Italy, known for its rich cultural heritage and tourism industry, is also great for starting a business.
However, before you do, it’s important to know what you are getting yourself in for. Luckily, we’ve done the research and pulled everything together for you.
What To Think About Before Moving To Italy
The Cost of Living
Italy’s cost of living varies depending on the region. Northern cities like Milan and Rome are more expensive than southern cities or rural areas.
Have a look at the cost of an apartment in the area that you want to live to make sure you are budgeting correctly. Depending on your visa type, you may also need to pay for healthcare. Italy has a free national healthcare system, but this is only accessible to people inside the EU or those on certain budgets.
Economy
Italy has a relatively strong economy, with particularly strong sectors like tourism, retail and manufacturing. It is also being driven forward by investment and startup visas which are bringing more innovation to the country.
Taxes
Italy has a number of taxes, these include:
Income Tax: Up to €28,000: 23%, between €28,001–55,000: 35% and above €55,001: 43%.
Corporate Income Tax (IRES): The main tax on a company’s profits, currently set at a standard rate of 24%.
Regional Production Tax (IRAP): Applied to the net value of a company’s production, this tax varies by region, with a national average rate of 3.9%.
Value Added Tax (VAT): Italy has a multi-tier VAT system with a standard rate of 22%. Reduced rates of 10% and 4% apply to specific goods and services.
Italy also offers tax breaks for new businesses, like the flat-rate scheme (regime forfetario) with a tax rate of 15% (or 5% for specific categories) for the first five years.
Location
Italy is positioned in Western Europe and operates within the EU market. Because of this, it’s a great location for businesses wanting to access Europe or participate in the trade market.
Language
While many Italians speak English, especially in big cities, being able to speak Italian will help with building relationships and building a business. Most legal documents will need to be in Italian, so learning the language is a good move.
Cultural Differences
Like all countries, Italian business culture runs in its own way. Italians love to build trust and meet people face to face, so do everything you can to network with locals as soon as you arrive there.
A Step-By-Step Guide To Starting A Business In Italy
1. Draft A Solid Business Plan
The first step in to your business is creating a business plan. This should include:
- Your business idea and target customers
- Financial expenses, investments and profitability targets
- Short- and long-term goals
- Competitor analysis and your USP
A well thought-through business plan will help you decide if moving to Italy to start a business is the right move.
2. Choose A Business Structure
Before you register your business, you’ll need to decide what structure you want to operate under. Common structures include:
- Sole Trader (Ditta Individuale): A structure where one person owns and manages the business.
- General or unlimited partnership (Società in nome collettivo – SNC): All partners have liability for their share of ownership.
- Limited partnership (Società in accomandita semplice – SAS): Includes two types of partners. Limited partners who cannot take part in the day to day running of the business. They are liable for the amount of capital they have invested. General partners or unlimited partners can take part in the business and are liable for all shared.
- Limited Liability Company (SRL): A popular option for businesses, needing only €1 in share capital.
- Public Limited Company (SpA): For larger businesses, this structure requires at least €50,000 in capital, with shares listed on a stock exchange.
3. Make Sure You Have The Right Visa
If you’re a citizen of an EU country, then you can live and work in Italy without needing an extra visa. However, if you are looking to start a business in Italy from a country outside of the EU, you’ll need a visa.
Business visas cost around €130 and can take a few weeks to process.
Some options include:
Self-Employment Visa: For non-EU nationals who want to start a business, work as a freelancer, or have a managerial role in an Italian company. You have to prove that your business will contribute positively to the Italian economy. This visa lasts for 2 years and then must be renewed. After 5 years, you can apply for permanent residency.
Startup Visa: Designed for non-EU entrepreneurs who want to open a startup in Italy. To apply for this, you must have a business plan, an investment of at least €50,000 and approval from the Italian Startup Committee.
Investor Visa: Designed to attract high-net-worth individuals who want to invest in Italy. You can apply for this visa if you have invested at least €250,000 into a startup or have donated over 1 million euro to public projects.
EU Blue Card: The EU Blue Card is granted to people with specific skills that are in demand in Italy. To get this, you must have an offer from an Italian company, a university degree and a salary of at least €25,000–€35,000 annually, depending on the region.
4. Register Your Business
Once you’ve decided on your business type, it’s time to register it with the Italian Business Register (Registro Imprese). You will need to:
- Submit your business name and legal structure
- Provide documents like articles of association
- Open a corporate bank account (for limited companies) and deposit 25% of your share capital
- Register for taxes, including VAT and corporate tax
Once that is done, you can start setting up your operations!
Local Employment Laws
If you are planning to hire employees, you must register with the National Institute of Social Security (INPS) and the National Institute for Occupational Accident Insurance (INAIL).
Here are some working laws that apply to Italian employees:
- Working hours are regulated, with a standard 40-hour workweek and restrictions on overtime.
- Employees are entitled to at least 20 working days of paid annual leave
- There is no statutory minimum wage in Italy
- Maternity leave (congedo di maternità) lasts for five months or twenty weeks.
- Paternity leave (congedo di paternità) lasts for 10 days
Is Italy Right For Your Business?
Starting a business in Italy can be rewarding, but only if you plan before you go.
The country’s strong economy, cultural heritage and strategic location make it an great place to set up shop. However, you’ll need to do your research around the cost of living and even learn Italian before you go.
By following the steps in this guide, you can launch your business in Italy and take advantage of all the opportunities this country has to offer.
