power unless they use loans and bnpl , the most European country to the usa is the uk imo with high adherence to app payments,ride sharing,delivery companies,a thriving financial and fintech sector ect.
Younger people have a different mentality to old people but old people still rule Europe and the status quo benefits them
You sign away all of your "safety net" as soon as you become an entrepreneur.
"Saying the welfare state is purely anti entrepeneurial is rather shortsighted I'd say," especially since businesses actually backed it heavily in the 50s-80s,
Excellent and timely presentation
Could it not be argued that it is the State and Brussels that are growing?
In my experience starting a business in germany is very frustrating and we would benefit a lot if it was easier/less complicated to start a small business.
Regulations and all are very important but i think we can make it easier for personal businesses. I was very impressed that in poland if you have a business that makes less than minimum wage per day you don't have to declare it.
I would have really enjoyed such a thing in germany.
Also the welfare state does have an incentive for business cause if you don't have a job you are poor in comparison, but the barriers for personal businesses need to be easier to pass
The thing is like in Poland... when you have basic income or less you can get social housing but the moment you earn a little more you get kicked out of it and you pay twice or triple the amount you did for renting it from private person. So there is literall financial barrier set up by the system to keep you poor and to not try to better your life. There are similar barriers all over the place. So the more you risk and work the bigger the hammer of the system to keep you poor and unmotivated. Small buissnesses have it the hardest in Poland as they have the most burden on single person. Let it be a plumber.. you need to pay accountant to keep your books, pay taxes, pay 2000 zł per month so almost the minimum wage in flat taxes then on top of that you need to pay taxes from what you earnt etc. So being a startup buissness you need to have funds for at least a year or more without profit. Which is damn long..
ah, this is called the welfare trap in english and its an extremely common problem in welfare systems across the world. Its also the actual explanation behind "lazy welfare scroungers" who are, frankly a myth. Fixing this problem isnt easy however as its, more or less, a cost of living problem, i.e working should by default pay enough to live as an independant adult if working full time,
but what often ends up happening at lower tier pay, is that its not enough to cover cost of living, and that person ends up being subsidized by the state etc. This is a particularly visible issue in the USA where you have full time workers needing state support like food stamps to feed themselves etc.
When this cost of living issue emerges, there are usually 2 causes
1. Pay is not enough and does not reflect the real cost of labour/living in the area, I suspect this is likely in poland given poland is not a heavily unionised country.
2. There is some factor or set of factors that is heavily pushing up the cost of living in the region, this is the case in ireland where housing is so insanely expensive that it literally obliterates the real wealth of the population (as building costs bleed onto everything, shops, pubs, services all cost more because they are paying extortionate rents etc). If housing in ireland cost the amount it does in what is considered a healthy housing and rental market (20% of income to housing costs), ireland would be in real terms, by lived person experiance, the wealthiest country on earth, its cost of living would also be in an amazing ratio too.
Now, theres more (I can go into how pay not being enough is tied to wealth inequality) but Im not writing a book today.
It's so easy that getting money for company that doesn't make, or even have any plan to make money is easy too.
Data is misleading if taken without context. That graphic shows that Greece and Romania don't have missing entrepreneurs. However, anyone who's lived in either Greece or Romania would tell you that their entrepreneurs are utter pieces of sh1t, to put it mildly, who are overworking their people with the smallest possible wages. Hell, Greece even adopted recently the 6-days work week. So maybe don't judge everything on data alone.
P.S.: What I said is literally confirmed at 7:43.
Truly new innovations are discovered by many years of research in labs and military. Europe needs those too.
This is very interesting, can you make series?
I visited sicily last year and befriended some business owners with a nice cocktail bar on the main street. Once I learned about how they are taxed in Italy and how much he struggles to pay the employees my jaw dropped.
No wonder it was Draghi of all people that stepped up. We need a giscal reform across the whole union. Yurop Stronk!!
In my country East EU most of the businesses are the politicians one or guy who makes money on black market and now they clean it.
