

Danish Startup Community Unified Against The Entrepreneur Tax - vilpponen
http://www.arcticstartup.com/2012/04/05/entrepreneur-tax-denmark

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tahitahi1111111
The problem is not about what happens when you make it big. The immediate
problem is much before that, that young startups die because they dont get
investment.

That's where the problem lies, that the danish state makes laws made for huge
corporations and forget they all started as small seedlings and without small
startups nothing will turn into big employers/tax paying companies.

Another example, today we just received a letter that we will be charged
income tax for the company, on income we havent earned yet, but they think we
will earn this year. Its insane, haven't they heard of cashflow?

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digitalengineer
Sometimes I feel every state makes laws made for huge corporations. It is not
accidental. They don't "forget they all started as small..." If I was a big,
fat lazy corporation that's exactly how I wanted things done. Lots of laws.
Guaranteed to kill any and all competition! Big, fat happy just opens a can of
lawyers.

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Loic
Danemark is a very pro-entrepreneur country. If you want to setup a business,
it is very easy, you can tax deduct nearly everything and you will have all
the benefits of a very well run country. I have been working for both funded
and bootstrapped startups in Denmark and Denmark is definitely one of the most
business friendly country in Europe.

You must put the law in the context of the country, here it simply says: "you
can setup a company here, you will enjoy everything from Denmark you love, but
do not expect to make it big, sale and not pay back your due". They want
people starting businesses and then staying there. Just that.

Take a look at what you get in the "all inclusive" package when living in
Denmark: free education (in fact you are paid to go to the university), very
good health care system, low violence, relaxed life, well run infrastructure
you can trust, etc...

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viandante
When I was in Denmark I found really irritating the pay Danish students get
for University (600 euros net). You can put it any way you want, but that
creates all sort of bad incentives and crappy education (which I did see. VIA,
anybody?).

Most of those "free" things are not really free also. You will pay them with
extremely "unfair" taxes (180% of tax on the value of a new car, anybody?) and
a State that believes is fine to dictate the proper way of doing things.

No thanks.

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Loic
DTU is providing extremely good education.

You consider taxes as unfair, but if they are still in play, after getting
left and right governments, it is maybe because in fact, Danish people are
happy with them.

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viandante
Yes, but for 1 DTU there are plenty of other Universities aiming only at big
numbers of students. Also, degrees are so inflated that companies keep asking
for a Master even after 2 or 3 years of experience.

I am not sure Danish are happy. Are they? And also, _will_ they be? Jobs in
Copenhagen are extremely few and hard to get (especially if you are a
foreigner...). I know Danish people easily find jobs _now_ , but what about in
10 years? or 20? or 30?

I just can't see the sustainability of this system. Taxes are way too high and
the State wants way too much control over things.

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_delirium
> Taxes are way too high

As an American who's moved to Denmark, I really don't see this, at least for
anyone in the middle class. I make a middle-class professional income, and my
overall effective tax rate is about 40% (incl. payroll taxes). I moved from
California, where the overall effective state+federal tax rates on the same
income would be around 35% (also incl. payroll taxes). A 5% difference isn't
really enough for me to care much; the two countries differ in so many other
ways that a 5% tax difference is way down on the list of why I would choose to
remain in Denmark or return to the US. I'll probably eventually return to the
U.S., but mostly because it feels more culturally like "home" (I'm American
and not Danish, and that's something relatively difficult to change), not
because I feel oppressed by taxes here.

