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Starting a business in Italy?
Why Italy?
Italy is the seventh largest economic power in terms of gross domestic product. It is also a founding member of the European Union, which is based on the free movement of goods, workers, services and capital. Therefore, the boot-shaped nation offers access to a wide market of approximately 500 million customers.
Its structure of business, which is foreign investment friendly, has produced impressive results over the past decade. Additionally, the present government policy (which favours privatisation of state-owned businesses) offers overseas investors the chance of setting up a company in Italy through the acquirement of private enterprise. Indeed, the reduction of state intervention offers foreign investors some very attractive opportunities to start a business in Italy.
Furthermore, incentives are offered to companies with the potential of enhancing Italy’s economic activity, in conjunction with government-nominated priority sectors and areas. Incentives are provided for investments to be made in less-favoured or economically staggered sections of the country.
Economic progress in Italy since the end of World War Two has been incredible. The standard of living is high, especially in the industrial north where standard purchasing power is one of the brightest in Europe. However, a handful of areas in the south, where unemployment is high, are some of the continent’s poorest.
What is the currency and exchange rate?
The currency used in Italy, along with fellow EU members, is the Euro.
The current exchange rate is £1 = 1.26 Euros.
What is the population?
Italy has the fifth highest population density in Europe, with most of those residing in its capital, Rome. The population in just over 58 million: 4 million of which are immigrants.
What is the time difference?
Time Zone: GMT+1 hour.
How is the weather/climate?
Italy benefits from a fair and temperate climate. There are five main climatic zones: the Alpine zone, the northern Italian plain, the Tyrrhenian area, the Adriatic coast, and the Mediterranean zone.
The northern Alpine region experiences harsh winters with plenty of rain and snow, and very mild summers. However, the weather conditions vary greatly depending on altitude.
The northern Italian plain (or ‘Po region’) has continental weather conditions with fairly cold, snowy winters, but warm, mild summers. Northern cities such as Torino, Milan and Venice can become very cold, damp and foggy with temperatures falling to 0-7C (30-45F) in winter. Most rainfall occurs in the first half of the year.
The Adriatic region also bears cold winters. Conditions improve to comfortably warm in the summer.
On the west side of the country is the Tyrrhenian region where the weather brings cool winters, warm summers and sufficient rain. Temperatures in Rome fluctuate between a low of 5-6C (40-42F) in winter, and a high of 26-30C (79-87F) during the warmer months.
In the Mediterranean region, which includes all the southern areas of Italy, rainfall is often in the winter months, leaving the summer months arid and hot.
Languages
Knowledge of English is reasonably extensive in Italian business, but far less so in the south. However, this does not mean you’re off the hook!
Businesspeople and investors need, if possible, to arrange a way of communicating in Italian with public authorities, agencies and potential business partners. The importance of personal contact in the Italian business sphere cannot be over-emphasised; and it’s always best done in the nation’s tongue.
Passports/visas
UK/EU nationals entering Italy do not require a visa but should have a valid passport.
UK/EU nationals are free to enter Italy for up to three months to look for work or set up a business. Thereafter, they need to register their presence with the local Italian authorities.
Economic overview
Italy belongs to the Group-of-Eight (G8) industrial nations, the European Union (EU), and the Organisation for Economic Cooperation and Development (OECD).
One salient feature of the Italian economy is its propensity toward entrepreneurship - seen in the very high number of small and medium-sized businesses: 98% of the over 4 million companies employ fewer than 19 persons (the average is 4 employees per company).
Italy's economic virtue is, therefore, in the processing and the manufacturing of goods, mostly in small and medium-sized firms. The boot-shaped nation has been rather less successful in terms of producing world class multinational corporations. In addition, the small and medium-sized companies commonly manufacture products that are not as technologically advanced as their competitors and, therefore, cannot always meet international competition.
The most developed sectors of Italian industry include the manufacturing, mechanical, construction sectors, chemicals, and the transport industry. A
significant contribution to national wealth is generated by products
‘made in Italy’.