Competition is so weak the standards are low.
We don't build tools to create competition and only the good to stay in industry or to have overflow because not all of them will survive.
Right now in the era of technology , paper is the most used thing in the system.
The Birocraty kills the creative part of having a business.
Every day, my support for taxing the undeveloped-value of land grows.
I think benefits of less regulated systems like high paying wages are looked at too much in isolation. Between a high paying job with bad benefits and a low paying job with good benefits, I'd choose the low paying job if it covers my expenses and provides enough to save, because the time saved in not having to do admin on all necessities is important. Vacation is important. Time free from work is important. Safety nets are important. There are some issues comparing income between EU and places that don't, for instance, offer proper healthcare insurance to their workers - what the EU needs to do more of is stabilising housing, food prices, among others, relative to wage growth. You're definitely making some valid points, but I feel like the idea that being 'friendly' to businesses is a terrible idea for society at large long term - you're supposed to be neutral for businesses, expecting them to take responsibility for what they do and deliver on what they claim. Some countries in Europe are truly harsh for businesses, but from what I hear, most are just neutral and some people just expect the American treatment. I think all the ideas that are supposedly 'hostile' to businesses seem to be.. good things. Maybe the problem is that other countries are recklessly allowing the employees of their businesses and the general population to suffer in favour of good conditions for the business owners. Starting a business is not supposed to be easy. It's not supposed to be everyone's job. It's supposed to be for people who have ideas and can deliver on them in such a way that they can provide good livelihood for their employees. I hear stories from work from my friends in the US. What they have, I would never want. They get paid much more and live a poorer life. Their economy is moving so fast with lax regulations, it crashes head-first into a brick wall and causes a global market crash every 15-30 years. Over-investment, wage stagnation, and at times overly easy lending conditions that cause disastrous consequences. I don't claim I know what the European economy needs, but whatever it does need, I would never want it to come at the cost of me feeling like I have a safety net not just in the work I do have, but also the work I could get without much trouble if what I have doesn't work out or I lose interest in it.
economic growth is a means to an end, entrepreneurship is not that important if people can live well without it
I think taxes are the key... If taxes are too high, like above 40% overall ( Income Tax, Social Security and VAT ) people cant save, and if they cant save they will could compete with major players already established on the market. So new business will fail, and old business with a lot of bureaucracy, lots of corruption, many people doing nothing still prevail. This makes everything less efficient.
But I cant see central planners drop taxes so much... The machine tend to defend itself.
Oh, in Portugal we also pay company taxes on advance, based on future projections. Today is September and I already paid half of my company projected profit for next year.
Even VAT can be very harmful for a company. P.e. We have to pay VAT every trimester to the central state based on the sells, but some clients ( p.e. the central state ) only pay you somewhere in the future. So a very healthy company may go bankrupt just because they dont have cash flow to pay taxes. And if you go bankrupt, the central state is the first one to receive the money from the assets, no the ones that provided goods or services, but the central state, lol.
What could possible go wrong here... xD
Most taxes are mandatory costs for society to exist, you will be paying them, to a government or a company, it does not matter. And in the case of infrastructure and services like healthcare, more often then not, taxes as the means of payment usually ends up cheaper then private market solutions. Its been well known for example that the USA is overpaying substantially on its medical services and that transitioning to a european universal model, such as the german model (germany is a federation after all) , would be substantially cheaper for both the US gov and citizens then its current market form.
This isnt also unusual either, i.e americans pay more for alot of things that, effectively round back to them not making it a state service like in the eu.
"if taxes are too high like above 40% overall" does seem awfully arbitrary, but im amongst the top 5% income earners in austria yet im able to save thousands.
"if they cant save they will could compete with major players already established on the market"
Except thats not how that works, in general, only 1/7 enterprises go anywhere in general, in some industries its as low as ten percent. Most buisnesses are not founded off savings but business credit/ a loan, all of the big IT companies we saw for example had this kind of origin. Personal savings are genuinely not relevant at all (and for another reason, namely, even if people could save, it would take many years before a saving could viably begin a buisness when said credit can be obtained in months).
