Doing business in italy

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DOING BUSINESS IN ITALY OVERVIEW ON THE ITALIAN CONTEXT Eugenio Tonin – Matteo Biagini – Simone Iorio Gnisci

+ITALY IN BRIEF

n  Capital: Rome

n  Government type: Parliamentary Republic

n  Area: 301.340 km2

n  Population: ca. 61.50 million

n  Average density: 189 people per km2

n  Currency: EURO ( € )

n  GDP per capita: ca. 34.000 USD

n  GDP 2012: ca. 2.000 trillion USD

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+ITALY IN BRIEF

20 regions, 110 provinces and 8092 municipalities

Every region has different:

n  Culture

n  Economic

n  Politics

n  North and the Centre: highly industrialised with good infrastructure and a highly trained workforce.

n  South: ranks low in these characteristic indicators and signigicant incentives are offered to nvestors to develop in the area.

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+START-UP STEPS

PROCEDURE TIME TO COMPLETE COSTS

1 Deposit at least 25% of the minimum capital in cash with a

bank

1 day no charge

2 Execute a public deed of incorporation and company

bylaws before a public notary and pay registration tax

1 day (simultaneus with previous procedure)

2.583€(Notary fees)+168€(Registration fee)+156€(bollo)

3 Buy corporate books and accounting books


14,62€ stamp fee for each 100 pages (3 books), 25€ registration

fee per book

4 Pay government grant tax to the post office current account


310€

5 Register the Company through Comunicazione Unica

2 days 200€(membership fees)+90€(registration fee with chamber of

commerce)

6 Notify the competent Labour Office of the employment of

workers


no charge

Six procedures are compulsory to start a new business:

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+START-UP STEPS

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

ITA 23 13 13 13 13 10 10 6 6 6 6

GBR 13 13 13 13 13 13 12 12 12 12 12

DEU 45 45 45 24 18 17,5 17,5 14,5 14,5 14,5 14,5

POL 31 31 31 31 31 31 32 32 32 32 30

USA 6 6 6 6 6 5 5 5 5 5 5

0

5

10

15

20

25

30

35

40

45

50

Average Time to Start a Business

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+START-UP STEPS

The Italian Constitution guarantees all citizens:

n  the right to health in the workplace;

n  the right to the pension and to the severance indemnity;

Two public institutions have been created to give effectiveness to these rights:

n  INAIL is the national health insurance institute for accidents at work;

n  INPS is the national social pension institute.

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+START-UP STEPS

30 days after the begennig of the activity the company have to communicate to INPS and INAIL:

n  the type of activity exercised

n  the name of the owner or the corporate structure of the company

n  the number of employees

Each year, the employer is required to pay into the INPS account contributions for all employees. At any time, workers have the right to verify their balance contributory.

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+LEGAL FORMS OF DOING

BUSINESS

•  Società Cooperativa

•  S.p.A •  S.r.l •  S.a.p.a

•  S.n.c •  S.a.S

•  Sole proprietorship

Individual Forms Partnerships

Cooperatives Companies

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Individual form: Sole Proprietorship

LEGAL FORMS OF DOING BUSINESS

n  Is a type of business entity that is owned and run by one individual and in which there is no legal distinction between the owner and the business.

n  The owner receives all profits and has unlimited responsibility for all losses and debts. Every asset of the business is owned by the proprietor and all debts of the business are the proprietor's

n  A sole proprietor may use a trade name or business name other than his or her legal name.

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Partnerships


Snc Società in nome collettivo or

General Partnership

•  A partnership where all partners are jointly liable for all of the firm’s debts and obligations.

•  Formed by two or more persons.

Sas

Società in accomandita semplice or Limited Partnership

•  Partnership with two different categories of partners: •  Silent partners (soci

accomandanti): the liability is limited to the extent of their per capital contribution ;

•  General Partners (soci accomandatari): the partners are jointly liable for all debts and obligations of the partnership;

•  Only one partner is required to be a general partner

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+LEGAL FORMS OF DOING

BUSINESS

S.p.A Società per azioni or Corporation

•  Participant’s equity is represented by shares

•  Minimum capital required is € 120.000

•  Intent to limit the risk •  Legislation requires that

the powers are strictly distributed among different organs

S.r.L Società a responsabilità limitata

or Limited liability company

•  Capital stock is represented by quotas and not by shares

•  Minimum capital required for a S.r.l. is € 10.000

•  Liability of the shareholders to creditors of the company is limited to the capital originally invested

S.a.p.a Società in accomandita per azionI or Limited partnership by shares

•  Combines some of the features of both a limited partnership and a limited liability company

•  At least one member has unlimited liability (socio accomandatario)

•  Liability of remaining members is limited to the extent of their share capital subscriptions (socio accomandante).

