And yet I'm not seeing an awful lot of advantage of registering in the EU then if this campaign has to exist - clearly there's a big enough friction to registering / running a company within the EU itself.
I think they mean that the Estonian company they run now has to file tax returns and pay taxes not only to Estonia but also Spain.
The company lives in Estonia. Yeah if they are taking income personally locally then that should go to the country of residence, as is normal.
But then if what Estonia considers acceptable standards for tax reporting differs from what Spain considers acceptable, or what they consider 'profit' etc, well good luck!
Indeed, the current state of affairs is rather sad.
To employ a regular (non-management) employee in Spain (and it applies anywhere else in Europe), an Estonian company would to at least have a local address, then register and maintain regular contact with several authorities there (chamber of commerce, social administration, tax office). The bureaucratic overhead makes it practically impossible to have employees across several countries (definitely as a small company), the only practical option is to pay an employer of record ~600 EUR/month extra (significant salary difference) only for the joy of maintaining the employment paperwork.
The really fun part happens if a managing director moves. Then the company is considered to have a permanent establishment in Spain, needs now to maintain ALL administration like a Spanish company, and to comply with Spanish corporate law, in parallel to what it was already doing at home. Both countries' laws apply, both expect taxes, and it is not even clear cut how much of the company activity and profits should be taxed by the company's home country and how much by the director's country! And having multiple managing directors in several countries is probably an exercise in frustration.
Then, if the director has enough and moves somewhere else, it all starts again in the new country (and you also have the headache, costs, and risks of closing the Spanish entity).
The EU may have free travel, but you can basically forget actually freely moving around as a small business owner, the company administration is prohibitively complicated.
This is why I don’t get what the EU brings to the table at all. I’ve considered starting something, never quite yet pulled the trigger, but I may as well do it in the UK because it’s extremely cheap, gives access to a great number of services, and I can do it all in English there.
It’s not like the company itself is going to be queuing at an airport or whatever.
I’ll have to file in Finland for the company anyway then, but I can skip all the stuff about starting an organisation here.
The actual practical option people end up using in practice (speaking as someone who've moved around in Europe, working for various other European companies) is that you ask them to self-employ in the country they live, then you treat them as contractors, offset any extra costs that'd come with compared to full-time, and do the best you can with that.
It's not ideal, and not a real solution by wide margin, and there is plenty of stuff that can get better, but I think it's the most "practical" and pragmatic option you can make use of today.
Yes, but some companies need employees on paper. When they do custom based software and want to apply for a job, there is often a number of heads you need to employ.
> the Estonian company they run now has to file tax returns and pay taxes not only to Estonia but also Spain.
Yes, this again makes sense to me. You have a company in Estonia, so that pays taxes in Estonia. You work for this company from Spain, so you pay taxes in Spain. Doesn't it work the same elsewhere? What other ways could it work, assuming we want taxes somewhere?
> But then if what Estonia considers acceptable standards for tax reporting differs from what Spain considers acceptable
Yes, that also makes sense, different countries have different systems? Again, if you open a company in Estonia, the ground assumption has to be that you're up for understanding Estonian tax laws. If you're living in Spain while working for that company, the ground assumption is that you're up for understanding both Spanish and Estonian tax laws, because they should of course get their taxes.
As long as I don't get taxed on the same money in both countries (which there are a lot of bi-lateral agreements solving that), I don't see the issue here.
> As long as I don't get taxed on the same money in both countries, I don't see the issue here.
That's exactly one of the current issues. The general rule is something like 'taxation happens where the company creates value'. Registration in Estonia just means taxation starts in Estonia. But at any point can Spain say 'we consider this a Spanish company'. After Spain taxes too, you can request a tax refund in Estonia. That's assuming they agree. Both countries will only communicate with the company, not with each other.
So while double taxation treaties are great, they are not doing much upfront in this respect.
The above is about company taxation, not personal taxes. For SMB that line is often confusing.
The Estonian company pays the Spanish resident money to them personally. Indeed it is normal that the Spanish resident has to deal with the Spanish taxes on this money only.
If the Estonian company is supposed to be considered a separate legal person based in Estonia, it shouldn't have to deal with anything Spanish.
> If the Estonian company is supposed to be considered a separate legal person based in Estonia, it shouldn't have to deal with anything Spanish.
If the Estonian company has employed a person located in Spain, shouldn't the laws of both countries apply to this employment then? The employee lives in Spain, so obviously Spanish labor laws should be followed, and the company is in Estonia, so obviously Estonian law should apply.
