LET'S FIX EUROPE FOR STARTUPS – AMA with Andreas Klinger & EU-Inc
Hi, I'm Andreas Klinger, investor at Prototype Capital and former CTO of Product Hunt.
LET'S FIX EUROPE FOR STARTUPS
We (the @euinc_petition crew) is on Monday again in Brussels. We want your input beforehand.
What questions about EU-Inc do you have?
What ideas have you got to improve Europe for Startups?
What feedback or suggestions do you have?
Want to know how you can help?
Europe won't fix itself and it's only impossible until someone simply does it. So, let's do stuff.
What is EU-Inc:
A new pan-European legal entity for startups.
By addressing regulatory fragmentation, EU-Inc seeks to radically simplify founding and pan-European funding of European startup as well as and standardize employee equity options—empowering European startups to scale across Europe and globally. With over 15,000 signatures from the biggest European founders, VCs, and policymakers, this initiative is shaping the future of innovation in Europe.
@steveb great question
In our current model for the EU-Inc we keep taxes and employment on member state level
Only corporate law gets standardized.
This kind of compromise is needed to have any chance of memberstate leaders passing this law – they ultimately hold all the power in Brussels
In this model the different corp taxes could actually be an advantage for individual countries
This image explains it a bit better.
@andreasklinger so in the same way people gravitate towards Deleware/Nevada in the US, startups would incorporate in Belgium instead of Denmark? How do you pitch that to Denmark in that they'd be "losing" the tax revenue?
@steveb it would be acording to current european laws - you could only incorporate where you have substance (or pay someone to fake/provide substance)
my hope is that they are still competitive - as in german founder moves over the border to poland because she knows all her investors can as well invest
@joshuavoydik @steveb all of the above.
invest in EU startups incorporated as EU incs.
I really like this idea. The one thing I see as a threatening aspect is with political background and I didn't want to bring politics into this too much, but it's also part of it:
Many European countries (especially from the eastern block are now shifting from the EU) – I can see it in Slovakia, Bulgaria, Hungary, and partially Romania... and as I heard, some radical parties are gaining power and undermining the stability of the European Union.
How do you plan to navigate this political uncertainty while pushing for a unified EU-wide startup framework? Do you see potential resistance from certain governments, and how do you plan to get their buy-in?
@busmark_w_nika Great question! You know, it's the Central and Eastern European (CEE) countries that would actually profit THE MOST from EU Inc. Why? All their founders struggle to raise funds unless they register as a Delaware LLC. And if they do that, they might as well move to the US, and many do!
So it actually is first and foremost in the interest of CEE countries to implement one standardized legal entity, the EU Inc, all across the bloc since that will unlock massive amounts of pan-European and foreign funds to flow into their countries best founders. This will meaningfully stimulate innovation, productivity, jobs and economic growth in the long term for CEE and all the rest of Europe as well.
But your point regarding national push-back is very valid. Which is why it's so crucial that WE ALL get active locally, talk to founders, talk to investors, and have them talk to their local national politicians and explain the urgent necessity of the EU Inc for their future wealth and prosperity. We all need to get active on this. Only then EU Inc will become reality. But we can do it!
@busmark_w_nika @marvinbaumann also it's worth noting that we do not touch taxes nor employment law
Or differently put: the only thing that the EU-Inc does from their point of view is to help getting more investments into those countries. Even anti-european parties shouldn't be against this without having trouble justifying it to their base.
@marvinbaumann I hope that this business mindset will get in Slovakia. Firstly, we need to create order with our politicians because it is a huge thing RN and if we do not have sorted out basic things, it is difficult to prepare space and ground for perspective projects.
From twitter/X: @JensHonack https://x.com/JensHonack/status/1890051084825374840
stop taxing early stage.
let me incorporate in 24h from the other side of the world.
@euinc_petition 100%
based on our proposal it should be fully digital (api-first) and possible to register within even less than 24hours
ideally on the long-run done through third party providers that also give you a bank account and other stuff you need to get going day 1
taxes are not part of eu-inc (intentionally) but we push brussels to introduce special programs for startups to simplify/minimize taxes®ulation early stage – but do those as distinct programs – not as part of a legal entity (because why would you… just makes stuff more complicated)
@euinc_petition @andreasklinger these are all steps in the right direction 💪
it’ll be good to have different tax regimes able to compete against each other in order to drive towards the most attractive structures in the long term.
@euinc_petition @jens_honack 100%
ultimately i hope they harmonize the frameworks/rules but not the percentages
that way it's ultimately competitive
but thats years away i think
Do you think there needs to be more cross-pollination of Silicon Valley/US VCs, founders, and prolific entrepreneurs with EU VCs, regulators, businesses, and entrepreneur-minded folk? How can other forces outside of the EU help influence and impact Europe being revitalized as a home for Startups?
@gabe I absolutely think there should be cross-pollination. Great ideas can come from anywhere. I think it wouldn't only strengthen European innovation hubs to have our American friends come visit and co-build or co-invest, but I'd venture to say it would give US founders great perspectives on what Europe is actually like beyond the Twitter doom echochamber.