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moonchrome
Don't they also have a 25% VAT ? And higher living expenses because of it, so
even with a 60,961 nominal GDP/per capita (5th in the world) when you correct
for PPP it's 37,585$ (17th).

~~~
_delirium
Living expenses vary in a lot of complex ways, yeah, depending on your
lifestyle. I find cost of living here overall cheaper than in the SF Bay Area
for my own lifestyle though, mostly due to transportation and healthcare. I
was able to sell my car, ditch my gasoline/insurance expenses, and no longer
have to pay co-pays or employee contributions for my health insurance. People
with other lifestyles may find it more expensive, especially if you want to
buy a car (which has its own separate, very high taxes).

I'm not sure VAT is a big component of the difference. I think housing costs
and high wages are the biggest factor. Grocery prices are slightly higher
(perhaps due to VAT), but we're talking differences there that add up to maybe
1% of my income annually. Eating out is _much_ more expensive, mainly because
everyone employed in the restaurant is making at least a lower-middle-class
salary (~$40k or so... nobody's working for $7/hr). Rental housing in
Copenhagen is more expensive than most of the Bay Area, but cheaper than SF
proper or NYC. Housing to _purchase_ is actually quite cheap; you can get a
2bd in reasonably central Copenhagen for $200k, which is completely impossible
in SF or NYC.

I suppose the PPP comparison is made against the U.S. as a whole, in which
case cost of living is _definitely_ higher than, say, the midwest or Texas.
But I don't think it's particularly high compared to coastal US prices. If you
want to buy housing, if anything CoL is considerably lower.

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digitalengineer
Reading this stuff (as a person from Holland, one of Danish neighbors in
Western Europe) I feel like I'm living in Atlas Shrugged. I am very sure the
Appsterdam Community in Amsterdam <http://www.appsterdam.com/> would never
have started if we had such business-unfriendly laws. (What's next? The Anti-
Dog-Eat-Dog Law?)

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nirvana
When Appsterdam came about, I went and researched the tax implications of
starting a business in the Netherlands. The Dutch-American Friendship treaty
essentially gives americans immediate residency if they start a business
(worth something like 12,000 euros or more) in the netherlands.

It looked to me like the effective tax rate was going to be around %70. (for
my particular situation, but I was counting the taxes levied against the
corporation and the taxes I'd end up paying on the income. So if the corp
earned $100,000 from app sales, and paid around %30, and then I paid %40 on
the remainder that would be more than %70 tax but you see what I mean.)

So, I gave the whole appsterdam thing a pass. I reported the %70, and Mike Lee
had a conniption, called me a liar, and some other appsterdam person posted a
link to the tax tables which.... confirmed that I was being generous. (IF you
were a really successful app company your tax rate would be higher.)

Amsterdam is really nice in a lot of ways... as is denmark. but there are a
lot of really nice places around the world. Most of which are not super
expensive to live, and many of them don't tax you for income earned outside
their borders.

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dan85
Can't one go around some taxes by paying to themselves dividends instead of
salaries?

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stevoski
When I sold my Australian consulting company, I received two 25% tax discounts
on the proceeds, both designed to encourage small business.

Those tax discounts were a surprise to me and didn't encourage me to start the
business, nor to sell. A most pleasant surprise, though, as I didn't receive
millions for the sale.

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aspelund
That sound great. When I sold my part of a startup in Sweden, I got half of it
taxed at 30%, and the rest taxed as salary, which is very highly taxed here.
Not as nice surprise. Later on I started a new company and put in some of the
fully taxed money into that company. When paying employees salaries then the
same money was taxed as salary again. No deductions anywhere to be seen.

If I would have gotten more money from my exist (I didn't get millions either)
the procedure would have been to keep the money within a holding company. Then
the taxation wouldn't have been multiple income taxes. But for a small player
that really isn't an option, resulting in a truly horrible and
counterproductive system.

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moonchrome
OK I don't know much about this topic but shouldn't this be mitigated by EU
laws ie. incorporate in some other EU country, open a local subsidiary, then
sell equity/report profits (assuming there is a no double tax law) in parent
company ? AFAIK some countries have very simple procedures to start a company,
IIRC UK is was really popular around here because in my country you don't get
access to things like Android/iOS store, can't withdraw from PayPal, etc. so
it's simpler to operate as a UK business and the taxes are lower.

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netcan
This reminds me of Zynga bosses talking about how they need to avoid the
'Google Chef' effect where a chef ended up with millions in shares.

People see an investor or founder making millions and think that it wouldn't
be so bad to tax them a little more. It's better than taxing lower-middle
income families a little more, isn't it/

Thinking of risk as a thing that needs to be compensated is something that
needs to be learned.

