Italy as a business opportunity

This week will be about italian economy, with a focus about some worrying factors or trends that are under way.  There’s a basic statement to do: due to the current economic crisis, Italy offers very good investments options with a fair range of prices. Name a business sector or a specific activity, I’m almost sure you will find what you need for sale.

Bureaucracy

As an investor you have to be smart and be sure about all the concurrent issues about your project. You have to consider bureaucracy for instance; it’s always a problem and in Europe you will need to remember that there are at least three levels of bureaucracy: local, national and european. The problem is that sometimes that three different levels collide, with uncertain results. So, the first move is to hire an italian law firm, better if it’s located in the same place you want to invest.

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The second step is about financial coverage. In Italy the words “credit crunch” have become a kind of barrier, even for little operations or for everyday money transfers. The biggest banks are dominant and not a lot open to consider new business so it’s a wise move to explore if there are medium or little bank operators located in the place you want to invest. A medium or little bank is often more costly but it can be  far more flexible to accommodate your special needs and/or to put your business in relation with local authorities or local companies.

If  you want to start a new business or acquire an old one it’s better to think about local taxes. In Italy there is a very complex set of laws and rules about national and local taxes (that’s a good reason to hire an italian consultant), a number of areas in the country got a set of special instruments to use, that could mean a heavy local tax cut for years and/or access to special financial loans. Using a bit of diplomacy you could set up fair conditions for your business with minimum extra effort.

It’s better to avoid direct business relations with politicians, no matter how high they are placed in local or national government. In the last twenty years we got a lot of major scandals related to politics and more are on the way. I strongly suggest not to barter short-time advantages with medium-time issues with the law. Once you enter in an italian tribunal you have no idea about when your troubles will be over, with all the legal expenses to be paid year after year.

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For a more easy access to the Italian market look for the Italian bonds. They still got interesting prices and good rates for the medium period. Stay away from the stock market but keep a close eye about chips like ENI or other state-controlled companies. Look for the few that are considering foreign markets to debut, like Ferragamo in the 2012, or for the spin-off companies from the likes of Pisa University (robotics and such). For long-term investments consider real estate, Italy is one of the few countries where you can buy a real castle or similar high-prestige buildings.

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