| Opening
A Business In Rome |
| One Expatriate’s
Observations |
| By Sarah Yeomans |
| My first impression
of Rome was that it was a lawless land, where you could make up the rules
as you went along, as long as it didn’t attract the attention of the occasionally
alert police officer or government official. Everything around me
seemed to reinforce this impression, from the “creative” parking
solutions, such as parking on a curb, to the seemingly helter-skelter methods
of immigration control. It seemed to me, as a newly arrived, non-Italian
speaking visitor, that the reason for “la dolce vita” is that one
could do pretty much whatever one wanted as long as it didn’t bother anyone
else. Italy, it seemed, was going to be a very easy place to set
up a business. I intended to open an English language and computer
training school in Rome, and thought that it would require only the correct
business partners who believed in my business vision. |
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| As I soon
found out, it is not that Italy has no laws. In fact, they have
so many laws, some that are even directly contradictory, that to follow
each one precisely would take a team of lawyers, a small fortune and more
patience than the average human is blessed with, not to mention more time
than a normal person’s lifespan.
So, Italians
simply find creative and resourceful ways to circumnavigate laws that don’t
seem to have any relevance or logic. Failing this, one can always
simply ignore them. The challenge lies in determining which laws
must be strictly adhered to, which can be creatively interpreted and which
can be ignored completely. It is for these reasons and several others
that every would-be business owner in Italy should enlist the help of a
trustworthy “commercialista.”
The “Commercialista”
A cross between
an accountant, lawyer and business consultant, a commercialista will often
take on the role of all three in the process of setting up a legal business
in Italy. He or she will take care of the company’s book-keeping,
drafting of legal documents, |
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| liaising with
lawyers and government officials if necessary, filing all the necessary
paperwork at the various and elusive government agencies, and generally
making sure that you and your company are in compliance with the necessary
laws. This is essential, because the government is aware of the Italian
national pastime of tax evasion.
There seems
to be a mutually acknowledged relationship between the government and citizens:
the government will impose cumbersome and unrealistically heavy taxes on
its citizens, and its citizens will in turn come up with new and innovative
ways to avoid paying them. The result is the intimidating “Guardia di
Finanzia.” Perhaps the best way for an American to conceptualize
the Guardia di Finanzia would be to imagine the IRS with machine guns and
military authority. An official branch of the Italian military,
the Guardia di Finanzia is meant to strike fear |
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| into the heart
of any would-be tax evader, and has the right to walk into your office
at any time and perform an unannounced audit. Since there are so
many contradictory laws regulating businesses, it is extremely easy to
be found in violation of at least a few.
So, the best business practice
is to stay under their radar in the first place by hiring a good commercialista.
Part of his or her job is to make certain that your business will be very
uninteresting to the Guardia di Finanzia.
A commercialista
can also enlist the services of other professionals if necessary.
For example, to set up the Italian equivalent of a limited liability company
(“S.r.l.”) or a corporation (S.p.a), the services of additional
professionals are needed. A good (and well-connected) commercialista
can make the difference between a smooth, relatively painless set-up and
a nerve-wracking, hair-raising ordeal.
Business
Partners
For a non-Italian,
one of the easiest ways to open doors to the business community in Italy
is to have at least one Italian business partner. |
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| From a legal
standpoint, it is infinitely easier to set up a company if at least one
of the partners is an Italian citizen. I know several American business
people in Italy who have Italian “silent” partners. These partners
are involved in the business only in that they lend their citizenship and
all legal privileges that come with it in exchange for a minor percentage
of the profits. This arrangement benefits both: the non-Italian has a much
easier time of it in the legal set-up of a company and may also receive
certain tax benefits by having an Italian partner, while Italian partner
receives money for essentially doing nothing. A word of warning here: the
terms and roles of each partner’s participation, both financial and otherwise,
should be clearly delineated at the outset in order to avoid resentments
later on.
If a silent
partner is an unappealing prospect for a non-Italian entrepreneur, one
could always seek out a business partner that would be active in the development
of the business. |
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| Connections
and relationships are essential to any business, but no more so than in
Italy, where connections are often valued over qualifications. A
well-connected business partner can open doors that would otherwise be
permanently closed to you, no matter how good your product or service is.
Employees
Italian
labor laws are quite strict and are most definitely in the employee’s favor.
Many westerners forget that Italy, fundamentally, is a socialist society.
While things are slowly changing, the majority of Italian workers see the
labor laws as protection from exploitation by employers, and they are reluctant
to see these laws modified. It is an ongoing battle between Italy’s
current center-right government and the majority of non-entrepreneurial
workers, and is the issue at the crux of Italy’s almost weekly labor strikes
and demonstrations.
Any business
that has legal employees will need the services of a “consulente di lavoro.”
This is a person who will liaise with the government powers-that-be that
dictate and enforce the labor laws and will make sure that you are in compliance.
The penalty for improper hiring and firing is extremely severe and almost
never worth the risk. The consulente will draft the contract and
file it with the necessary officials every time you hire someone.
They will also advise you as to the correct procedures in order to fire
someone. This is a lengthy, difficult and expensive process so it
is best to be quite sure of a good job candidate before offering them a
permanent contract.
As the law
stands now, employers must give a work contract to their employees.
Depending on the type of contract, employers may end up paying as much
as double the amount of their employee’s salaries in taxes and pension
contributions. When I first received a copy of our first employee’s
work contract to sign, I pointed out to our consulente that there was a
typing error – the contract read that our new hire was to be paid for 13
months in a calendar year. I was shocked to learn that not only is
this normal, but that many contracts stipulate 14-month, or even 16-month
contracts in a single calendar year. This is, essentially, a forced
bonus, usually paid out in December and August. I have yet to figure
out why these extra months are not just figured into the overall salary
and paid monthly according to a normal, 12-year calendar, but no one I
ask seems to understand it either. This is one of those points where
most expatriate business owners just shrug their shoulders, roll their
eyes, mumble words like “ludicrous” or “ridiculous,”
and just sign the contract.
Additional
Necessities
Perhaps
the most important requirements for setting up a business in a country
like Italy are patience, a sense of humor, patience, determination, patience,
flexibility and patience. Italy’s bureaucratic machine is a behemoth,
full of corruption and inefficiencies. However, choosing good professionals
to help you with the legal aspects of setting up a business, doing a lot
of research on the type of business you’d like to initiate and having patience
with the quirks and idiosyncrasies of Italian bureaucracy will go a long
way towards making it a positive experience. Be courteous, don’t
lose your temper (because there will be moments when you want to),
and stay focused on your main objective.
Americans
often find that once a business is established, our business culture finds
a very favorable reception in the Italian community. Business
customs such as customer service, punctuality, delivering more than promised,
extended business hours and courteous treatment are mainstays of American
businesses, but are reasonably new arrivals in the Italian business culture.
Our clients are delighted when they receive feedback forms in the mail
after they have completed a course – many of them have never seen one before.
Touches like these often give American-owned businesses an edge in the
Italian market.
Of course,
to own a business in Italy, one must enjoy living in Italy. Respect
for the country you are living and working in, for its people and customs,
is essential to creating a good business and having an enjoyable life.
There are, of course, no guarantees that a business will be successful,
but understanding the culture you are in will go a long way toward improving
the chances of success.
To contact
Sarah Click Here |
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