Start-ups: What Germany can learn from the Netherlands

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Dhe Netherlands can do more than just camping, tulips and cheese. According to a study by the European Commission, Germany’s neighbor is one of the leading countries in Europe when it comes to driving innovation.

On behalf of the Commission, a research group uses different data to measure the so-called “Research and Innovation Performance” of individual countries every year. The Netherlands is currently in third place, behind Sweden, Finland and Denmark – and well ahead of Germany in ninth place.

Innovations often indicate a lively start-up scene. And indeed, the start-up barometer from Ernst & Young in April 2022 shows: In terms of both the number and the amount of start-up financing rounds, the Netherlands is at the forefront in a European comparison.

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In 2021, 321 financing rounds were completed in the Netherlands, investing a total of 4.4 billion euros in Dutch start-ups. In the study, this is fourth behind Great Britain, Germany and France.

The most well-known tech export hits from the Netherlands include the listed travel platform Booking.com, which was founded in 1996, the payment processor Adyen and the developer tool Gitlab – both also listed on the stock exchange. The Messagebird customer communication platform is part of the Dutch unicorn club.

The neighboring German country is therefore a start-up country. A more entrepreneurial and founder-friendly country than Germany, says Shane Samuel Yankam. He tried both, wanted to get started with a software start-up in Germany and now prefers to do it in the Netherlands.

Founding companies in the Netherlands – quickly and digitally

Yankam came to Germany from Cameroon at the age of 18 to study business informatics at the University of Duisburg-Essen. He decided to start a business while he was still studying and applied for an Exist start-up grant – without success.

After a few years as an employee in German software companies, he moved to the other side of the border and founded his start-up Cloudopex in Eindhoven, with which he develops a cloud management tool.

In the European Union it is not a problem to set up a company beyond any national borders. The option to set up a BV in Holland, a “Besloten vennootschap met beperkte aansprakelijkheid” (Dutch limited company) – the equivalent of the German GmbH – is open to every EU citizen:

– EU companies and individuals can without restrictions Set up companies in the Netherlands.

– This requires one Dutch business address.

– That share capital a BV is only 1 euro.

“Here, people hardly look at you with skepticism if you say you’re a founder,” reports Shane Samuel Yankam

Source: private

The foundation itself works quickly, less complicated than in Germany – and completely online, reports Yankam. You can only set up a BV with the help of a Dutch notary. But: “I never had to go to the notary myself, it all went online.”

Registration with the KvK, the Kamer van Koophandel, the Dutch Chamber of Commerce and Industry, also happened via their website, which Yankam says is very good and clear. This early start-up phase is a lot more complex in Germany, he says.

Tax advantages in the Netherlands

In his eyes, the most important advantage of the Netherlands as a start-up location is clearly the tax. Companies in the state have previously paid 15 percent, and since 2023 19 percent corporate tax for all profits up to 200,000 euros. Anything beyond that is taxed at 25.8 percent.

In Germany, companies still only pay 15 percent corporate tax. But then, depending on the location, there are 7 to 19 percent trade tax, the solidarity contribution and 1.5 percent dividend tax when profits are distributed to a holding company.

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It is not possible to give a general answer to how much tax companies in Germany pay in total, but the benchmark is around 30 percent of the profit – and thus significantly more than in the Netherlands.

“In Germany, the tax disadvantages have long outweighed any location advantages,” says the entrepreneur Yankam. “And we haven’t even talked about the income taxes and social security contributions that come with it as soon as you want to hire employees.”

Good start-up culture in the Netherlands

And something else is better in the Netherlands: the image of tech entrepreneurs. “In the Netherlands, people don’t look at you with such skepticism when you say you’re a founder,” reports Yankam. “It’s just much more normal, many people are self-employed on the side.”

Starting as a sole proprietorship (eenmanszaak) is quite commonplace. “There is a different understanding of work and a different assessment of the risk of self-employment.” Accordingly, Yankam finds it easier to build up a network of entrepreneurs that can also be useful in finding investors in the future.

And what Yankam has just observed: the Dutch start-up scene and possibly society is more open than the German one. “In my experience, as a person with my phenotypic conditions, it is more difficult to found a company in Germany.” This is how Shane Samuel Yankam himself puts it.

“I found it more complex to move forward or even be taken seriously. You’d think that what I was working on back then might not have been such a good idea – and it wasn’t. But that alone wasn’t the reason. That still happens to me today when I’m traveling in Germany.” The truth for non-white people in Germany is: “Too often people don’t take you seriously until you start talking.”

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