Companies

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n  Formed to jointly manage a company that aims to provide first of all to the same shareholders (mutualistic purpose) those goods or services for the attainment of which the cooperative is sort.

n  The distinctive of all types of co-operative is summed up in the fact that while the ultimate goal of both the company and partnerships is the realization of profit, co-operatives have a mutualistic purpose

n  Minimum number to constitute a cooperative is 3 members.


Cooperatives: Società cooperativa or Co-operative company

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TOPICS ITALY (67) POLAND (48)

UK (11) USA (4)

Starting a business

84 124 18 11

Dealing with construction

permits

101 104 26 30

Getting electricity

86 138 64 13

Registering property

54 63 71 24

Getting credit 105 3 1 3

Protecting investors

51 51 10 6

Paying taxes 135 104 17 69

Trading across borders

58 50 16 21

EASE OF DOING BUSINESS

Ranking of the most influencial factors of 189 countries

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+CORPORATION TAXES

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IRES Imposta sul reddito della società

Italian Income tax for corporate Income

• Established by Legislative Decree no. 344/2003 • Has replaced the corporate income tax and actually entered into force January 1, 2004

• 27,5%

IRAP Imposta sul reddito delle attività produttive

Italian tax for corporate revenue

• Established by Legislative Decree December 15, 1997 • 3,9% • Charged on the net value production in commerce and manifacturing

• 10% of IRAP can be duducted for IRES purposes • Tax interests paid and payroll costs are not deductible

•  Gross Turnover

+ •  Increase in stock trade and work in progress

- •  Expenses of production (depreciation included)

= •  NET VALUE OF PRODUCTION

+CORPORATION TAXES

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n  Two advance payments plus a balance payment

n  The first advance payment (40% of the total) and tha balance payment are due within the 16° day of the sixth month from the end of the financial year

n  The secod advance (60% of the total) is within the 11° month of the financial year

n  Advances are calculated on 100% of IRES and IRAP of the previous fiscal year

Corporation Taxes Payment

+INDIVIDUAL TAXES

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n  IRPEF: Imposta sul reddito delle persone fisiche, Italian Income tax for personal Income

n  As of 1° of January 2007, personal income tax is applied to individuals on a progressive basis, with rates ranging

n  In addition, a regional tax of up to 2,03 % and a local communal tax of up to 0,8% are applied on all individual’s income

n  All employers have to withhold part of their salary and pay it to the TAx Authorities

Annual Income in € Rate %

Up to 15,000 23

From 15,000 to 28,000 27

From 28,000 to 55,000 38

From 55,000 to 75,000 41

Above 75,000 43

+VAT

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n  Standard VAT rate: 22% (1st Oct 2013)

n  Reduced VAT rates: 10% n  Pharmaceuticals,

n  Passenger transport

n  Admission to cultural and entertainment events

n  hotels, restaurants

n  Reduced VAT rates: 4% n  Foodstuffs

n  Medical

n  Books

+BUREAUCRACY

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Indicator ITALY USA Germany Poland UK OECD

Procedures (number) 6 6 9 4 6 5

Time (days) 6.0 5.0 14.5 30.0 12.0 11.1

Cost (% of income per capita) 14,2 1.5 4.7 14.3 0.3 3.6

Paid-in Min. Capital (% of income per capita) 9,8 0.0 0.0 12.6 0 10.4

Coprruption Percetion Index (0-100) 43 73 78 60 76 /

Transparency of Public action in the economic field 3,2 4,0 4,0 3,7 4,0 /

Transparency of economic policy 4,0 4,0 4,0 4,0 4,0 /

STARTING A BUSINESS (RANKING)

90 20 111 116 28 /

+USEFUL TIPS

Where ever business takes you, learning the culture, etiquette and protocol of the host country is a key step to success.

In Italy there are some unwritten rules that have to be followed during a business relation. So keep in mind that:

n  Public and private life are strictly linked (don’t be surprised if you will be asked about your family situation during a formal meeting);

n  Italians prefer doing business with someone they know or have introduced to;

n  Italian lenguage is a must for communication;

n  Italians give great importance to appearance (dress to impress);

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+USEFUL TIPS

n  Good manners and courtesy are essential;

n  Moving away or keeping your distance can be perceived as unfriendly;

n  Mantain good eye contact to show you are sincere and honest;

n  Never instill a sense of urgency to your presentation (urgency=weakness);

n  Show an interest in anything italian such as food, art, fashion and sports;

n  Italians are often guided by emotions and business relationship are based trust (1° trust, 2° contract);

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