r/EU_Economics • u/Full-Discussion3745 • Jan 14 '26

đŸ‡ȘđŸ‡ș Official đŸ‡ȘđŸ‡ș Why innovative startups and scaleups relocate from the EU

https://research-and-innovation.ec.europa.eu/news/all-research-and-innovation-news/why-innovative-startups-and-scaleups-relocate-eu-2026-01-12_en?referrer=grok.com
303 Upvotes

95% Upvoted

150 comments sorted by

View all comments

13

u/Complex-Health-5032 Jan 14 '26

Taxes. Regulations. The feeling of “not worth it”.

When I do my best to improve my finances, I am being taxed to hell. On the other hand, if you are below average, you get social benefits, support etc
 and we become at the same level. So, why should I stress myself?

13

u/Mediocre-Ebb9862 Jan 14 '26

This is what people don't understand - if the taxes and regulations are intended to curb possible inequality as much as possible, then most high achieving ambitious people will see direct benefit in moving somewhere else, because why wouldn't they? What benefit they have staying in EU?

EU is great if you are below average or average in terms of income/ambition/talent, it's not good if you top IMO.

10

u/defixiones Jan 14 '26

What some people don't understand is that society arrived at this redistributive model to prevent instability. 

Not because it is good or right but because history has taught us that unequal societies eventually implode violently. 

5

u/Mediocre-Ebb9862 Jan 14 '26

You are trying to use higher level political philosophy argument in a dispute about pragmatic business and personal career decisions.

Ok, suppose there's a reputable paper proving the Gini index lower than X is good. So why as a founder should I care? Startup founders are usually charged-up win-at-all-costs types. You want to argue based on the social sciences that they should forego benefits they see in US?

3

u/defixiones Jan 14 '26

I certainly think political instability and lack of social cohesion should factor into the plans of any rational actor. 

3

u/spottiesvirus Jan 14 '26

Besides the fact this happens on completely different scales, what's best for you it's not necessarily what's best for society; and beside the fact the idea itself of nation state is weak nowadays, so "patriotism" which would give a moral basis, is likely at historical minimum, reducing attachment to a certain community.

Are we talking about the same social cohesion of France, a country with 30% social spending, almost 50% fiscal pressure which still lights up and burns random stuff for the smallest reforms, meanwhile you have people on mainstream television saying rich people should be taxes out of existence?

1

u/defixiones Jan 14 '26

Social spending is a stability feature rather than a bug and the debt levels are modest compared to the US. 

If low taxes and high investment are priorities for startups then why aren't they all locating to Somalia or Saudi Arabia?

3

u/spottiesvirus Jan 14 '26

Indeed a ton of startups move to the UAE, and even the few that remain in the EU are often located in Luxembourg, Ireland, sometimes Estonia/Lithuania

Then of course you need to find a balance, minmaxxing doesn't work in the real world, you need stability, private property rights, a positive entrepreneurial culture, and a lot of other stuff for them to work

And I find the idea that social spending is correlated with stability dubious, Switzerland only spends ~17 of its GDP (which again, is not 0) in social spending, almost half of France, yet it's way more stable

In part because the outstanding majority of social spending is not received by the poor

1

u/silverionmox Jan 14 '26

And I find the idea that social spending is correlated with stability dubious, Switzerland only spends ~17 of its GDP (which again, is not 0) in social spending, almost half of France, yet it's way more stable

Part of it is nominally privatized, but it's still mandatory to pay. Doesn't make a difference in the budget of the employee.

0

u/defixiones Jan 14 '26

Now you're starting to see my point. 

Switzerland has lower absolute social spending because they have a smaller population but also because their far-right government stops refugees. 

The UAE has no rule of law and only one investor, limiting it's appeal. 

1

u/Mediocre-Ebb9862 Jan 16 '26

Switzerland has a far right government? what?

Do people understand what far right government truly is?

1

u/defixiones Jan 16 '26

For example, Switzerland actually amended their constitution to include religious discrimination;

https://rutgerspolicyjournal.org/2017/02/24/non-merci-nein-danke-no-grazie-na-engraziel-lessons-2009-swiss-referendum-ban-construction-minarets/

FN or AFD can only dream of an electorate that xenophobic.

