Why fewer people want to become entrepreneurs in Germany and beyond
In Germany, the number of entrepreneurs has sharply declined due to the high tax burden on self-employed individuals, who face taxes of around 35-40% and monthly health insurance costs of approximately €1300, making entrepreneurship financially challenging. Similar trends are seen elsewhere, such as in Spain, where self-employed taxes were unexpectedly raised by 42%.
These burdens deter people from pursuing self-employment, as the combination of high taxes and insurance costs reduces the appeal of running one’s own business. Tax and social insurance policies significantly influence the development of small businesses across countries.
The heaviest financial load falls on the self-employed, who lack the benefits available to employees in the public sector or organizations. This financial pressure forces many to reconsider entrepreneurship or seek alternative income sources.
Given these economic conditions, governments need to find a balance between tax collection and supporting entrepreneurship to prevent shrinking self-employment sectors and to foster innovation.
Ultimately, high taxes and social payments slow entrepreneurial growth, potentially harming economic progress and employment in the long run.
Going forward, revising tax rates and introducing incentives could create a more favourable environment for small businesses and entrepreneurs.
