Doing Business in Italy: What You Need to Know

Expanding or opening your business abroad is not a trivial activity: market, regulatory and social dynamics vary from country to country, and what you take for granted in your home state does not always hold if you change context completely. What characterizes entrepreneurship in Italy at this time in history? What should one expect from the moment one decides to embark on such a path?

Mature and experienced entrepreneurs

There is no shortage of incentives for young entrepreneurs, yet according to an analysis by Unioncamere-Infocamere, businesses led by entrepreneurs under the age of 35 (or with a predominance of under-35s in governance) fell from 697.000 in 2011 to 541.000 at the end of 2020, thus registering a 22.4% decline.

Ten years ago, youth enterprises accounted for 10 % of all companies registered in the Business Register, while today they stand at 8.9 %.

The Italian population is predominantly composed of people between the ages of 45 and 60, a fact that certainly affects the phenomenon. However, it alone is not enough to explain why young entrepreneurs in Italy are in short supply. The cause may lie in a lack of education in Italian universities and a lack of drive and stimulus for an entrepreneurial approach.

Self-confidence first

Italian entrepreneurs are on average more self-confident than neighbouring countries. SumUp research shows that only 9 % of entrepreneurs in Italy doubt themselves, compared with 18 % of entrepreneurs in the United Kingdom and 11 % in France. This may be a consequence of age (which, as we have just seen, is relatively high) combined with years of experience. The same research shows that almost half of the business owners have experience in the industry in which they launched their business (as many as 48.16 %). It is up to the individual entrepreneur to work on self-confidence healthily and positively, boosting self-esteem but not opposing new ideas or constructive observations.

Digitalization on the rise

An ISTAT study shows a good level of digitalization in Italian companies. Not only about multinationals but also about SMEs (small and medium-sized enterprises), which represent the most widespread type of company by far. 60.3 % of Italian SMEs have reached a basic level of digitization, which is higher even than the 56 % average of the 27 European Union countries.

This figure is expected to be maintained in the future, thanks to the many subsidies the state reserves for business digitalization and innovation. With the PNRR, (national recovery and resilience plan submitted by Italy to the European Commission to access Next Generation EU funds) the Italian state has allocated 30.57 billion euros to improve the innovation in the private production system.

A confirmation of the widespread digitization of businesses we have again from the SumUp research, which showed a very limited percentage of entrepreneurs who do not employ any digital tools in their business (2.33 %). Most entrepreneurs have realized that business digitalization allows them to
simplify processes, thus saving time and resources.

So let’s be prepared: the use of digital tools is essential to streamline and speed up activities. Technology is a crucial asset in the success of a business. That is why knowing the level of digitization of the market in which you will be operating is of paramount importance for every entrepreneur.

A recovery in entrepreneurial activity

According to Movimprese, (the quarterly statistical analysis of InfoCamere and Unioncamere), Italy is finally seeing the return of a balance between new business registrations and terminations. Having overcome the stop in 2020 and the rebound in 2021, it is returning to a stable situation that mirrors the average of the last 10 years.

Another interesting fact concerns the geographical distribution of Italian companies.

Indeed, we often hear of Rome as the capital and Milan as the business center; in general, northern regions are known for their important industrial presence. Now, on the other hand, there is a great recovery in the southern Italian regions, which put in the largest increase in the second quarter of 2022. This is certainly given by the important incentives that the state has reserved for those who open new businesses in the South, to revitalize an area that has always been secondary in terms of business development.

In terms of sectors, wholesale and retail trade still accounts for the majority share, followed by construction, agriculture and manufacturing. Compared to the beginning of the year, the second quarter of 2022 sees an increase in new businesses, especially in construction (+1.01 %) and services (0.92 %).

How to do business in Italy

If you intend to open a company in Italy, you have probably already defined your goals, sector, business model, and target audience and found Italy an interesting potential market. Of course, it is also essential to have in mind an initial budget to invest in and the people you would involve in your new business. All these elements put together are essential to guide you in choosing the type of company best suited to your needs.

Companies in Italy are divided into partnerships and corporations.

Corporations are joint stock companies (spa), limited partnerships, limited liability companies (SRL or LLC), and simplified limited liability companies (SRLS). The most common form by far is the limited liability company (LLC). The common feature of this type of corporation is the fact that the partners are liable for corporate obligations only from the company’s assets.

Partnerships are divided into simple, general, and limited partnerships (SAS). In these cases, the partners are liable for corporate obligations not only with the assets resulting from the shares but also with their assets in an unlimited manner. These companies are recommended when one intends to open a small company with limited risks.

To open a corporation, whichever type is chosen, requirements include the designation of the partners and their participation in profits and losses; an Italian tax identification number for each director and partner; the corporate purpose; The registered office; the name of the company; the bylaws; the registration in the commercial register; a bank account.

If you are not an EU citizen, check the requirements for residing and working in Italy In most cases, no citizenship or residency requirements are required. Each administrator/member only needs to provide a valid ID or passport. However, if you plan to relocate to run your business locally, don’t forget to apply for a legal permit to live and work in Italy.

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