Saturday, May 16, 2009

Ready for a bit of a break

6 I’ve been tackling four large writing projects this week; a manuscript, a funding proposal, and two business plans.  By this morning, with most of the work done or in final draft, it was a good time to relax and take advantage of a sunny Dutch Saturday.

The central core of Maastricht fills with tourists and shoppers this time of year: the heavy coats and umbrellas have disappeared and cafe life is crowding the sidewalks.  I still enjoy finding a table to watch the people passing by and to savor DSC07978an Orval (Belgian beer), filling the afternoon with good humor and easy conversation.

The kermis (fair) continues in Vrijthof Square, and I found myself still casting thoughts toward the Speed ride: a double arm that spins vertically, flipping the passengers around at either end.  Friends had been goading me all week, and we all studied the ride today and gauged whether the line was too long, the weather was too threatening, or I was too mature to challenge it.  While I trust physics, I am not so sanguine about mechanical engineering when it comes to these rides.  The thought of dangling face-down several hundred feet up, held in only by a purple plastic yoke, is very scary.

Nonetheless, I took the plunge.

Scary Rides 02Scary Rides 06

Scary Rides 11Scary Rides 08

The only truly scary bit is when the ride first hoisted me up to the top while the other car was loaded.  Perched way up above the town, clutching the restraining yoke, I felt horribly vulnerable and in great danger of a long fall.  But once things get going, it’s exhilarating: it goes fast enough that it’s more like a looping roller coaster.

The business plan is out for review by half a dozen people, and I’m gong to hop a flight out for a few days of R&R.  Hopefully there will be some internet to send some pictures, but I hope to put work as far away as the Netherlands for a bit of a break.

Thursday, May 14, 2009

The necessity of getting advice

Despite all of the good intentions of international treaties and globalization advocates, the complications associated with transnational business can still be daunting.

Take a simple example: an American entrepreneur establishes a Dutch BV to create a software product in the Netherlands for sale to US customers.

Pretty straightforward, until you start to follow the money through the business.  I’m not an accountant, but here’s how the conversation went when I spoke with one:

The American ownership of a foreign entity must be reported to the US government.

The transfer of money in excess of $10,000 is a reportable flow out of the US under anti-terrorism and money laundering laws.

The creation of software in the Netherlands is a wholly Dutch corporate activity, with income after appropriate business deductions taxed at the 25% corporate tax rates.

The sale of software in the US is a foreign source income, subject to a foreign tax exclusion which varies from 0% to 100% depending on how the software is defined as a good (e.g.: service, product, license for use).

The Dutch corporation’s retained earnings are subject to a supplemental 15% US tax if they are ever transferred to the US when the owner moves home, raising the total tax hit to 40%, unless…

The full corporate income is reported to the US in parallel with the Dutch reporting, in which case it is taxed at roughly a 5% marginal rate (‘Pay me now or pay me later)

…or you could fight for a sub-part-S exclusion that forces you to distinguish personal service income from manufactured income, where “manufacturing” can mean different things in the US and Europe on almost a yearly basis….(whimper)

Yes, I’m glazing over too: a one-sentence business drags all of this behind it!  Worse, up-front choices make $10,000’s of dollars of difference in taxes. The method for reporting corporate income must be decided and registered in the US within 75 days of the establishment of the Dutch company. The service / product / license choice must be made when the client contract is signed.

So, the lesson is to secure excellent tax and legal consults in both the US and Europe.  They can get the best startup structure established, and create the yearly audited accounts and annual tax returns for the Netherlands and the US.

I’ve found that the services are offered as standard service packages whose costs don’t vary much from firm to firm.

Setup costs for establishing this one-line business are around $3500.

Total annual reporting and tax preparation costs are  around $5000 per year.

Tuesday, May 12, 2009

Thrills and Chills

Vrijthof fair 2 The Vrijthof Square has lit up with a summer carnival just a bit ahead of the actual arrival of summer.  The Speed Tumbler looks absolutely breathtaking: I’ve been watching the arm spin above the rooftops each evening and working up the fortitude to try it.  The roller coaster was good; the haunted house was more scary on the outside than the inside.  Still, it was good fun ahead of the warm weather (and, best of all, Oliebollen made an unseasonable return!)

Vrijthof fair 1Vrijthof fair 3 Vrijthof fair 4Vrijthof fair 5 Vrijthof fair 6

-------------------------

  While the fair had the chills, the thrills were all in Amsterdam today.  With eventual severance from my parent company seeming increasingly likely, I’m hardening my Plan B life alternatives.  This involves two tasks: creating a new corporation (a BV, or Besloten Vennootschap in Dutch, the only form of company that preserves my 30% Tax Exclusion), and making a DAFT application (Dutch American Friendship Treaty) to reside as an American entrepreneur in the Netherlands.

The final articles of incorporation were ready for review today at Finsen's, and I signed off on the application papers for the Notary to process.  So far it’s all going according to script, and I highly recommend the accountancy for shepherding expats like me through the process. 

Preliminary incorporation should be granted in about two weeks , creating a skeleton (B.V. i.0.) that allows me to fund the business and finalize it.  Typical details of the process are summarized here. Interestingly, the papers are moving through more quickly than usual since the real estate market in Amsterdam has slowed, giving the notary more time for processing business applications.