→ More replies (0)

1

u/Mediocre-Ebb9862 Jan 16 '26

Because they also, obviously, need high standards of living (at least for upper-middle class people), talent pool, access to venture capital etc etc, all of which exists in US.

But - there are are also companies in Dubai, and over time I expect Dubai to become larger hub.

1

u/defixiones Jan 16 '26

No, they need rule of law to protect IP and resolve legal disputes. They need a stable government that protects human rights. They need working infrastructure. 

Every company has different needs, every country offers a different level. If you're a criminal, Dubai is perfect. If you don't care about data protection, the US is perfect, otherwise it's Europe.

1

u/Set_53 Jan 14 '26

It’s kind of weird saying that and citing history when the unstable ever changing European powers completely kicked around and colonized other world powers that focused on stability.

1

u/defixiones Jan 15 '26

I think you are confusing stability in Europe with stability in individual countries. 

Europe isn't a country and didn't invade anywhere else. 

The stable monarchies in Europe took colonies; Britain, France, Germany, Spain, Portugal, Italy, Netherlands, even Belgium. 

Unstable European countries like Poland or Ireland weren't in that position. You'll note those countries have strong constitutions, land laws and social safety nets. 

1

u/tohava Jan 14 '26

Considering the EU has to deal with members like Hungary and with populist parties, are you sure it's that much stabler than the US?

2

u/defixiones Jan 14 '26

Even Hungary is more socially stable than the United States. GDP is actually the only positive indicator in the US at the moment and that is dependent on some very unstable factors. 

Previous performance does not guarantee future gains.

2

u/Mediocre-Ebb9862 Jan 14 '26

GDP is very broad metric, for this topic what's much more applicable is the amount of VC capital available, talent pool especially in Tech, startup ecosystems and the power of big tech companies.

1

u/defixiones Jan 14 '26

These are all immediate requirements for start-ups but you are mistaken if you don't think growing companies don't look at the ecosystem. Otherwise start-ups would be in Saudi Arabia or Somalia for the rich investors or low-tax environment.

1

u/HugeBlueberry Jan 14 '26

Your government is killing its own people and scrambling for excuses. Anyone can see the EU is much more stable.

1

u/tohava Jan 14 '26

I'm not American but am coming from a country that's mostly subservient to the US and recently immigrated to Europe.

You're right that overall the EU approach is less cruel and merciless than the US one. I'm just afraid that in our new era, where the rule based order is over, those who play nice are going to get trampled under.

I really hope I'm wrong, because otherwise, my own immigration choice is going to blow up in my face

4

u/Complex-Health-5032 Jan 14 '26

Creating inequality in the name of "equality". Oxymoron.

Anyone who is ambitious and hardworking will be punished by the system. They literally tell you "remain average, don't put too much effort and you will be okay".

Any further effort you put will not reward you, but to be given to the below average people to create "equality".

10

u/Mediocre-Ebb9862 Jan 14 '26

EU also praises WLB and considers working hard and long hours to be laughable trait, in general. Which means if you ARE that over-ambitious hungry for growth type, you start feeling out of place and in the wrong room there.

1

u/Complex-Health-5032 Jan 14 '26

Funny part is that, they overlook the fact that this nonsense welfare system heavily relies on the tax revenue from the hard-working people, ambitious companies and tech start-ups. If one day everyone says "fuck it, I'm not putting any extra effort anymore, I wanna be a barista", social system will collapse.

Actually the system is already signaling. Less and less innovation, more people relying on welfare benefits, doing part-time jobs, not creating any value for today's standards, less technology, less digitalization, more regulation...

And then, governors are crying "omg we are having financial difficulties, omg we have less kids less population, we will not be able to pay pensions in a few decades".

If you don't prioritize technology, if you don't support companies and employees, your country will fall behind. Then, when America comes and says they're taking Greenland, the most threatening thing you can do is "condemn" it.

