
Fixing Italy, a little bit at a time - ot
http://blog.therealitaly.com/2015/04/16/fixing-italy-a-little-bit-at-a-time/
======
davidw
That's my article, if anyone's curious about the details.

 _Edit_ \- I may as well post this here: I finally wrote this up 3 years after
the fact as something of a "swan song" for my time in Italy, which is drawing
to a close for now (I'm sure we'll be back in the future!). We're moving to
Boulder, Colorado, and are actively looking for people to meet, jobs, housing,
etc...

~~~
balsamiq
David! I met you at Better Software in Florence a few years ago, not long
after I had finished scrounging up 2,500 euros to start Balsamiq SRL (I had to
give my mother 1% of the company, otherwise I would have to deposit 10,000
euros, which I didn't have at the time).

I remember thinking "I hope this guys is successful" when I talked to you, and
when the new law came into effect, I remember thinking "I wonder if that guy
had anything to do with this awesome change". :)

As an Italian entrepreneur, thank you. I meet with lots of wannapreneurs, and
I alyways tell them "it's cheaper now!". Now I can tell them "thank David
Walton!" too. :)

~~~
davidw
Thanks for the kind words, and thanks also for the inspiration - your talks at
Better Software, and MicroConf Europe were very nice in that they show that
it's possible to do a cool, successful bootstrapped startup in Europe too.

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idiocratic
As an Italian living in the UK I'm not sure anything changed in Italy in this
field. I see more and more Italians establishing their companies in the UK or
Germany, because it's mostly hassle-free and better in the long run. Italy has
a problem with business, risk is not something that the few investors are
willing to consider and startups are just a tiny fragment of an IT market
ruled by short-term contracts with 3 levels of outsourcing.

There are exceptions, but you can count them on the fingers of one hand.

~~~
1_player
Fellow Italian here also in the UK. I've been self employed in both countries,
and, boy, how easy it is to open a company in the United Kingdom compared to
Italy.

The taxation system is much better and fair (although PM Monti's new tax
regulations for new small businesses have helped, but they have their share of
shortcomings) and the market and average salary for a software engineer is at
least 2x compared to the Italian average:

\- Good luck earning more than €24000 after taxes in a non-management
position.

\- Good luck finding full time positions: here in the UK I have the opposite
problem, as a consultant I'm often looking for part-time offers and
everybody's looking for full-time engineers. You may actually work full time
for a company, but more often than not you get a short term contract with much
lower benefits that gets renewed until you quit.

\- Good luck if you're looking for remote work: nobody likes or trust remote
workers here.

\- I've quit my job after learning that my salary was filtered through 2
levels of outsourcing agencies, and my take-out pay was 16% (or 1/6th) of what
the client was actually paying.

That's my personal 7 year experience in Milan, arguably the best Italian city
for service-related work.

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lultimouomo
A nitpic:

with a traditional S.R.L., 10k€ is the minimum capital of the company, but you
don't actually need all of it to get started. A S.R.L. only needs 25% of its
capital to get started, so you need at a minimum 2500€, which your newborn
company will spend anyway in its first month, to pay the notary and the
registration fees. Of course if you go bankrupt you still need to pay the
remaining 75% of the capital to pay your debts.

Overall, the new form of reduced-capital S.R.L. will make you save around
1500€ for the notary, but it remains quite onerous, especially time-wise,
because of all the bureaucracy you need to go through.

~~~
davidw
Yes, there is _ample_ room for improving things further in Italy, but I think:
if I was able to do that, what could be accomplished if more people tried?
Especially people with money/power/connections/etc... Heck, my Italian is
good, but I'm not even a native speaker!

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pierotofy
This is not exactly correct... "At least 10,000 Euros of capital that you were
required to invest in the company.". You are required to "pledge" that amount,
but you are not required to invest all of it right away. You can invest as
little as 2,500 (and the founder will owe in the books the remaining 7,500).
It's still a significant amount compared to what's required to open a company
in the U.S. however.

The notary fees absurdity is true. A disgusting privileged class problem.

"a lot of people told me it’d never happen, so why bother". Sadly, it's a very
typical attitude among Italians.

~~~
davidw
> This is not exactly correct... "At least 10,000 Euros of capital that you
> were required to invest in the company.

You are completely correct, as is lultimouomo, but I skipped over the exact
details - this article was aimed at a broader audience than those interested
in the technical details of Italian company formation.

~~~
pierotofy
That's understandable. By the way, thank you for your efforts. Italy needs
more people like you that push for entrepreneurial reforms. Right now a lot of
talent is emigrating to other countries because of the difficulties to start a
successful business (or even just a career).

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ecesena
Could you elaborate and compare to a US Inc., rather than a LLC?

There are several reasons to prefer a Inc vs a LLC. Without entering into a
battle, I refer to Sam Altman lecture [1].

