Thinking of starting a business in Italy? What is the tax law in Italy? How will you import your products and what is the Italian work culture? If these are the questions, which you ware looking the answers for, then you are in the right place!
Despite the reputation for bureaucracy, red tape, corruption and a rigid labor market, Italy still has its attractive point for foreigners to start their own business there.
So, don’t panic. If you wish to succeed when starting a business in Italy, just like you would anywhere else, do follow the 5 essential tips below! With them, you will know more about the law, regulation/requirements of importing product and Italian business culture.
#1 Creation of your company status
The first thing you might wonder when wanting to start your own business in Italy is : How?
First of all, the Italian government provides financial and technical support for foreign investors. Dependent on the amount of money you are planning to invest or where you wish to establish your company. Have a look at some of the advantages (and disadvantages) of starting a business in Italy right here!
Which company status should you choose?
In Italy, you can create a SRL (Limited Liability Company) or a SpA (Public-Limited Company), depending on the size of your company and the amount of money you are investing.
If you wish to create a brand new company, you might find the SRL status as more advantageous. In fact, this status allows you to create a company with only one shareholder by investing a minimum of 1€. Additionally, the director does not need to be a European Union resident, which comes handy for foreign investors.
On the other hand, you might be more interested by the SpA status if you are planning on having a minimum paid-up capital of 50 000€ or seek a significant amount of capital from investors (third party), or have the company listed on a stock exchange.
You can read more about the different types of status right here.
Your to-do list for starting a business in Italy
Once you have decided which type of company you wish to create, you need to:
- Draft the company’s memorandum;
- Register your company and its bylaws before a notary public;
- Deposit the required documents with the Register of Enterprises in Italy;
- Buy corporate and accounting books (as specified by the Article 2478 of the Italian Civil Code).
You can find very useful information about these steps right here.
#2 How to pay your taxes
The Italian law provides 5 taxes: the Imposta sul reddito (income tax); the Imposta sulle società (corporate tax); the Imposta sul valore aggiunto (VAT or sales tax); the Imposta sui servizi (tax on services); and the accise (excises).
Italian individual income tax is called IRPEF, or Imposta sul Reddito delle Persone Fisiche and is rated progressively from 23% to 43%. Additional taxes are based on regional (0.9% to 1.4%) and local (0.1% to 0.8%) levels.
If you’re a foreign resident working in Italy, you are only taxed on the income earned in Italy. However, if you are an Italian resident, spend more than 183 days a year in Italy, and your business and investments are in Italy, your worldwide income is subject to IRPEF.
For more information on the different taxes rates, click right here.
Once your company registered, you will have to pay a corporate tax of about 24% along with a regional tax on productive activities of usually 3.9%.
Another tax that you will be expected to pay is a VAT of 22%.
There are other minor taxes that you will also have to remember, such as the property tax (up to 0.16% of the value of the building) and a tax on financial transactions (up to 0.2%).
Before starting a business in Italy, you might want to find more information on the different types of business taxes right here.
#3 Import & customs for your business
No matter how liberal Italy would like to be in terms of trading, it certainly has some important rules and restrictions to follow.
For example, the import of particular goods such as live animals and animal products, pirate or counterfeit items or Genetically Modified Organisms (GMO) are prohibited. As well as products containing chemicals, such as mercury, PCB, PCT CFC and HCFC are banned from the market.
If you plan on importing goods from another EU member state, it is not necessary to make a customs entry. But it may be necessary to file an Intrastate declaration if the items you are importing exceed an annual value threshold.
Overseas imports on the other hand, typically require commercial invoices and shipping documents such as an Air Waybill, for instance. Other requirements can include a certificate of origin.
Once you have considered the logistics of entering the Italian market, either with an existing business or a new venture, you can start planning. Just keep in mind to plan everything to the last detail, so you can enjoy your successful business in Italy.
For further information on import/customs click here.
#4 Italian culture overview & language
The Italian language
Italy is a country with strong culture and identiti. Around 96% of population speaks Italian, but there are also many other ethnicities in the country. Almost half of the population speaks a regional dialect as their mother tongue and some of them are not officially recognized. The most famous dialect is the Friulian, which comes from the north East of Italy and is spoken by 600 000 citizens.
If you want to work in Italy you will need to learn Italian, you can begin your classes with Youtube Italian lessons:
The Italian culture
In the Italian culture, family is one of the pillars of individuals’ life. They used to live close to their families and to gather at least once a week. Cuisine is really important for all the family meetings. Everybody knows at least 3 Italian dishes because Italian immigrants spread their culture all around the world. For the population, lunchtime is an opportunity to gather and share food – eating is a social habit!
Another important aspect of the Italian culture is the religion. Around 80% of the population are Roman Catholics because of their proximity with the Vatican and the Pope. Of these 80%, one third are regular churchgoers. However, there is a growth of the Muslim population due to the immigration waves towards Italy.
#5 Work and live with Italians
One of the most important thing to keep in mind when wanting to start a business in Italy is that hierarchy is strict and based on traditional leadership. The aim of team meetings is to test the support of colleagues but not to reach consensus or making decisions. As you might already know Italians have a strong character and have leading personalities. They are also good in creating holistic solutions which prove to strengthen personal relationships or help improve the profile of the participants.
Now let’s talk about the way they like to work! Italians like to have a day filled with interactions and several tasks! So you have to be a bit relaxed with time perception! Indeed, meetings might start few minutes late and even more during social occasions. It’s La Dolce Vita, but when it’s time for important business meetings, Italians are always on time.
Appointments can be made on really short notice, so don’t be surprised and get ready! For instance, in case you have made an appointment a long time in advance, it is almost mandatory to verify it 2 days before the meeting. Small advice: Try to make business appointments around coffee time. In the morning between 10:00 and 11:00 or after 15:00 o’clock in the afternoon.
To learn more about the Italian business culture and starting a business in Italy, click right here!
As you know, the key element of the Italian culture is the food so do not hesitate to have a long lunch break to go to a local bar or pizzeria. You will get very strange looks if you snack on your sad-looking home-made sandwich in front of your computer screen. Also, lunch appointments, at a nice restaurant, can be effective.
Last but definitely not least, almost as food, fashion is part of the Italian culture and work codes. For Italians, the way you dress is a reflection of your personality. So, dress to impress but dress neat and formal. If you are a man you should wear suits and women should always have a feminine touch. Do note, first impressions make lasting impressions on Italians! Read more in Italian business culture here