Italy’s big exports are:
Motor vehicles
Chemicals
Petrochemicals
Home appliances
Firearms
Their most famous and pre-eminent exports, however, are fashion, food and wine.
Tourism accounts for much of Italy’s economy, too. It is the fifth most visited country in the world with over 35 million visitors each year.
Italians also have had one of the highest rates of private saving in the EU. They are Europe's biggest spenders on clothing and apparel, and second only to Spain for expenditure in areas such as bars and hotels. They spend much less, however, on accommodation. The older generation of consumers also spend typically less than the young.
Inflation has risen approximately 2% each year for the past two years.
What does Italy import?
Italy imports many pharmaceutical and medicinal products, industrial engines and machinery, precious metals, aircraft parts, pulpwood, semiconductors and organic chemicals. Their fasted growing imports are things like fuel oil, primary synthetic rubber, aluminium and un-manufactured agricultural products.
Taxation
The new rates for personal income tax are listed below.
Taxation of an individual's income in Italy is progressive; the higher the income, the higher the rate of tax payable.
An individual is liable for tax on his income as an employee and as a self-employed person. Tax will be payable on income earned in Italy and overseas by an individual who meets the test of a permanent citizen of Italy. A foreign resident who is employed in Italy pays tax only on income earned in Italy.
One of two tests must be passed to be considered an Italian resident: a life centred in Italy, or being registered in the Population Registry as living more than 183-days-a-year there. It is essential to point out, in regards to taxable income from outside Italy, that a ‘tax credit’ is granted for tax deducted outside Italy. In the case of income from a salary, the employer is obligated to deduct the amount of tax payable on a monthly basis. A self-employed person must pre-pay income tax that will be offset on the filing of an annual return. The advance payment is decided on the basis of the return made for the previous year. In the event of a new business, the advance will be calculated on the basis of estimates made by you, or the head of the company.
23% on income between 0 and 15,000
27% on income between 15,001 and 28,000
38% on income between 28,001 and 55,000
41% on income between 55,001 and 75,000
43% on income of 75,001 and over
What are the key advantages to setting up a business in Italy?
The geographical position of Italy (at the centre of the Mediterranean and the infrastructural links with the countries of Europe) allows it to form a crossroads for international trade, a natural bridge between Europe and Africa.
Italy, particularly the prosperous north, has one of the highest per capita incomes in Europe. Italian consumers are sophisticated and demanding, particularly in terms of quality. Traditional, high-quality British consumer goods often do very well, and designer items or recognised fashion brands are also very popular. British technology, equipment and components have a good reputation, and innovative high-quality products are always of interest.
What are the essentials to know?
Foreign investors must be aware of the applicable EU Laws.
Foreign investors are free to adopt any form of business investment, and may acquire a stake in or take control of a company which has already been set up.
Selling business to Italy is best done by delegating an agent or distributor. However, caution must be taken in planning a written contract, probably best overcome with the assistance of a professional advisor. Verbal agreements can also be held good at law. Furthermore, it is not advised that you enter into contracts from a distance or on the foundation of meeting on neutral territory. Make sure you are familiar with your representative, his capabilities, assets (offices, staff, etc), customer base and industrial relations.
Setting up business in Italy should be approached similarly to any other developed and competitive market. Exporters need to be aware of cultural differences. Generally speaking, you need to develop an effective and reliable business relationship at a personal level. Vital personnel should be involved from the start and must be of a quality sufficient enough to converse with their Italian counterparts.
Businesspeople should find a way to communicate in English, whether written or spoken. Major businesses will have staff on all levels that are fluent in English, and English is more common in the business sphere than in the public.
Inaugural correspondence, as well as product literature and tender documents, should be translated into Italian by a professional, and ideally followed with an e-mail or telephone call. There are many business schools that can offer placements to aid you with this. Additionally, using the Italian language in documents, such as invoices, will help to clarify your intentions and eliminate confusion or misunderstanding.
