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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.  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.

Sarah

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, 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 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.
 

Facade of the Pantheon, built by the Emperor Hadrian in the 2nd century A.D.

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.  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.

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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.  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.
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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.

Temple of Saturn in the Roman Forum

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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