Most eu states also exempt small enterprises from heavy bureaucracy and even labour standards are usually lower for them too. You will often find when checking out xyz workers regulation, that said rule/law only applies to enterprises of 50+ people (which for context is a business that already has a turn over of millions of euros already).
Central planners, pfft
Going to banks for small business loans is a huge barrier to starting a small business in EU. e.g. you must have a minimum amount in an account to start a limited company, ~20,000 euros minimum dep. on country.
Good research and presentation on a complex topic. Well done. +1 for the algo
In Romania the economy is made for the secrete services which are allowed to create, own and develop private business. They have businesses in key industries and if you want to compete them they can have a lot of leverage over you. You have to work with them or go bankrupt.
It is simpler than it looks. Starting and developing businesses depend on capital - in the form of loans.
In the USA, the FED just prints money if it is decided that the economy needs a boost. This is lent out to businesses at around 0% interest - and the cost is covered by the WHOLE WORLD, the USD being the world's reserve currency.
Now in Europe, there is just no equivalent of FED. There is a central bank, but it can't just print EUR and hand it to companies. The EUR is the world's second reserve currency, but its prominence is measured by low single digits, so printing more would be paid for, well, Europe.
So, in short - the USA cheats by providing endless capital. That is why European companies just can't compete. Still, it might not be an all-bad thing. The US has huge companies that doesn't even promise to be profitable in the future. Like Tesla. Or even Amazon. These companies are just full of hot air - they might be valued high today, but their real worth is less than 0. So far the US have avoided the collapse of these rotten tomatoes - but it might have trouble coming out of this.
Another thing in Germany is, that the culture is straight up hostile to you if you want to have a successful career or have your own business.
Among acquaintances, I always get comments for being greedy and antisocial, because I have a comparatively good paying job and now started a business. A lot of people don't tell when they are successful because you are always met with a lot of envy.
in portugal i also pay these advance payments in IRS. ridiculous. suposedly it lowers the burden as the government assumes (probably correctly) that people will not have the money if it is all in one lump sum. But if invested that money can help grow the business. Also ridiculous that i will get fine because they deduct these payments automatically but sometimes dont. And i can never tell what will be deducted and what wont. so now i get a late payment fee when i applied for automatic payments and had money in account
To be honest, starting and running your own business in Poland is already so simplified that if we simplify it even more, pets will start their own businesses. It seems to me that the main problem is to pick out innovative businesses from among them and support their development through funds (which is to some extent) but also, above all, by creating demand for their services in this initial period. Europe is unfortunately more focused on tourism, agriculture or infrastructure construction. There is not much innovation in these industries and this is where a lot of money is invested. We need to think about how to encourage private capital to invest in new technologies and ambitious startups.
try make a simple company in germany and you will understand immediately what these guys are talking about. in romania, too, we can register a company in 2-3 days, even foreigners are allowed to start any company whatsoever, you get a banking account right away without any hassle and a debit card. but the guys from bruxelles are trying hard to cancel all the small companies created this way with useless regulations like in their countries and, if ignored by local governements, they push harder taxation for small companies in exchange for european funds!
It is better to be "unfriendly towards corporations" than live in an utopia dominated by corporations.
Do think the Euro Currency is a major aspect to this.
German conservative economics hasn’t helped either (pro austerity)
there are some good points here, but also others are way too far from being correct as it seems this is being looked at from naïve or American stance. please take this video with a grain of salt
In the US, you can start a business for as little as $25 dep. on the state. Bureaucracy is also a breeze compared to EU. Taxes are low. Bankruptcy is easy if you get in over your head. But... you can still end up homeless living on the street because there is no social safety net.
As an American I can say creating a business has always seemed like a scam to me almost entirely because all you hear about are those who are opening business is saturated sectors (retail/restaurants/mechanic). All you hear about are 12+ hour work days for a decade before they finally make a decent amount of money.
