The top 4 challenges of doing business in Italy

challenges of doing business in italy

Doing business in Italy has never been so rewarding: despite the recession having lasted longer than in other European countries, the local startup scene has picked up on the international challenges and its momentum has been aided by a few laws aimed at making life easier for new companies. If you are thinkging of Starting a business in Italy, however, you will probably need local expertise to find your way through both the cultural milieu and the specific regulations that might look puzzling or even frustrating to an outsider. Italy, after all, has grown an egregious fame for its byzantine bureaucracy (which is often as bewildering as it is rumored to be) and for widespread inefficiency (which is actually less widespread than you may think). And yet, foreign investments are pouring in, as more and more companies realise that Italy is the place to be, right now and for the coming years. What are the biggest challenges of doing business in Italy and how should you prepare for them? Here’s a quick guide.

The perks of doing business in Italy

doing business in italy positano beach seaLet’s start, as it is always advisable to do, at the beginning. Why should you be doing business in Italy right now? There are several advantages to starting or expanding your business to the Belpaese. Italy is strategically important both because of its convenient location, at the center of the Mediterranean area, and because it is the fourth-largest economic power in Europe. On one hand you have modern infrastructure in place and a business environment which is already sensitive to new technologies and emerging industrial branches. On the other, the fact that the Country recently went through a period of stagnation, means that the interest for new industries and the desire to attract foreign companies is at an all-time high. Italy has been building its own Silicon Valley in the north-east for a few years now, by creating a receptive and modern professional environment and facilitating the work of startuppers and young entrepreneurs.

1. Bureaucracy: is it really that bad?

doing business in italy bureaucracy challenges mazeYes. And no. Bureaucracy is mostly bad if you are not aware that you are going to have to deal with it and if you are not aware of the time that it will be required to jump through all of your assigned hoops. And, make no mistakes, there will be hoops and you will going to have to jump through each and every one of them. What mostly makes Italian bureaucracy frustrating and exasperating even to the locals, is not having accurate information on what each particular procedure will entail and how long it will take. Despite a general effort in the direction of smoother processes and more readily available intelligence, such information is still, in several instances, hard to come by. Particularly where construction permits are involved, timing might stretch way beyond anything you expect. This is not due to the fact that procedures get dragged out, however, but to the fact that your expectations might be optimistic in the first place. Obtaining construction permits and founding companies are regulated by procedures that are simply longer than in many other countries. They are not being delayed, you are not intentionally being made to wait: that absurd length of time is exactly how long those processes are supposed to take. If you are not aware of that, your entrepreneurial experience is likely to be frustrating. If, on the other hand, you have researched the procedures in advance or hired a local expert to help you plan your business, you will be able to work on an optimised schedule and make the best of stretches of time that would otherwise have been unproductive.

2. Credit and taxes:

doing business in italy taxes credit paperwork.jpgGetting credit in Italy is objectively harder than in many other European countries, both in terms of guarantees that you will be required to provide and in terms of protecting your investment. Again, working with a local consultant will help you stay on top of regulations as they change and to manage your budget more effectively. The same goes for taxes, which are organised in an often overwhelmingly convoluted system, which may seem as it was intentionally designed to be obscure and to lure you into making mistakes that you will have to pay for. However plausible this explanation is, we encourage you to keep a positive frame of mind and, again, employing a skilled consultant. The aspects that most foreign professionals find puzzling in the Italian system are the number of payments that both companies and freelancers are required to make (as many as 15 separate ones per year) and the fact that some of them need to be made in advance, because part of the taxes are calculated on projected rather than actual income. In order to navigate this particular situation, you will have to factor the advanced payments into your initial budget plan and starting capital.

3. Hierarchy and company culture

doing business in Italy hierarchyDespite the business environment having grown more dynamic and flexible over the past few years, hierarchy still plays an important part in most Italian companies’ culture. This may affect you as you are trying to establish partnerships and strike deals: if you are unaware of how the chain of command works in the specific company you are approaching, you are at risk of wasting time and energy negotiating with the wrong person, who will have no ultimate power on the company’s decision. This obstacle is easily overcome, but it may require you to hone your diplomatic and interpersonal skills, starting your negotiation process by devising the right way of contacting the right tier in the organisation you are approaching.

4. Culture and traditions

doing business in italy tradition company cultureEach Country has its own business etiquette and, while the differences might seem trivial to the untrained eye, not being aware of them may land you in a few tight corner and cause embarrassment. This is easily avoided by brushing up on the local customs in advance and, if you are serious about doing business in Italy, by mastering the language as soon as you possibly can. This is due not only to the fact that Italian is the only accepted language for contracts and official documents (translators will more than suffice on that account), but also to the fact that speaking the language will help you earn your partners’ trust and enter into a direct and more intimate relationship with them, creating a friendly climate that is essential to the Italian way of doing business. If your communication flows effortlessly and you are able to transfer the business interaction on a more human level, negotiating deals and liaising with potential clients, partners and stakeholders will prove much easier.

Need help starting a business in Italy? Contact us, we will make it easy!
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Angela

She is a part-time digital nomad. She would go full-time, if only she could stay away from Berlin for long enough without pining for a Pretzel. She was born in Italy and she enjoys life as an expat, but visits home often enough and can still remember how to bake a perfect lasagna. She is passionate about writing, marketing, languages and the systematic demolition of cultural stereotypes.

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