German founder spends €9,600 and 152 days to register company, still cannot invoice

A software founder in Germany has reported spending more than €9,600 and waiting 152 days to register a company, yet remains unable to issue invoices due to a delayed VAT ID. The entrepreneur, identified as Paolino, initiated the process in late January and reached the five-month mark in late June. The total cost comprises approximately €7,600 in fees and bills, plus €2,000 in share capital frozen in a bank account.

The registered entity is structured as 'PlentyLabs UG & Co. KG', involving two companies. This complex legal arrangement is required for sole proprietors seeking limited liability, as a simple sole proprietorship exposes personal assets. A standard GmbH requires €25,000 in share capital, whereas a UG (mini-GmbH) allows starting with almost nothing but requires locking away 25% of annual profits until the reserve reaches €25,000.

The delay in issuing invoices is specifically due to the absence of a VAT ID, which is still being processed by post despite requests made weeks prior. The notary, register court, and tax authorities operate sequentially, creating dependencies that delay the finalisation of the VAT ID. The founder notes that while clients abroad require the VAT ID for reverse charge, domestic clients must also wait to avoid reissuing invoices later.

The founder contrasts the German process with Estonia and the UK, noting that those jurisdictions offer faster, online registration for lower costs. German company names must be distinctive; generic terms like 'Plenty' or 'Labs' are often rejected, leading to the adoption of non-standard naming conventions. The founder mentions a previous company, 'Freshflow', and notes that leaving Germany would trigger a significant exit tax on unrealised gains.

The article includes a promotional mention for 'Chat with Work', a private Work AI tool, stating it is free because the founder cannot yet invoice users. The Wirecard scandal is cited as an example where the rigorous bureaucratic system failed to prevent fraud, contrasting with its current role in deterring new founders. The founder argues that the system taxes ambition before revenue is earned, potentially driving talent abroad.