I'm not sure why the Estonian company wouldn't have to follow Spanish law if they've decided to employ a Spanish person? What laws should cover the person living in Spain, Estonian laws, although they don't live there?
For labour - the laws of where that labour is actually being conducted are the ones that are followed. Spanish prosecutors can for sure bring a case against an Estonian company if they are not. In theory at least.
But for company tax law, that company is a tax resident in Estonia, not Spain.
Also, we harmonise laws such as traffic laws (for example, in Finland, all solid yellow central lines were painted white) so that people have the chance to work across the whole union as transport operators, why not do the same for entrepreneurs?
> where that labour is actually being conducted are the ones that are followed.
So in that particular case, would be in both Estonia and Spain, just so we're on the same side?
> But for company tax law, that company is a tax resident in Estonia, not Spain.
Indeed, and I don't think the Estonian company would pay Spanish taxes, correct? Unless they have a presence (subsidiary for example) in Spain, then they would have to pay Spanish taxes. But if not, it's only the employee who pay Spanish tax. Or did I understand incorrectly?
> why not do the same for entrepreneurs?
I think this is exactly what we're doing right now :) Small steps, but EU-INC seems to be one of those steps in that direction.
> So in that particular case, would be in both Estonia and Spain, just so we're on the same side?
It sounds like we are. If labour is being conducted in both of those countries then yes. And the same anywhere else where someone might join the party.
And on the tax thing - yes again, but what I see happening now in European countries, is that, if a person of significant control resides in another country, then that other country considers the company a tax resident of that country too.
E.g: I live in Finland. If I were to open an Estonian company and have it literally do nothing all year, not only would I have to file a company report in Estonia, (fine, that's why I chose to start a company there, perhaps it's really easy) but also file a company report in Finland as if the company were a Finnish company.
I think this is an overreach of bureaucracy and adds a friction to entrepreneurship. Others might think differently - which I completely accept. Unfortunately for me, I do not think that this initiative here will change this, much. Perhaps I am mistaken. Either way, it is in the right direction and I support it.
Yeah, you should pay taxes from where the company is run. Basically if you have one person company. In a place it “does” business. But i want estonian company for the ease of doing business and for to hold profit, for reinvestment later. I dont want to deal with spanish/german authorities if i move around and want to grow business. No government competition is what they want. Because they cant win in square fight.
But there is no threshold for cross-border selling in the EU.
Fine if you're selling widgets at a market in Germany - but if you sell software abroad, make sure you're following [each] one of the 27 VAT codes correctly.
(From what I understand - would love this to be wrong)
Following US sales tax has way more complexity. In my county alone there are many different rates depending on the city in which the sale is made. Even just finding out authoritatively which jurisdiction to pay taxes to is nontrivial, practically impossible to solve without dedicated software.
> Fine if you're selling widgets at a market in Germany - but if you sell software abroad, make sure you're following [each] one of the 27 VAT codes correctly.
Yes.
> But there is no threshold for cross-border selling in the EU.
Kinda, but misinterprets the VAT itself.
Basically, VAT is paid at the point of sale and local thresholds apply.
>>Basically, VAT is paid at the point of sale and local thresholds apply.
The threshold is 10k EUR (total sales to EU). The point of sale in case of software/electronic services is the country of residence of your customer.
You need to collect two pieces evidence of that location, usually billing address and IP. If those don't match (your customer has used a VPN for example) you need a 3rd piece.
One Stop Shop helps with it (when I was starting my company it didn't exist and predecessor VAT MOSS was just being introduced and no one knew how to comply with it) but you still need to charge local VAT rates and report quarterly.
This is a great initiative that I've been following, but the stumbling block is still 'local taxes [and employment]' - that's still 27 different tax codes to deal with, submitting returns to in 27 different languages.
Even now with cross-border selling, there are 27 different VAT codes to follow when transacting within Europe. Sure, you can report and actually settle it to a single national authority (and then that national process separately).
Unless a country will actually defer parts of its company and tax law to Brussels, for companies present in that country - then I just don't really see what this brings over just starting a limited company in another state (even outside of the EU) - as you'll still have to follow national law in the country where you're resident anyway, which could be anything.
(e.g. I start an Estonian OU with E residency, I live in Finland. I am obliged under Finnish law to submit a return for that company in Finland too as a person of control. In Finnish, along with the Estonian return, in Estonian)
A mass selloff of US bonds will mean that the US can’t sell any more - because the market is suddenly flooded with bonds at a ‘discount’. This means that the US can’t take on any more debt (borrow money)
Why would you pay the US $10 when you can get the same thing from France for $8?