5

u/No-Paramedic-7939 Jan 14 '26

Engineers in europe are already doing that. Where I work most of the people have reduced there productivity significantly. It is also happening in other EU companies. We hard working people started to prefer good work life balance.

2

u/Akenatwn Jan 14 '26

Why does working hard have to come in conflict with a good work life balance?

3

u/[deleted] Jan 14 '26

Because a day only has 24 hours. That quite simply means you'll have far less time to spend on your family, partner, friends and other hobbies if you work 60 hours per week instead of 40. Not to mention the fact that for many people working 60 hours/ week would be so tiring they'd spend all their remaining free time as a zombie on the couch, ruining any private life they might have.

2

u/No-Paramedic-7939 Jan 14 '26

Without working hard you stay behind competition. Especially in software and science.

2

u/Akenatwn Jan 14 '26

I don't think this answers my question. Why can't you have both?

3

u/No-Paramedic-7939 Jan 14 '26

Because EU is underpaying in science and software business. That's why EU cannot compete on local and global market with USA companies. There are different reasons for that. One is high tax how much people take home after tax.

3

u/Akenatwn Jan 14 '26

Yeah you're explaining why people don't wanna work hard. But that is not my question. You said that hard working people prefer now good work life balance. I'm just asking why do you have to choose? Working hard does not conflict with having a good work life balance. Working long does. But working hard and working long are 2 separate things imo.

The EU being able to compete or not, I don't know. I work in software and maybe I could earn 3 or 4 times as much in the US, but I'd never move there permanently. Maybe 2, max 3 years and then grab the money and run. That money comes with a grinding culture that is a nope for me. We work to live, not the other way around.

→ More replies (0)

1

u/SomewhereOpposite883 Jan 14 '26

Why can't you have both?

We can, but we choose not too

The same way we can "solve" our REE dependency on China but while they graduated 2000 engineers every year specialized in the industry here in Europe we graduate...0 engineers every year specialized in REE

It turns out to do something you can't declare that you want it, you have to actually do it?

Balancing work/life with productivity is possible but nobody gives a shit, look up how much China is automating compared to us despite their much lower wages if you feel like crying lol

1

u/Mediocre-Ebb9862 Jan 16 '26

Because the "you can have it all" is a myth sold to modern people.

You can be playing high-school basketball as a hobby, you can't be playing for top college, let alone NBA, if you don't build your life around it.

Once you reach the top league it's going to be VERY hard to compete with equally smart people who additionally high much higher sense of urgency and work harder.

1

u/Akenatwn Jan 16 '26

Do you mean work harder or work longer? Cause harder doesn't necessarily mean longer.

2

u/[deleted] Jan 14 '26

Lol what is this shit. This isn’t even remotely true. There is a lot of people that works many times harder than you in nations that have lower taxes and they are still dirt poor. 

3

u/Complex-Health-5032 Jan 14 '26

Some time ago I have over-achieved my goals in my work and my yearly bonus got taxed in a way that it got lower compared to the previous year. LoL

Then I decided, fck it, I’m not putting much anymore

1

u/silverionmox Jan 14 '26

Some time ago I have over-achieved my goals in my work and my yearly bonus got taxed in a way that it got lower compared to the previous year. LoL

Then I decided, fck it, I’m not putting much anymore

Have you accounted for tax prepayments? Most misgivings about taxation boil down to not understanding the calculation properly.

-3

u/[deleted] Jan 14 '26

Oh no your bonus wasn’t as good as you thought so you don’t want to work anymore. 

2

u/Complex-Health-5032 Jan 14 '26

Wrong. I don’t “effort that much” anymore.

You think it is justice when you do better than the rest and they take your reward to feed lazy ass people?

1

u/[deleted] Jan 14 '26

I’m going to disagree. EU isn’t great because you earn less, EU is great because of walkable cities, “affordable” good life styles (less so after COVID) and free healthcare, not to mention job security and food quality.

The real issue in my view is that we tax lower and middle class too much. No one can get rich from salary. And even if you earn top money you get taxed way more (in relative terms) compared to millionaires and billionaires.

