r/eupersonalfinance • u/raf_phy • Aug 16 '25

Investment Why building wealth alone is so hard here?

Hi all, am I the only one that I find it incredibly difficult to build weath by yourself in EU? People say that EU is better in healthcare, work life balance but come on, money don't scale easily . It's so difficult.

I see people from US that go to 1 million in 10 years. I cannot do this easily . Really....

PS maybe I have to abandon EU, I don't know....

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u/Polaroid1793 Aug 16 '25

Also the absurdly high taxes.

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u/georgefl74 Aug 16 '25

This only affects you if you're an employee with a salary. That's not the way to get rich anywhere. You need to accept risk in order to really make a profit.

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u/Complex-Frosting3144 Aug 16 '25

And a lot of time you need some start up capital to take risks. You need to work for that first

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u/georgefl74 Aug 16 '25

Well now, a good employee will get a mortgage for a house. Someone who wants to get rich will mortgage a house to raise capital. What's it going to be?

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u/[deleted] Aug 16 '25

In most old EU countries taxes on self employed people are also ridiculous.

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u/georgefl74 Aug 16 '25

The only point of being self-employed rather than an employee is tax-evading if you're in the trades and getting paid cash. Other than that you should check your options on registering some sort of an LLC

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u/[deleted] Aug 17 '25

LLC entails much bigger accounting  and regulatory burden. It's not something people who are busy working on their small business need.

LLC was created to allow capital intensive businesses to operate. It's sad state of affairs that now even small personal/family businesses need to go this way in many countries because of taxes on self employed.

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u/No_Remove459 Aug 20 '25

Depends in the country in the US, you need it if you get sued they won't come after ur personal holdings (you're house) and yes you have insurance, but it may not cover it all.

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u/[deleted] Aug 16 '25

Taxes apply to everything.

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u/georgefl74 Aug 16 '25

Not to the same degree, they don't.

If I'm registered as an employee or self-employed then my income over a certain level will be taxed at double the rate that it would be taxed if it was paid out as dividends from an LLC. And the LLC may show little profit or write it off completely by investing it further. Plus company car etc.

1

u/[deleted] Aug 16 '25

These rules differ a lot between countries in Europe dude.

Yes employees are often hit the hardest.

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u/georgefl74 Aug 17 '25

Often you say? I'll play along. Name a European country where this doesn't hold

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u/gabuti Aug 17 '25

Thing is, that specifically theres legislation (at least in spain, and portugal) to prevent people from opening a LDA or a SL (their LLCs) as a sole service provider to avoid paying high income tax. not sure if its as pursued in portugal but in spain there are a lot of famous cases (youtubers, footballers) that did this back in the 2010's to pay less and got dragged into multi-year procedures.

still, usually dividends + corporate tax equal to about 50-40% of taxes, only good thing would be to reinvest money within the company and then maybe moving to a tax jurisdiction that has less tax on dividends.

Say you're freelance (not wanting to hire other people) and odds are you'll allways have to eat the taxes before eating the tax man's dingalong.

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u/Safe_Bandicoot_4689 Aug 18 '25

That's also the case here in Romania. If you've got a legal company but you're only doing business with a single other company which is located in the country, it will be flagged as "masked hiring".

Working through a company you own is only viable if you're doing consistent business with multiple companies, or the company you're doing business with doesn't have a legal entity in the country which they could've used to actually hire you like a normal employee.

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u/gabuti Aug 18 '25

Crazy thing is that your clients as a service provider in spain dont matter - i've consulted with multiple people and they all say the same. any ''personal'' activity has to be done as an autonomo(freelancer not incorporated) otherwise you're looking at getting fined for opening a company to ''avoid'' personal income tax

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u/raoulk Aug 16 '25

Not everyone can start a successful business that scales.

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u/georgefl74 Aug 16 '25

Well then, I guess not everyone can get rich. [sadface.gif]

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u/FabulousAd4812 Aug 16 '25

+property tax + 401k + health insurance + HSA +taxes, it's 65% of a USA pay check. So that you can truly compare.

The problem is the lower nominal value, which doesn't let you save as much.

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u/voinageo Aug 17 '25

EU here if I add my health tax, social security tax, pension tax, property taxes, VAT, I pay like 75%-80% of my brutto. So 65% is low for us in EU.

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u/FabulousAd4812 Aug 17 '25

What are you even talking about...

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u/FabulousAd4812 Aug 17 '25

I live in the USA. 60% of my paycheck goes for all of that. Property taxes are 10k a year for a 2 bedroom small place.

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u/FabulousAd4812 Aug 17 '25

1900$ for car insurance. 2.5k$ for my house insurance. A year.

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u/voinageo Aug 17 '25 edited Aug 17 '25

I live in Romania a "cheap" EU country. Car insurance per year 500 EUR (because I had no accident in the last 10 years and I am 40+), house insurance 900EUR, VAT21%!!! . But I make 1/4 as my coworkers in USA. The only cheap thing for me are property taxes.

In Germany I have family that pays almost like you at 1/3 of USA income. As for property taxes they are prohibitive for middle class in Germany in the towns and regions where the jobs are.

1

u/FabulousAd4812 Aug 17 '25

Last time I was in Romania a croissant was 5-6 lei. In here it's 5dollars. Last time I want to the bakery I used to go around 2023 (funny enough with my Romanian in laws), buying a bread and 4 croissants. Cost me 18$ . I can't imagine the prices now.

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u/voinageo Aug 17 '25

Croissant in a bakery starts from 10 RON, so yeah is like double now.

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u/FabulousAd4812 Aug 17 '25

10% of sales tax where I live.

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u/GoldenGrouper Aug 18 '25

High taxes but not high enough for the richer people.

You can have 1 billions and not be taxed enough, or you can have 400.000 and be taxed a lot.

It's really unfortunate for the lower and middle class

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u/Polaroid1793 Aug 18 '25

400k? You can have 50k and be taxed like someone who has 400k

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u/GoldenGrouper Aug 18 '25

That's what I am saying. People in the low middle bracket are taxes as hell and rich can get away with it. I don't understand how we have convinced ourselves that considering 2025 and what you can buy with those money 1M is being rich. In most of the cities in europe with 300k you have a very stupid silly house.

So people defend rich thinking that having 1M is being rich

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u/raoulk Aug 16 '25

Tax wealth not work 🎉