Or the US then has to issue bonds with massively inflated returns - i.e. pay a much higher interest rate.
On the other hand, China sold off most of theirs and nobody even noticed. I think you're exaggerating both how much EU holds and the potential effects of them selling it.
Sure but we were talking about just debt. Also the "rest of the world" is basically just China. I don't think it's a shocker that China isn't interested in betting on US companies.
This idea of waging financial war on the US seems very en vogue in Europe right now, but I think it's terribly shortsighted. Here's how I think it would go down:
1. EU countries coordinate a mass selloff of US debt, somehow even coercing private holders into a fire sale.
2. US bond prices consequently fall. EU holders lose tons of money on the sell side. US and Asian buyers rush to buy and get a sweetheart deal and massive risk-free returns, which starts crashing the stock market.
3. The Fed intervenes. They conjure up dollars from nothing and buy the bonds EU holders are selling at some discount, maybe 95 cents on the dollar. Those new dollars go into those countries' and banks' Master accounts at the Fed.
4a. EU countries' and banks' Master accounts are frozen. Maybe some portion of the funds are released every week in order to allow an orderly flow of value without too much market distortion. Or maybe given the act of financial war, those funds remain frozen indefinitely.
4b. Alternatively, their Master accounts are not frozen. Now, presumably EU didn't sell all their bonds just to hold non-yielding dollars. So they'll go to the forex markets and buy up Euros, massively strengthening the Euro and fucking up their export-based economies. Maybe they buy gold, or EU sovereign debt, or ECB steps in with mad QE. EU bond yields crater. EU holders lose more money on the buy side as whatever assets they purchase get more expensive. Inflation ensues.
5. US is furious and retaliates with financial warfare of their own. Or perhaps kinetic warfare. The ringleaders of the fire sale end up blindfolded and earmuffed on a US warship.
6. EU is in a much worse position than before, lost a ton of money on each leg, likely had tons more frozen, has pernicious inflation and/or diminished exports, cut off from the dollar system making currency reserve management and forex difficult and costly. The US is also now furious and looking to impose additional costs on EU however and wherever it can.
I think he knows the end* is drawing near and he hasn't got long to cement his legacy in painting more of the map in his colours.
* 'end' being anything from nature's course, to losing the support of his own inner core as they jostle for succession, upcoming midterms leading to impeachment...
In my personal life, I've learned the hard way that when people seem to be acting irrational with regard to an iterated game, before ascribing irrationality to them it can be very helpful to examine if they're short timers, acting rationally with regard to a game that won't be iterated.
Well, not for public bodies at least: “ Administrative fines cannot be imposed on public organisations, such as the government or state-owned companies, municipalities and parishes” [1]
But luckily this sort of thing never happens in the public sector. Except for when it does: https://yle.fi/a/74-20094950
That's interesting, because if you go here https://www.enforcementtracker.com/ there are a lot of public institutions being hit with fines (if they are enforced it's another issue) - search for Municipality for example
However I don't see any municipality in Finland getting fines
Also I don't see the point of what TLS is supposed to solve here? If you and I (and everyone else) can legitimately get a certificate for 10.0.0.1, then what are you proving exactly over using a self-signed cert?
There would be no way of determining that I can connecting to my-organisation's 10.0.0.1 and not bad-org's 10.0.0.1.
The identifier would be generated by the certificate authority upon your first request for a certificate, and every time you renew you get to keep the same one.
I see what you're getting at - but to me this sounds almost exactly like just using DNS, even if the (A/AAAA) record you want to use resolves to an un-routable address: https://letsencrypt.org/docs/challenge-types/#dns-01-challen... - you just create a DNS TXT record instead of them trying to access a server at the address for verification.
This is assuming NAT, with IPv6 you should be able to have globally unique IPs. (Not unique to IPv6 in theory, of course, but in practice almost no one these days is giving LAN devices public IPv4s).
For better or worse the push down to 47-day certificates is an industry-wide thing, in a few years no provider will issue certificates for longer than that.
Nobody is being forced to use 6-day certs for domains though, when the time comes Let's Encrypt will default to 47 days just like everyone else.
And you don't think that years ago people would have said "of course you'll be able to keep your security cert for more than two months"?
The people who innovate in security are failing to actually create new ways to verify things, so all that everyone else in the security industry can do to make things more secure is shorten the cert expiration. It's only logical that they'll keep doing it.
reply