It’s potentially a big, bold step into a very different future, and I am alternately excited and frightened as this moves forward.

 There’s going to be lots to talk about…I’ll probably be just as spun as I was on the Vrijthof rides

Monday, May 11, 2009

A movie, a play, a book recommendation

I am trying to get into better balance during trips to the US, adopting the Dutch habit of working during work hours and cultivating life during off hours. So, over the past week, i branched out a bit and returned with a few recommendations.

Movie: Slumdog Millionaire:

I had avoided this one based on the previews, but a friend assured me that it would be transformative viewing.  After viewing, I’m of two minds about it.

It seems to be a very honest and visual portrayal of lower class life in India.  The people, the cityscapes, the situations are compellingly portrayed, and the entire narrative leaves me feeling like I’ve seen life from a very different perspective.  I can’t tell how much truth there is in it, but it makes me think hard about my assumption of what is important and meaningful in life.

At the same time, I get sympathetic pains during surgical videos in physiology class.  The unflinching portrayals of children being maimed to become beggars were very difficult for me to watch, and I had to stop the movie and disconnect on more than one occasion. I’m don’t classify these experiences as entertainment, but I do think it is a significant work.

Play:  Sunday in the park with George:

A Steven Sondheim musical loosely based on artist Paul Seurat’s creation of the pointillist painting Sunday Afternoon on the Island of La Grande Jatte , this turns out to be a meditation on the tension between work and life.  Seurat relentlessly pursues his vision of artistic harmony while his girlfriend Dot alternately accommodates, opposes, and finally rejects his obsession with painting.

Its fascinating to watch Seurat withdraw into his work, elevating his passionate pursuit of ideals above critical disdain, human relationships, and finally his own nascent family.  He scribbles notes about balance, tension, light into the back of a book, later annotated by a baffled Dot, to be read later by his grandchildren.

I recognize too much of my own obsessive pursuit of creative product at the expense of human relationships…it’s a good caution.

Book: Escape from Cubicle Nation:

My business school professor recommended this one, and I found a fresh copy at the airport.  Far from being another “Dilbert” reflection on corporate life and bromides for dealing with it, it is surprisingly practical advice on breaking free.  It’s filled with Plan B thinking and sound ideas to force you through the steps of making a new business into a reality.

She’s anticipated a lot of my scribbled notes about what I need to do if I were to start a consultancy, and what I have to consider saving or replacing if I leave the corporate cradle.

Which, it increasingly appears, I am…

Sunday, May 10, 2009

Keeping in touch back home

DSC07924 Despite the speed and density of links across the globe, I’ve found that isolation is one of the most difficult issues to deal with as an expatriate.  The 9-hour time difference between Maastricht and the West Coast makes telephone conversations difficult: it’s always the crack of dawn or late evening for one or the other of us.   E-mail is good, but only loosely couples people and can be time-intensive.  Postal letters and packages are important but expensive.  Personal visits are vital but infrequent.

Here are a few suggestions that have worked for me:

Personal conversations and narrative:

  Skype is invaluable: it’s a free messaging client that includes instant messaging, voice, and video.  A small webcam is a worthwhile addition that personalizes the feed and lets me share views from the window during conversations.  Find me as drhamptn.

  Flickr is a solid photo-sharing site: I get a dedicated web address and unlimited storage for a small yearly fee.  There is no editing feature (I use Windows Live Photo Gallery for that), and organizing photos is a bit ticklish since everything is done from a sequential photostream. But friends do like being able to thumb through my galleries.

  Facebook is the most developed of the social networking clients. It is easy to share messages, photos, and status, and the depth of people on the service is amazing.  I pass messages to friends more often by Facebook than by e-mail now, although IM and photosharing capability is rudimentary. Find me as drhamptn.

  FriendFeed helps me to keep everything in one stream and saves a lot of cross-site management.  More and more, lately, people have been tapping into that instead of Twitter or Plaxo.  Find me here.

News and commentary:

I keep up with Dutch news through the English-language feed Expatica, with business news through the Financial Times, and with US news through MSNBC.  I was a dedicated newspaper reader over coffee before leaving the US and have a resolution to become a regular reader of a Dutch newspaper this year. It’s important to get a good 10-minute news summary each morning.

For weekly news summaries digests, there is nothing to compare to the Economist.  Their world news coverage is comprehensive and their special features are always interesting.  The US weeklies have degraded to light  tabloids, but I read this cover to cover.  It veers towards cheerleading globalism and debunking climate change, but I forgive it the eccentricities.

Walter Cronkite said that everyone should subscribe to a couple of monthly magazines of commentary.  I used to follow The Atlantic, dabbled with the New Yorker, but am looking for a good source.  In the meantime, I follow the weekly Slate Political Gabfest and Slate Culture Gabfest podcasts, which give me some literate discussion of US events that keep me in the stream of conversation back home.  I’ve put a selection of the news and views podcasts that I listen to up on my NetVibes audio links page, but I’m open to better print suggestions.

For further commentary and perspective, I follow a number of blogs.  Some are general technology, business, and medicine sources, others are the personal thoughts of fellow expats.  It’s always a pleasure to catch up with it over coffee and to share in the conversations through essays here: I’ve put a good selection up on my NetVibes blogs links page.