SPECIFICS OF DOING BUSINESS IN ITALY
It is important to consider noticeable regional differences between the modernized, industrial, and post-industrial north and the more backward, agrarian south while doing business in Italy. These differences manifest in terms of income, economic specialization, and the level of corruption within the public authorities — such factors should be taken into account when planning to establish a business in Italy. It is also noteworthy that local banks are not particularly willing to give loans to non-residents. However, under some conditions, it is possible to receive a subsidy from the European Union, aimed, for example, at the development of the southern regions.
Despite the presence of a developed large-scale industrial production, the backbone of the local economy (comprising up to 95% of companies) is small and medium-sized businesses (often family-owned) — the profit generated by these enterprises accounts for 66.9% of the country’s GDP.
The tax system in Italy is quite complex and confusing. Taxes are levied at three levels: national, regional, and municipal. Legal entities are required to pay national income tax (24%), regional tax (up to 3.9%), value added tax (22%, but for some types of services a reduced rate of 4%, 5% or 10% may apply), capital gains tax (12.5% and 26%) and some other applicable taxes. New tax residents can receive a tax credit under the principle of “Non Domiciled Resident”. It is crucial to choose the optimal tax system for the business in Italy to reduce tax pressure, and only experienced specialists can help with this.
Certain commercial activities (such as, for example, providing travel services, currency exchange, giving loans, gambling, and others) require businesses to obtain a business licence or special permission after registration. Business licences are issued by the local Chamber of Commerce (Camera di commercio). Only citizens of Italy or the European Union can obtain permission to conduct licensed activities.
Balance sheets must be submitted once a year, while reports for specific taxes must be submitted to the relevant regulatory authorities on a quarterly or even monthly basis (depending on turnover). The approval of the financial statements must be completed by April 30 of the following year. In some cases, a longer period of up to 180 days may be granted. Accounting statements must be filed with the Commercial Register.