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Start-Ups leave Greece due to over-taxation and no incentives for early-staged businessestaxes

It is not a secret that over-taxation is killing the Greek economy and individual businesses, even those in the early stage of their establishment. Based on my recent informal asking around small business owners aged 32 – 63, they all said in one voice: “Do not start a business in Greece, Go abroad!”

Then a report on Bloomberg came to confirm this, especially in a promising business sector, a key player in reviving Greece’s economy in the years of economic crisis: the  Start-Ups – in fact a booming sector in the last six years of austerity agreements and high unemployment. But in Greece’s austerity mentality and grabbing the last drop of blood of working force,  there is no space for incentives for new business established mainly by young skilled manpower full of ideas and visions for the future.

According to Statistics Authority ELSTAT, the general unemployment was at 24.1% in March 2016. In aged groups: 15-24 unemployed are 50.1%, 25-34 unemployed are 30.6% and 35-44 unemployed are 21.2%.

The rest, estimated 250,000 young and qualified professionals left Greece in the past five years.

I know of at least one successful start-up that moved its headquarters to UK. One and a half year ago, I read an interview by one of the founders complaining about the over taxation. The start-up headquarters were in a town in Central Greece. Recently it was confirmed: the Headquarters are now declared in London.

The last blow to Greek economy and start-ups came in recent months, when the government introduced austerity measures equal to 3 percent of gross domestic product for exchange to 10.5 billion euro bailout tranche.

“What startups need is a break,” Vassilis Sioros, chief executive officer of Ardustech P.C told Bloomberg. Sioros’s Ardustech is a small company with big plans for the use of olive oil in the pharmaceuticals, food and cosmetics industries.

“No startup is asking the government for money,” he said in an interview from Athens. “The state can invest without giving money by allowing startups to pay no tax or social security contributions for one year, or at least reduce them. This can help give at least another year of life to a startup allowing for the creation of one or two more jobs.”

“Greece has competitive advantages for startups, such as excellent and internationally-recognized scientists and engineers, and low personnel costs and operating expenses,” said Vassilis Stivaktakis, chief executive officer and founder of OSEVEN, which provides a smartphone-only solution for insurers to collect accurate data on drivers.

Still, for Ardustech, the tax hikes come as the company is targeting its first clients and planning test production in September for its product.

Stivaktakis’s OSEVEN raised capital a year ago, signing term sheets with investors on June 28 only to see capital controls imposed the next day. He says that the government needs to encourage startups, not drive them away.

“The government should provide a five-year plan for startups, at least for ones backed by venture capital as their potential has been recognized, and that would help investors look differently at the Greek startup landscape and at the same time contribute to the restarting of the Greek economy and the much expected development,”

OSEVEN was forced to move its headquarters overseas amid the turmoil and registered in London on July 7.

“London-based venture capital investors supported our idea, but asked for the company’s headquarters to be set up in the U.K. given the uncertainty over Greece’s financial future,” Stivaktakis told Bloomberg [read the very interesting article here].

The number of Start-Ups in Greece has almost doubled each year since 2010.

Apparently, we want to see also these firms that create jobs especially for the most active, talented and innovative groups of the country’s workforce paving the way for the economy future to abandon “competitive” Greece.

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2 comments

  1. SMEs are the lifeline of an economy and hold the fabric of society together. Putting tax and other measures on SME and startups breaks down their resistance and resilience to fluctuations in the economy because they have little buffers to adapt to these fluctuations.

  2. The EU — despite all of its political propaganda about how much it supports SMEs — has done immense damage to small businesses across Europe, and promoted only the interests of big business, banks and international finance. This has been especially damaging for those countries, such as southern Europe, whose economies rely inordinately on SMEs. And these are also the economies hit hardest by the eurozone fuckup — all to save german and french banks.
    ~
    Greece has never been business-friendly, and the impositions made by the German government-led “creditors” have made the situation far worse. Instead of “reforms”, they have imposed deformation of the economy — collecting taxes to pay themselves.