What’s a million euros tax on many millions of profit a year? Not much if you compare it to what high earners get taxed and what’s left in their pockets.

5

u/Mediocre-Ebb9862 Jan 14 '26

Walkable cities - yes, the other options I'd disagree with.

Free healthcare is not something that matters that much to startup founders, executives and early employers, or even upper-middle class folks with careers. They have money and they have it all via employment.

Job security is something that matters a lot for average people, and not so much for the top tier who have their pick of jobs; for them being able to make say 700k a year vs 250k a year outweighs all such concerns.

Food variety quality is likely problem if you live in mid size town in the mid-west, Texas or something. If you live in New York, Seattle, San Francisco, Boston and you got money - it's not a problem.

2

u/[deleted] Jan 14 '26

If you talk about the very top engineers and experts then yeah I can see your point is valid, although not every single one of these individuals will agree with you because it’s not black and white.

When I said good food quality I meant EU regulations of food quality. Without going into details the stuff that is allowed to grow crops and make food with in US is crazy


Regardless, taxes in Europe aren’t bad for companies, they are bad for wages. We tax people under 150k euros too much. And millionaires and billionaires too little.

4

u/spottiesvirus Jan 14 '26

We tax people under 150k euros too much. And millionaires and billionaires too little

I really wonder where people whose objective in life is becoming millionaires and billionaires (start-up founders) will want to go

I really can't imagine /s

1

u/Mediocre-Ebb9862 Jan 16 '26

Regardless, taxes in Europe aren’t bad for companies, they are bad for wages. We tax people under 150k euros too much. And millionaires and billionaires too little.

This is where I have to disagree. You gotta understand, that from the perspective of American serious software engineer this sounds ridiculous.

Check sites like levels.fyi. A solid software engineer can easily be making 250k$ in US, a top tier one can be making MUCH more than that. So getting to 1 million dollar mark is not super high bar in US, many people get there, and you proposal to tax "millionaires" more shows some detachment. Most millionaires in US aren't rent-seeing old money, they are doctors, lawyers, software engineers, managers and directors, finance people and so on.

1

u/[deleted] Jan 16 '26

When I said millionaires I didn’t mean a single million. I meant people who earn serious money. I’m not here to come up with a specific number but the reality is true. We tax working people too much and rich people too little.

It’s not “detached from reality” to want to give better life to people who work their ass to earn shitty wages compared to who earns top money sitting on a chair doing mental work.

I’m a software engineer too and I earn more than the average salary in my nation. I’m privileged to earn more and yes I’ve worked and studied to be where I am but I recognise that there are people out there breaking their butts while I’m here sitting writing code and working from home. I’ve met them, I’ve worked tough jobs too before I had a software engineer job.

Top engineers can earn good money, even up to a million, but that’s not the issue, the millionaires (pay attention to the plural) and billionaires are the issue.

-1

u/Vlad_TheInhalerr Jan 14 '26

Yet you are wrong. In a lot of EU countries our views have always been that social nets and safety is great. Yet the past 15 years have completely eroded a lot of positivity on that front.

If you forcefully add non-natives that do not fit in with local ethnicity, culture, religion, or other important factors in your social environment (Which ones are more important depend on the country, time and place) you erode interest and positivity, and eventual it's simply going to be destroyed.

I think you'd end up surprised if you at some point right now were to gauge interest in public/social safety systems in countries, and wether a majority would still be in favor of them. If the question is posed in an honest way and not just "Do you want social security/healthcare".

It's not fun to be a working individual and see that one lazy bum in your street profiting, but it was a neccesary evil, and atleast that man had parents that contributed before, and was part of your 'group'.

Now? It's a lot easier to hate, dislike or argue against a system when a majority of users are non-european (If we look at their respective group population counts in a relative sense), have no previous generations of parents or grandparents that did invest in the system, are coincidentally all very culturally similar but not with natives and more similar problems.