I think regulations like the GDPR scare a lot of people. In my country, Norway, it’s very easy to set up a limited company. In fact, the government has agencies that make the process extremely simple and guide you every step of the way. The minimum share capital is 30,000 NOK (2,500 EUR). However, there are numerous reporting requirements, and fines in the first year alone can easily exceed four times the minimum share capital - and, of course, they’re not tax-deductible.
While it’s easy to establish a company, I’m almost certain that an average person without a background in business or accounting will need help navigating the first year’s requirements. In Norway, this issue has worsened in recent years. The frustrating part is that the fines aren’t used for proper controls, which allows criminals to easily take advantage and defraud the state.
gdpr requirements don't apply to most enterprises until they have already reached a substantial size where they will already have some accountancy and HR and compliance focused employees present, this is something that is explained pretty easily when googling up gdpr (and alot of gdpr rules are practically speaking, the formalised cultural practices of places like germany, norway sweden etc regarding privacy).
So, if your company is able to get over 200 employees in less then a year, it more then likely can handle the basic requirements of gdpr (as they ramp up as you get bigger).
@@davianthule2035 You might be right; I've just worked in organizations with over 200 people. Most service providers, such as accounting or web service providers, likely emphasized it because this segment is an important part of their customer base.
@@rolf7135 Oh, IT companies and companies with alot of IT processes present have alot of GDPR requirements, but yeh, 200 is the usual benchmark figure, it varies from eu state to state (I don't know how eu directives apply to norway, for context an eu directive is an instruction law, i.e the eu tells its states to make up laws/rules that implement said instructions, most GDPR law is in directive form meaning the minimums on employee numbers and other such details do vary).
It was 200 in ireland and germany, etc.
@@davianthule2035 There's another issue as well. Sometimes it seems that even the Norwegian government isn’t entirely sure how to interpret EU directives, and we’ve had a few cases like that. For example, some welfare recipients who were outside Norway but within the EU-and lied about it-have previously received prison sentences. Recently, they've been cracking down on 'distressed companies,' where having negative booked equity is considered a very serious problem, even if the accounts include guarantees and are prepared under going concern accounting.
Love that you included Poland in the stats
As a European, I believe Europeans tend to dislike businesses. Heck not even businesses, simply people making a good income - wherever that income comes from. That creates an environment where everyone wants the benefits of having large businesses (the welfare system is expensive and only works if your country is rich. Nordic countries don't have good welfare systems because they have high taxes, they have good welfare because they're rich), without wanting new businesses to flourish. And of course politicians will just do whatever gets them the most votes.
It's also impossible to hire self-employed people into your small business to shield yourself from the draconian employment laws.
huh, its impossible to bypass employment laws, via a fairly obvious bypass, who would have thought a government doesnt want its laws easily being unfollowed.
@@davianthule2035 it is possible... but it's usually illegal. In three EU countries (that I know of), the taxman turns a blind eye on people working "on the side", such as a cleaner, odd jobs, painting, etc. But even then you must be careful not to add too much cash to your bank account. My point is that when starting out, e.g. a small video production business, you need to hire in freelancers who take care of their own taxes. This is possible but the insurance coverage is prohibitively expensive for someone with virtually no capital. Even with a demonstrable track record in another country, getting a bank loan to cover start up costs is extremely difficult. Catch 22.
While the european pension system based on redistribution is straining with demographic changes, the american pensions system based on investments will struggle when real growth will be impossible due to ressource shortages and climate change.. We are at the end of prosperity, and it will affect both welfare and capitalist systems
The impact of the welfare state is overstated though. Back when it was all the rage in the 1950s and 1960s, European businesses had no trouble to be innovative and grow.
It's essentially about finding what we lost sight of.
Allowing once again a massive exchange of capital is very much what makes for a dynamic economy.
Reshaping tax incentives and pairing them with simplified regulations is what we need, but also for certain countries, business taxation should be moved onto the outcome, not the process.