A Paradise for Setting Up New Businesses and for HNWI
In a bid to boost innovation and foreign direct investments within Italy, the Italian government has enacted legislation specifically designed to encourage the creation and development of innovative startup companies in the country as well as to attract foreign direct investments and relocation of foreign direct investments.
Generally, Italy has been taking great strides to increase their attractiveness to EU and non-EU citizens opening a company. There are no nationality requirements to become a shareholder or a director, no minimum legal capital requirements for the incorporation of the company, and corporate tax has even been lowered from 27% to 24%.
As well as the above improvements for business owners, the government has introduced a raft of changes to particularly entice foreign investors to Italy.
Compared to the recent past, it is becoming increasingly attractive to open companies in Italy for non-EU and EU residents. In fact, the time frame for the incorporation of a company (including obtaining VAT and opening a bank account) is around 5 working days from the day in which the incorporation procedure is started. Unlike other countries, in which the incorporation of a company might take only one day, in Italy the incorporation process takes a little longer but, at the end of it, no further steps are necessary.
VAT number is obtained before the company is even incorporated and it only takes a couple of hours to open the bank account. In the UK, for example, a company is incorporated in one day, but it can take several weeks to obtain a VAT number and opening a bank account can be quite difficult for a foreigner.
Startup companies in Italy: a paradise for setting up innovative businesses
In a bid to boost innovation within Italy, the Italian government has enacted legislation specifically designed to encourage the creation and development of innovative startup companies in the country. Young entrepreneurs have seen the bounty on offer and are changing the Italian business scene. The number of startups in Italy is now at around 5,500 and growing at a fast pace – in the first 3 months of 2016 alone, the number increased by 5.8%.
The Italian Startup Act (ISA) introduced measures that aim to create a breeding ground for innovation: simplified registration of the company, exemptions from certain fees and procedures, flexible staffing options, salary systems based on the profitability of the company and the productivity of the employee, fast track VISA program, tax incentives for investors and other tax credits and incentives.
The startup’s core business must involve the development and commercialization of innovative goods, with 30% of the company’s costs dedicated to R&D. Failing the R&D requirement, the following applies:
- 30% of the company’s team must hold a Ph.D. or be studying for one; or
- 30% of the company’s team has conducted research for 3 years or more; or
- the company is the owner or licensee of a patent.
Italy is a very interesting destination for entrepreneurs and wealthy individuals that want to have free access to the EU. In the past few years it has become increasingly difficult for non-EU individuals (especially from certain jurisdictions in Asia and from India, Iran, Russia and the Middle-East) to obtain entry visas and residence permit in the EU. Nonetheless, incorporating an innovative startup company gives access to a fast-track procedure to obtain a startup visa if there is a commitment to invest at least 50,000 € in the company. A startup visa can be obtained in only 30 days, instead of the usual 90 days required for regular visas.
Investors Visa
Given the difficulties, mentioned above, to obtain a residence permit in the EU, another very attractive procedure is the so-called “Investors Visa”.
This new type of visa allows the entry and residence in Italy, notwithstanding the entry quotas established annually by the government, to foreigners who wish to:
- invest at least € 2 million in securities issued by the Italian government, to be held for at least 2 years;
- invest at least € 1 million in equity instruments of a company incorporated and operating in Italy, to be held for at least 2 years;
- invest at least € 500.000 into an existing Italian innovative start-up company;
- make a philanthropic donation of at least € 1 million to support a public interest project, in the fields of culture, education, immigration management, scientific research, recovery of cultural and landscape assets.
The Investor Visa also gives access to a fast-track procedure.
Italy’s resident non-domiciled package
The Italian government has, furthermore, recently implemented a tax package and fast-track VISA procedure to attract wealthy individuals that intend to relocate to Italy.
This package includes a € 100,000 flat tax on all foreign income for individuals who become Italian residents after at least a 9-year period of residence outside of Italy. This flat tax is paid on an annual basis for a maximum of 15 years.
The tax package is integrated by a fast-track visa procedure for investors and their relatives.
According to the Res Non-Dom Regime, eligible taxpayers can choose which country or countries income to tax with the substitutive flat tax (the so-called “cherry picking” principle). Any income sourced in the “non-chosen countries” (if any) is excluded from the Res Non-Dom Regime (as well as the Italian sourced income) and, therefore, is subject to ordinary Italian taxation and will benefit from tax credit on taxes paid abroad (under ordinary limitations) and from relevant tax treaty protection (if any).
If you are going to or are in the process of setting a startup company in Italy, or you are planning to move to Italy, it’s vital to know the legal ins and outs of business creation and visa application in Italy. LEXIA Avvocati, an Italia law firm with offices in Milan, Rome and Palermo, has the expertise in providing legal assistance in all types of matters in Italy and can provide professional help through a number of services, all available in English. They are the official partner of the Government Agency for the attraction of foreign direct investments http://www.investinlombardy.com/about-us/our-partners/lexia-avvocati.
For more information, please visit www.lexia.it and www.italiancompanyformations.com