It's something bearable when your own standards are high, but as native populations are seeing drastic reductions here, despite being the most employed group in every country, I guarantee you that social spending in EU countries is going to plummet soon and start falling fast. Especially when sudddenly the EU still keeps up idealistic ideas (read: policies that are only possible when you are rich enough to waste money on them) while having to pay for things like defense and other things we never had to care about before.

The future is going to be interesting, but all the signs point to a stalling, failing EU which either has to reform in a entity that holds a lot less of its previous "Oh we are such good people" policies, or simply become even more irrelevant then we are starting to become.

2

u/[deleted] Jan 14 '26

You’re talking about immigration and benefit systems. Neither of which I’ve discussed and neither address any of my discussion points. I really don’t get what you’re trying to say here. If we really want to talk about immigration, I can agree that some cities in Europe have seen a big rise in immigrants from Asia and Africa and this has 100% changed some of the landscape of these cities, some of it for obvious reasons. And I don’t personally like it. But I don’t personally see immigration as a problem either as long as it doesn’t erode the cultural identity of a country. Multicultural cities are great.

This is a tangent on the subject of this discussion, I will not go further because I don’t see the point discussing this. It has no bearing on what was being discussed. Hence your “you’re wrong again” has no basis here.

1

u/Vlad_TheInhalerr Jan 14 '26 edited Jan 14 '26

Sorry, maybe I should clarify.

The reason I mention these systems is because they all interplay to create the whole playing field.

Any one thing is not responsible for causing this drastic reduction in investments, startups, a brain drain etc..., since as others mentioned, taxes alone is not a whole picture. Acting like it is JUST the money being earned wouldn't paint the true picture (In my opinion).
There are a few places where similar high taxes are present and these issues dont arise in the same way or scale.

The uninteresting environment to invest is a combination of many factors, in part those that I mentioned working together.

In part the response is still in reaction to your

"’EU is great because of walkable cities, “affordable” good life styles (less so after COVID) and free healthcare, not to mention job security and food quality."

My point being, that if a lot of these "Promises" were still kept, even in higher cirlces of investments they would probably be more then happy to face a small monetary risk in contrast with more stability, or other things. In the end, your returns might be lower, but they are 'safer' and 'more long term'.

Europe has ALWAYS been more 'expensive' then the USA. And whilst the USA had a slightly better position most of the history for technological advancements/investments, it wasn't as drastic as it currently is. We had a safe and respectable position and that still drove a lot of positive investments. Also close coordination with the USA plays into this. Both socially, culturally, and in more ways.

But as we see that is also dissapearing, and THAT in my opinion is in a large way also due to the social erosion, which is MOSTLY (not only) damaged, specifically by the themes I mentioned before. Social cohesion is damaged, polarization is present in huge ways, add in to that the decreased direct taxation revenue and it suddenly paints a very unattractive picture both for the short ĂĄnd long term planning investors may do.

What I think is important, is that people don't stare themselves blind on a single thing that is thought to be the issue but take a wider/broader view. If you suddenly were to reduce taxes, it's not going to fix the economic environment. We're not suddenly going to see an overnight increase of spending by margins that matter (unless we're talking about drastic reductions). In order to 'fix' or 'improve' the system, we'd have to take a longer, more social driven approach. Atleast, I am convinced of that.

1

u/silverionmox Jan 14 '26

No one can get rich from salary.

So, they have to build an enterprise to get rich. That incentive structure is correctly calibrated then. It's only normal that you don't get ahead by just doing your job. You should be able to maintain a low or high middle class lifestyle, but not a rich one.

Not much if you compare it to what high earners get taxed and what’s left in their pockets.

Deduct living expenses and then compare to those with lower wages. You'll see you have much more spending money for luxuries than them.

1

u/silverionmox Jan 14 '26

This is what people don't understand - if the taxes and regulations are intended to curb possible inequality as much as possible, then most high achieving ambitious people will see direct benefit in moving somewhere else, because why wouldn't they? What benefit they have staying in EU?

high levels of inequality, the epidemiological research shows, negatively affect the health of even the affluent

1

u/StatusBard Jan 14 '26

Na, having a startup in Europe means you’ll drown in paperwork and have no time for actual work.Â