Challenges of Doing Business in Italy


Doing business in Italy is rewarding indeed. This Mediterranean country is the 8th largest economy in the world and the 4th largest in Europe in terms of GDP. It has large highly educated population as well as strategic location and modern developed infrastructure. With the most active industry sectors being information & communication technologies, consumer goods, life science, renewable energy, engineering products and high-tech design.

However, despite all the above benefits, Italy ranks only 58th out of 180 countries for the ease of doing business. So, what are the main challenges that make entrepreneurship in Italy so hard?

Opening a company in Italy

Setting up a company in Italy can be exhausting and time-consuming. To begin with, a company representative must deposit at least 25% of the amounts contributed in cash with a bank before executing a public deed of incorporation. Moreover, you need to pay a government grant tax and register with Comunicazione Unica and the Labour Office.

Registering property in Italy

Although registering your property is a fairly streamlined process, it involves high expenses. You need to obtain an energy certificate (Attestato di Certificazione Energetica), as well as obtaining the necessary certificates for the transaction.

Paying taxes in Italy

The level of taxation in Italy is extremely high and complicated. Therefore, privately owned companies are likely to feel the pressure of the government tackling the growing budget deficit.

In addition to this, businesses are required to make 15 payments per year taking around two hundred sixty nine hours to deal with.

Trading across borders

As if the above was not enough, cross-border trading is not easy too. It takes 19 days to export and 18 to import because the authorities need ten days to process the required documents. Also, containers can get held up by customs clearance and technical control.

Getting credit in Italy

Unfortunately, Italy was severely struck by 2008 credit crunch, resulting in restricted capital flows for businesses. As a result, getting a credit in Italy is harder than in many other European countries. According to International Finance Corporation and the World Bank the country ranks only 119 by the ease of getting credit.

Traditions

Mistakenly, many entrepreneurs choose not to pay close attention to cultural differences. Not so obvious at first, yet traditions play a significant role when conducting business in Italy. You can start by mastering Italian language as well as you can. The reason being is that Italian is the only accepted language for contracts and official documents. Even though, luckily, translators are perfectly capable of helping you with this challenge, the knowledge of the local language can help you enter into direct and more intimate relationship with your partners and earn their trust.

Company culture

The last but not the least, employees and company culture play a crucial role in the success of your venture. Even though it is up to you who to hire and create the right work atmosphere, yet some difficulties may arise when dealing with international employees due to not knowing what work thicket they are used to. When it comes to Italians, hierarchy is important. This can affect your company operations both, externally and internally. For example, if you are unaware of how the chain of command works in a specific company, you are risking wasting time and energy  negotiating the wrong person.

To conclude, doing business in Italy can be challenging at times due to many delays and complicated bureaucracy. However, it should not discourage you from expanding into the market. While there is not much that can be done regarding culture, traditions and regulations short-term, you can easily avoid the hurdles of company formation, payroll and taxation. With our Italy PEO services you can begin operating in Italian market in as little as 48hours. 

Contact us now for more details.