Government “innovation” subsidies move a lot of money into shinny “new” ideas, but in EU there’s no thought about how to create innovation itself.
Just as an example, a friend of mine roasts coffee for a living. He is considering closing shop, because he is succeeding too much. At the point he is, he’ll be required to register as a business, which in Spain means he will have to pay ~300$ a month whether he makes money or not, plus 20% VAT and 20% in income taxes. Add to it the massive amount of time he’ll have to spend in paperwork (or paying someone another 100$/mo for handling it). Another good side job that will go to waste, instead of growing into a company. And it’s by no means an exception. I’ve work for tens of companies here, all of them have admitted to be flunking regulations intentionally to avoid costs during their creation to be able to exist.
Edit: the EU does have a problem with barriers to entry when starting a new business without gobs of funding, but the US solution is not a good answer to that.
No I’m not, I’m saying that some tax systems make no sense. The only way to create a company in Spain is to flunk regulations. Some are meaningless and people ignore them all the time, some aren’t.
Another example. When escape rooms we’re trending, me and some friends considered building one. One of the partners didn’t want to get into trouble on it, so he wanted everything by the book.
Spanish regulation requires a business to specify their “economic activity” with a codified value. The list is in the thousands, with a lot of non defined ambiguous terms.
Evidently “escape room” was new, so it wasn’t on the list (and it still isn’t). The closest was “gambling business”, which of course a escape room isn’t. It also has a lot more paperwork and additional taxes.
Faced with this conundrum, we went around to the 3 or 4 escape rooms that were near enough to visit and asked them. Some of them just wrote a random number and called it a day. One of them was registered as a butchers…
The legal exposure it represented was simply too big and we abandoned the idea. there was no good reason for that legal exposure.
The statistics then are hardly surprising. Unemployment here is >14%, just to name one.
not really, you can run the business on your name and pay personal income taxes.
Avoiding to create a separate entity which will carry additional compliance and tax costs is something else altogether, and some governments just make it too onerous
Government “innovation” subsidies move a lot of money into shinny “new” ideas, but in EU there’s no thought about how to create innovation itself.
Just as an example, a friend of mine roasts coffee for a living. He is considering closing shop, because he is succeeding too much. At the point he is, he’ll be required to register as a business, which in Spain means he will have to pay ~300$ a month whether he makes money or not, plus 20% VAT and 20% in income taxes. Add to it the massive amount of time he’ll have to spend in paperwork (or paying someone another 100$/mo for handling it). Another good side job that will go to waste, instead of growing into a company. And it’s by no means an exception. I’ve work for tens of companies here, all of them have admitted to be flunking regulations intentionally to avoid costs during their creation to be able to exist.