There are smart people everywhere, and great ideas and companies truly can come from anywhere, so global exchange and cross-pollination ultimately means more innovation, more awesome startups and more prosperity for humanity.
Have closing costs been factored in? In Germany, my company had to hold investors cash before distributing for almost a year in case there were liabilities, which cost accounting fees, and more headaches, plus the usual 2/3 visits to the notary to shut down/deregister the company. This friction was the cherry on top. Doing everything in my power to not open another UG/Gmbh again.
@adrian_vanw I think there are two sides to this matter
1 - The formal procedures required to wind down / liquidating the company. For the actual "rituals" (shareholder resolutions, filings, etc), the EU-Inc proposal aims to be as simple as possible.
2 - The local liquidation and bankruptcy rules however will then dictate further rules and timings. The example you are giving is based in the law, and for purposes of protecting creditors. The one year period is rooted in analogue / old age practices, and while good efforts have been made (i.e in Germany you run creditor notification online), the timing was not addressed. We are optimistic that showing how something like EU-Inc can work well in practice will then create the necessary mindset shift for further change down the road, such as shortening the creditor notice period from 1 year to say 3-6 months Edit: but this has to happen on a local legislation level!
@adrian_vanw We understand that shutting down a business can be a painful process in many jurisdictions. That’s exactly why we’re pushing for more balanced system, i.e one that protects stakeholders without adding unnecessary hurdles. While we haven’t put forward specific solutions yet, our focus is on ensuring the process is proportionate, practical, and doesn’t put founders off starting something new.
@luis_cerqueira_da_silva1 Thanks! Noted on creditor notice. Other than that having to visit the notary at least on 2 occasions seems excesive for something that could be done online with all the checks you mention.
I dislike paying confusing taxes in the EU. It's not well-organized. Each country has its own approach, making it challenging. A Stripe integration for tax payments would be a game-changer. Create Stripe Atlas for the EU!
@karmedge same. lol.
fwiw we introduced two things into EU-Inc that are both low-touch but potentially could be used to fix this over time. (think platform for future products)
everything is API-first – so third parties can plug directly into this
we recommend centralized tax reporting – so even if your taxes are per nation laws you could file them all together
this would potentially allow eg pan-european accounting and payroll third party providers to make this 10x easier
Andreas and team,
Two quick questions:
1. What’s the roadmap you have in mind, and how can we best support the movement? Any key KPIs where our help would make the biggest impact?
2. This is a great opportunity, and we need an EU Regulation (plus a tax directive) as soon as possible. How do you see the political momentum shaping up?
@ale_palombo
> 1. What’s the roadmap you have in mind, and how can we best support the movement? Any key KPIs where our help would make the biggest impact?
We are working with Brussels right now – we are hoping they are taking our detailed Proposal (https://proposal.eu-inc.org/ ) and the urgency of everything serious – but tbd will keep you in the loop
They moved their deadline for a law proposal to already this year – which is rocket speed for government standards btw
If that passes add 2-4 years on it to have it on national level - we hope to have a coalition of the willing that has it earlier
The biggest impact right now: Get the topic into national press and politician discussions
Basically, ping your fav local journalists - place Europe+Startups as a topic – can be with a local founder, yourself, anyone – goal is to show that we need pan-european solutions
Also get national politicians and parties to officially support this proposal.
In the end the real battle is on member state level
2. This is a great opportunity, and we need an EU Regulation (plus a tax directive) as soon as possible. How do you see the political momentum shaping up?
You mean standardized taxes in Europe?
Genuinely – don't know
Taxes and employment law are the two main thing member states care about
Eg we keep those local in EU-Inc – otherwise it could never pass (or only for a weird niche with all kinds of hoops and headaches)
I can see a sort of sandbox for the first N years of innovative companies where people have simplified taxes. But member states will insist on keeping this for niches to make sure no real tax amount/power is lost.
(fwiw any sandbox like this has to be disconnected from the legal entity or otherwise companies need to reincorpoate or do other BS once they leave the N years hurdle)
Exciting to see this momentum. Fixing fragmented regulations could out Europe on par with the US and other start hubs.
From twitter/X: @0xAngler https://x.com/0xAngler/status/1890053989347303442
Does it eliminate the need for a notary If I'm in Germany?
I get that tax and employment law stays with the respective country. But since the registration moves to the 28th regime, does it eliminate the need for a notary?
@euinc_petition based on proposal we provided there is no need for notaries
we believe notaries fulfill a lot of useful services to founders - reading out share holder agreements is not one of them.
multiple countries already moved away from mandatory notary use (eg portugal) turns out they are still very much in business – eg founders like to use them as they can act fully on their behalf and usually try to create less overheads than lawyers
Huge fan of this initiative. As an American founder based in Paris and incorporated both in Delaware and France, the need for EU-Inc. is so clear. Wishing you success!
First and foremost, @andreasklinger thank you and all of you behind this. You are doing god's work and I am happy to get involved should you need any help.
I know this is not the focus of the bill proposal per se but how can an initiative like this succeed without a fiscal union that allows for a cross European-sized, unified capital markets that would drive healthy and regular venture investment?