Essential for companies is getting a product or service to the market on time. The main options for this are:
Road
Rail and air-freight
Post, air parcel post or express/courier services
All these methods, of course, are dependent on the product requirements for time, expense and safety.
Italy generally has a sound transport infrastructure; although heavy traffic occasionally causes bottlenecks in and around the main northern and city centres. This can often lead to severe traffic limitations, making local delivery arduous. Heavy goods transport on motorways in is usually limited or sanctioned on Sundays and some public holidays. Infringement of this rule can at times lead to heavy fines, confiscation of driving licences and impounding of the vehicle. Freight transportation companies should also be alert of becoming the innocent targets of smugglers (i.e. drugs and tobacco).
Italian State Railways offer an inexpensive and reliable means of passenger transportation. Commercial freight is foremost carried by road, but the railways are also taking increasingly more long distance goods. Although, beware that some international rail freight services from Italy have been the subject of infiltration by illegal immigrants travelling via France to UK.
Storage
Warehouse and storage space is available in most major cities. However, it is recommended that you consult legal advisors before entering into any agreement.
Day-to-day living in Italy
Living cost should not be underestimated in Italy, which has increased dramatically during the last decade. That said, there’s a noticeable disparity between the cost and standard of living in the north and central regions of Italy, and the comparatively poorer south.
It would prove quite difficult to estimate an average cost of living in Italy, as it obviously depends on your circumstances and lifestyle. It is viable to live frugally in if you’re willing to waive luxuries and ‘live off the land‘, so to speak. Shopping for selected ‘luxury’ items (electronics, etc) abroad can also yield significant savings.
Education
Italy promotes education to all citizens, although the government only subsidises public schools up to the secondary level. Private Catholic institutions are very expensive and only wealthy citizens or scholars get to attend. There are several prestigious universities in Italy, too, and many are populated by students who come from across Europe and the United States.
Healthcare
Italy ranks number two on the World Health Organisation’s list of top countries for quality health care services. However, although medical facilities are considered to be sufficient for any emergencies, many public hospitals are overcrowded and under-funded.
Italy has a national health plan that provides for hospital assistance and medical benefits. You can legally apply to join the plan. Eligibility for the plan, however, depends on certain criteria, such as your nationality, work permit, etc.
If you are a citizen of Italy and covered by the national health plan, hospital services will be provided to you and your dependents free of charge. Visitors, or persons not legally covered by the plan, are expected to pay full hospital charges and then claim a reimbursement from their insurance provider. If you do find yourself in an emergency, head for the nearest hospital. Most general and regional hospitals have emergency rooms that are open 24-hours-a-day.
To call an ambulance, dial 118 from any telephone. Assistance can also be found by calling the police on 113. Both of these are equivalent to the 999 number here in the UK.
Housing Services
Housing services are also provided for citizens and expatriates. Home repairs are covered by living insurances. Other utilities, water source, internet connection and gas providers are also sponsored by a good number of employers. Company and housing benefits are just some of the rewards high tax rates.
Groceries
The average Italian spends about 200 Euros on groceries every month. Food costs are generally modest.
There are many large, chain-store-style, supermarkets in Italy. Large supermarkets are located outside of the historic town centres, commonly along a main road. They are even sometimes part of a mall or shopping centre.
Grocery shops are generally closed on Thursday afternoons and don't re-open until Friday morning. Apart from grocery shops on Thursdays, most other shops are open every weekday evening until about 2100.
Do note that most other shops (those not supplying food, etc) are closed from around 1230 to 1630 every afternoon.
Utilities
Whether you are buying or renting a property in Italy, you'll almost certainly find that the gas, electricity, and telephone have been disconnected. Getting things reconnected will mean signing new contracts with a local provider. This is only likely to prove problematic if you cannot produce your stay permit and/or tax number; both are needed in order to sign contracts.
