When the German IRS Threatens Founders

The statistics on Germany’s entrepreneurship could not be more sobering. According to Statista, there were still more than one and a half million founders in Germany in 2001, but this figure fell to just over half a million in 2019. A drop of no less than two-thirds in just two decades.

One can speculate about the reasons. Too little venture capital, too high taxes, a hostile startup climate, shifting priorities and ambitions of young people, and so on. In a survey in Austria, startups were ranked among the least attractive employers.

During the Corona crisis, freelancers and the self-employed were considered the big losers. No wonder that the result of the Young Professionals Barometer 2020 from the market research institute Trendence showed both the willingness of young academics to change jobs or to become self-employed at all dropped rapidly, and this despite a simultaneous increase in dissatisfaction with their own employer. In view of such survey results, the daily newspaper ‘Die Welt’ sees Germany on the way to breeding a generation of civil servants.

“In times like these, something like self-employment seems downright dangerous to them. Our potential innovation hopefuls are currently studying or still going to school. And if things go badly, we’re breeding a generation of risk-averse employees and civil servants with whom it’s impossible to win the global competition.

Now Antonia Cox, co-founder of the startup POTTBURRI, which makes sustainable plant pots, posted a letter from the German Federal Central Tax Office regarding the advance VAT return. Note the choice of words here: “threat” (“Androhung”).

Threat from the Federal Central Tax Office

Not a “request for post-filing” or “request for correction,” no, the state comes into the house with the full force of its power. Cox only commented with a sigh:

Ah Germany…
How much love there is in our language, especially in connection with bureaucratic letters.
No wonder no sock wants to start a business here, when you always feel like you’ve got one foot in jail.

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