Basically, our hack is to only european-ize capital law (for incorporation, fundraising, stockoptions, captable, etc) and keep taxes + employment law local
None ideal BUT allows us to get it passed.
Brussels might do additional sandboxes/grants/programs for startups to reduce or standardize early stage taxes - but this should be not a hard-link for the entity
@andreasklinger Look, it's fantastic starting point. I hope this gets implemented.
From twitter/X: @__snamber https://x.com/__snamber/status/1890050187889930402
Abolish taxing unrealized gains when moving between EU countries (exit tax) – freedom of movement needs to be frictionless, as people think it is
Wealth tax certainty across Europe – make it clear that across the EU equity itself is not considered a liquid asset, and cannot be taxed like being liquid. To close the buy-borrow-die loophole tax loans taken out against equity instead – anything but illiquid assets
It must stop feeling risky to tie yourself to a European jurisdiction, at the moment governments are getting really creative when it comes to new taxes (often on illiquid assets) and that drives founders away
fwiw i agree on all points
one thing we are pushing for with EU-Inc (and why its so powerful as a project) is that all stock options are taxed as capital gains – or differently put: stock options would only be taxed when exiting a company (not like salary or other madness thats currently happening in many countries)
imho there should be a group starting a project on deferring EXIT taxes in Europe - it's a bigger topic that we can't cover w/ eu-inc
From twitter/X: @SergeyPopescu https://x.com/SergeyPopescu/status/1890051468151185910
(1) we need pan EU SAFE agreement with exactly the same framework as in the USA - the American YC spent 10+ years to create it. If it is a law then it is several months
(2) we need a clear pan-EU rules for round A, round B, round C rules and clear pan-EU exit rules
(3) pan-EU rules for exit are needed as in many countries the founders or investors are held criminally liable for what happens inside the company, which nobody wants as taking money with SAFE agreement would mean obligation to pay it back and also add interest and penalties Criminally liable even you deliver the product, but not having enough sales as expected
@euinc_petition re (1) that is exactly what we're doing. We call it the EU FAST. It's basically an EU SAFE that builds on top of EU Inc.
re exit: absolutely, exit is a big issue in Europe. We need clear rules and deep, liquid markets that unified across Europe to enable our founders to IPO in Europe rather than in NYC.
from twitter/X: @thiago_peres https://x.com/thiago_peres/status/1890076732927205516
what's the 30-60-90 day plan to accelerate the EU?
@chrismessina Lots!
15,000 people signed.
A full proposal was developed (https://proposal.eu-inc.org/) and delivered to the Commission
EU Inc held meetings with the teams of four responsible Commissioners
At the World Economic Forum, President of the European Commission voiced her support for ambitious proposals and creating a new pan-European entity
The EU Commission committed to developing a legislative proposal by Q4 2025
We need a US-style VC based in Europe. Operated by former founders who are willing to take bold bets and lead rounds without excessive due diligence just like US funds operate
Everyone knows EU problem with the startups are the regulations that suffocate the startup environment. I would breakdown it down in two main points:
Not all startups are equal - regulations are generally a good thing and EU is trying to protect people from abuse from the tech giants. However when they make such regulations the problem is that they also choke the small startups at pre-seed / seed stage. The most recent example for that is the MiCAR regulation where the crypto startups must start with at least 50K capital (CASP level 1). So no chance for bootstrapping there, while the technology itself allows anyone to start with just 1K (or less) capital. In this case it would be better to have exception for startups that are starting and want to try MVP.
Regulations can't fight the corruption - many if the regulations are invented to fight frauds. But the frauds continue because of the corruption. When there is no one who enforce the law, the regulations can't save you, but certainly they choke the startup ecosystem.
From twitter/X: @Lukaesch https://x.com/Lukaesch/status/1890138964172198182
How will the 28th regime handle employment laws? Will it align with national labor laws, or will it establish its own framework - potentially allowing more flexible hire-and-fire policies like in the U.S.?
Employment law and taxes will stay on local level
The reason: the member states wouldn't want to give up that kind of power and never let it pass – unless you cripple it to some niche audience and burden it with all kinds of unfavorable aspects
Our suggestion:
a lean/clean entity for anyone (standard incorp, investments, stockoptions, etc etc – but employment/tax local)
then separately and distinct from each special programs to support startups with their own criteria of acceptance (eg something for the first 3 years etc - but disconnected from any kind of reincorporation)
From twitter/X: @martindonadieu https://x.com/martindonadieu/status/1890050189127454790
Remove cookie law bullshit force this to be a browser setting you set once forever.
remove AI act, and do like RGPD with just require to have a plan to improve over time, for big companies only.
Remove RGPD for companies under X (rev, years or whatever)
Make EU inc like Delaware.
Make English default globally in EU
Kill bureaucracy
Product Hunt
Love the initiative. How do you anticipate being able to handle the large variance in corp income tax and cap gains treatments between nation states? For this to work in the EU, wouldn't all countries need to agree on and adjust corp tax and cap gains rates?