Bills commonly arrive every two months, and you can settle them at the utility offices, post offices, or at your local bank. Water charges are seldom included in the service charges for apartment abodes. Individual homes are on a metered-supply, which is controlled by the local municipality.
Mobile Phones
Italians are one of the largest users of mobile telephones. All mobile phone numbers in Italy begin with “3“. The first three digits tell you which network company supplies the service.
The STD area code (beginning with a "0") is an integral part of the phone number in Italy, and must always be used, even when calling from the same area. The leading zero is not dropped when calling from outside Italy.
The international dialling code for Italy is + 0039.
Internet
The Internet is not yet as commonly used as in the UK because there are less personal computers. Companies, however, have adapted very fast new technologies.
Religion
Approximately 90% of Italians are Roman Catholic.
Are there any tips or etiquette I need to know?
No one likes social suicide, so here are a few tips to prevent a faux-pas:
Unsurprisingly, the Italians are very fashion conscious. Men are recommended to wear a suit and tie at business meetings.
A handshake is the accepted custom at the start and end of a meeting.
Refrain from giving gifts that carry your business logo.
Do not wrap gifts in the colours yellow or black, as these are symbolic of funerals. Similarly, gift-wrapping in purple signifies bad luck.
Do not be surprised if your Italian colleague is late for the meeting.
Try not to use first names until familiarity is on a more personal basis.
Banks of Italy
Ambroveneto
64, Piazza Deo Tribuni
00175 Roma (RM)
Tel: +39 6.763141
www.ambro.it
Banca d’Italia (Main bank)
Via Nazionale, 91
00184 Rome
Tel.: +39 06 47921
E-Mail: email@bancaditalia.it
www.bancaditalia.it
Banca Di Roma
271, Via Del Corso
00186 Roma (RM)
Tel: +39 6.67141
www.bancaroma.it
Banco di Napoli
24, p. Parlomento
00186 Roma (RM)
Tel: +39 6 676 09757
Fax: +39 6 6786 111
www.bancodinapoli.it
Banca Agricola Mantovana
Tel: +39 5773 81694
Email: bamonline@bam.it
www.bam.it
Banca Popolare del Verona
4 Viale Delle Nazioni
37135 Verona (VR)
Tel: +39 827 4111
www.bpv.it
Banca Popolare di Milano
84/A Via Mecenate
20138 Milano
Tel: +39 2.5801011
www.bpm.it
Banca Popolare di Novara
Tel: +39 321.521655
www.bpn.it
Banco Sella
Tel: +39 15.2434617
Email: info@sella.it
www.sella.it
Cariplo
Piazza San Carlo, 156
San Carlo
10121 Torino
Tel: +39 11 555 1
www.cariplo.it
Mediocredito Centrale
Via Piemonte, 51
00187 Roma
Tel. +39 6 47911
fax +39 6 4791 3130
Email: mcc@mcc.it
www.mcc.it
Banca Monte dei Paschi di Siena
Piazza Salimbeni, 3
53100 Siena
Tel: +39 577.294111
Email: info@banca.mps.it
www.mps.it
Banca di Credito Cooperativo dell'Alta Padovana
Via Caltana, 7
35011 Campodarsego (PD)
Tel: +39 49.9290111
Fax: +39 49.9290340
Email: info@altapd.it
www.altapd.it
Banca Akros
Viale Eginardo 29,
20149 Milano
Tel: +39.02.434441
www.bancaakroswebank.it
Credit Italiano
UniCredit S.p.A
Piazza Cordusio
20123 Milano
Tel.: +39 02 88 621
Email: info@unicreditgroup.eu
www.unicreditgroup.eu
Banche di Credito Cooperativo della Toscana
La Federazione Toscana BCC
Via Lungo l'Ema 1
50012 Bagno a Ripoli (FI).
Tel: +39 55.64931
Fax: +39 055.6493211
Email: info@ftbcc.it
www.ftbcc.it
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