Let’s assume we meet for coffee, and that you’ve just founded a new company – very simple structure, 100% owned by you. If you now went on to tell me that, as part of your company registration, the so-called “transparency registry” has opened an investigation into your newly-founded, one-person company which is obviously 100% owned by you, my first thought would be that you must be from an autocratic, evil country with no rule of law, because none of this would make any obvious sense.
But the thing is that, no, this is Germany.
Situation 1: The Tax Office
I registered my company with the tax office. This is a mandatory step in Germany, because the tax office doesn’t get notified when a new company is founded in their jurisdiction (??). Registering with the tax office is a blocker for any business activity, because they issue your tax number, and you need your tax number to send out invoices.
I filled out the 24-page registration form (“Fragebogen zur steuerlichen Erfassung”), which essentially makes you feel like a combination of a criminal and a tax evader at every step – among other things, you’re asked which usernames you plan to use at online marketplaces (e.g. eBay) so that they can track your commercial activity.
I submitted the form online (this is possible nowadays in Germany), so it arrived at the tax office in seconds.
And then I waited.
After one month, I planned to follow up. As an introvert, I obviously chose text communication first. I sent them an email – nothing. I sent a letter – nothing.
Finally, I gave them a call. A friendly lady picked up the phone. She wanted to connect me to the person responsible, but it was 11:50 and everyone had gone out for lunch already. So there’s nothing we could do right now, but we could wait for everyone to come back from lunch. The friendly lady gave me a direct number to call and told me to call at 13:00.
At 13:00, I reached the responsible person, a young dude, and we got along nicely. He profoundly apologized for the delay. He said he just processed my company registration today and just handed it off to the next department which “usually takes another 2 weeks”. So there’s nothing we could do right now, but could wait for the next department to process it which usually takes another 2 weeks.
The next week, I called this other department. I reached a lady who explained that her colleague had taken over my file (yes, a physical file). And that colleague had taken that file home, because she was working from home, but now she also was sick. So there’s nothing we could do right now, because her sick colleague had taken the physical file home with her, but we could wait for her to not be sick again.
The next week, I reached the no-longer-sick colleague in her home office. She couldn’t find the physical file, and she couldn’t go to the office because she still was a bit sick and didn’t want to spread her disease to all her colleagues. So there’s nothing we could do right now, because no one knew where the file was and the person assigned to my company was sick and couldn’t go to the office. But we could wait for her to not be sick again so that she could go back to the office and look for my file.
And so on.
Next up, the transparency registry.
Situation 2: The Transparency Registry
Every German company has to be registered in two registries: The company registry and the transparency registry.
The company registry is handled by your notary. Going through a notary is a mandatory step in Germany for incorporating a company. Your notary will be happy to bill you a few hundreds Euros for incorporating your company and submitting it to the company registry. My notary also was a very nice person.
The transparency registry is handled by yourself. Once your company is registered in the company registry, you have to register it yourself in the transparency registry. The transparency registry is happy to bill you every year for this “service”.
Here’s where it gets crazy: The transparency registry can choose to start a random investigation into your company.
So, let’s stay, your name is John Doe, and you actually have a middle name John Maynard Doe. And maybe your notary forgot to add this middle name to your company registration, but you did enter it in the transparency registry. Now the transparency registry can invoke a so-called “Unstimmigkeitsmeldung” which kicks off an investigation into who the actual beneficial owner behind a company is.
All of this makes sense – in theory. Everyone in a free, democratic country agrees that it’s probably useful to understand who ultimately is the beneficial owner behind a company.
What matters is the implementation.
You see, an ongoing Unstimmigkeitsmeldung means that your company will likely be blocked from any notary activity for 1-6 months. Wanted to sell your company? No chance. Give out some shares to employees? No chance. Restructure into a holding company? No chance. No notary will touch it.
And the craziest part is that a Unstimmigkeitsmeldung may happen for the most trivial of reasons and for the most trivial of company setups – company setups like mine, where the beneficial owner is already stated in the company registration, owns 100%, and there’s no holding structure involved.
It doesn’t get simpler than that.
And resolving it probably just requires a few minutes time of someone working at the transparency registry.
You see, the people at the transparency registry are also very nice, very friendly, and very helpful. But – just like at the tax office, they are understaffed, a lot of them are sick, and sometimes all of them have simply gone for lunch.
There’s even a number you can call where you’re directly connected to someone in the department handing the Unstimmigkeitsmeldungen.
I’ve called that number a few times. A friendly lady picks up the phone. She’s happy to explain the general procedure of Unstimmigkeitsmeldungen, but she also notes that it’s not possible to talk about specific cases and that the actual department working on cases is not reachable by phone.
She notes that I should send an email to the intuitive email address
[email protected].
But, believe me, I’ve already done that. Multiple times.
So there’s nothing we can do right now, because the actual department can’t be contacted by phone, they’re understaffed, they’re dealing with a lot of colleagues on sick leave, and maybe they’ve all just gone for lunch.
What’s the epilogue here?
At the very least, it’s fascinating to observe how systems emerge. Systems which consist of friendly, helpful humans.. yet systems, when you interact with them as an outsider, feel deeply inhumane and evil.
And, personally, I find it surprising that such a system can emerge in a country consisting of friendly, helpful, educated people, people with good intentions.
Even a free, democratic country can suddenly feel very different once it has reached a certain state of bureaucracy and dysfunctionality.
Or, looking at it another way: How can a group of friendly, helpful people with good intentions suddenly form a system which is perceived as utterly evil by any outsider who interacts with it?
I’m sure smart people have written smarter things on this. And I should probably read Kafka, but for now, I don’t have the nerves, as I’m dealing with German bureaucracy.
The biggest thing which boggles my mind is that no one speaks about this. In private, every founder I know in Germany has some similar horror story with the tax office, the transparency registry or similar institutions.
Yet hardly anyone talks about this publicly.
Why?
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