From [http://www.srlfacile.org](http://www.srlfacile.org) (translated):

> In the UK, the cost of a "Ltd" (Limited) varies from 25 pounds for a basic
> package, 250 pounds 'all inclusive'. In the United States, create a "LLC"
> (Limited Liability Company), it costs 50 to $500 depending on the state in
> question, and you can do everything through the site in many cases.

My fear, in some sense, is that we go towards something which is better than
the current Italian Srl, but with the drawbacks of a LLC vs Inc. I'm not
criticizing, just asking for clarifications.

[1]
[http://startupclass.samaltman.com/courses/lec18/](http://startupclass.samaltman.com/courses/lec18/)

~~~
davidw
An Inc is the equivalent of an Italian SPA, which is _even more_ expensive to
register and maintain than an SRL. I went for the SRL's because it's low
hanging fruit.

If you compare an Inc in the US to an SPA in Italy, it's even more in favor of
the US, although unlike an LLC with a single owner and pass through taxation,
I think with an Inc, you're going to want to get an accountant and lawyer
involved from the get-go.

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bakhy
Great work! And I could not agree more with the conclusion. It's like people
think that they either have to get exactly what they want, str8 away, or the
cause is not worth their effort at all. But if everyone chipped in a little,
as much as they could, mountains could be moved in a day.

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Animats
The real questions with the creation of corporate forms are 1) how do taxes
work, 2) how does bankruptcy work, and 3) what rights and powers do investors
have. Most startups fail, so 2) is an important issue. Policies vary by
country. The US is lenient on corporate bankruptcies; Ireland is very tough.

There are a number of rackets associated with easy corporate creation.
Ordering stuff and then going bankrupt with the stuff missing is a classic.
(The usual strategy is order a little stuff, pay for it, order more stuff, pay
for it, order a lot of stuff, disappear with the stuff. Popular in New
Jersey.)

~~~
davidw
> There are a number of rackets associated with easy corporate creation.

This is an interesting point. Italy tends to optimize for the 'worst case'...
"well, this _could_ go wrong, so we'll make everyone do X, Y, and Z".
Therefore, all the honest people have to pay extra in terms of time and
bureaucracy to the detriment of society as a whole.

My take is to make things easy for honest people, and come down on the
dishonest/fraudulent ones fairly hard.

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JanezStupar
For all things that are shitty in Slovenia (next door neighbor to Italy),
starting a company is not.

If you want a LLC - you will need 7500€ of capital, however there are no fees
and whole process doesn't take more than a week.

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Fede_V
Hey, what you did is awesome. It is a small step, but it is decidedly in the
right direction - and often us Italians are too cynical and resigned to a
shitty system to push back against it as much as we should.

Kudos!

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jarek-foksa
As far as I know there is no European country that would have legal structure
similar to LLC in the US.

If you want to avoid double taxation while maintaining limited liability, you
have to get into some complex and obscure legal structures - like a limited
partnership where one partner is a limited company (with at least two
directors) and the another partner is you.

Even then, the limited liability is very _limited_ and it's easy to make a
mistake that will make you fully liable.

~~~
lultimouomo
In Italy you can actually avoid double taxation, in small LLC companies (less
than 10 partners, only natural persons) you can opt for a "fiscal
transparency" mode in which you avoid corporate revenue taxes.

~~~
ane
I think in Estonia any invested money is exempt from taxation, that is to say,
if you invest your profits, you will not be taxed.

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radicalbyte
It's not just Italy which has horrible rules around private limited-liability
companies (LLC).

In The Netherlands you need to invest 18k EUR to create a BV, which is the
Dutch form of a pLLC. Combined with strong worker protections it's amazing
that there are so many startups here. I guess the culture, high level of
English-speaking and high education level explains it.

~~~
bkor
A LLC is a burden on the country if you go bankrupt. So obviously you need to
show that you have enough money. Are you sure about the rules? I was taught
(though ages ago), that you could basically get a short loan for the amount.
Further, it was more like 10k IIRC.

I'm surprised you think the rules should be eased. An LLC is pretty often
abused for fraud. Putting everything in an LLC, letting it go bankrupt, moving
to the next one, etc.

Edit: BV for .nl is 260 EUR at
[https://www.oprichtenbv.nl/](https://www.oprichtenbv.nl/). I just googled for
it. No additional costs.

~~~
jarek-foksa
The directors are fully liable if their actions are found to be fraudulent.
It's "limited liability", not "no liability whatsoever".

~~~
bkor
Which in practice is not enforced very often.

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ybalkind
The real story seems to be ItaliaCamp since they seemed to be the ones who
gave the idea traction. But their website is only Italian.

Can the author or anyone else explain a bit more about ItaliaCamp and how they
manage to successfully lobby for change?

~~~
davidw
They certainly played a big role in actually making things happen. I'm not
sure too much about how - I know a bunch of them are connected with a private
school in Rome, LUISS:
[http://en.wikipedia.org/wiki/Libera_Universit%C3%A0_Internaz...](http://en.wikipedia.org/wiki/Libera_Universit%C3%A0_Internazionale_degli_Studi_Sociali_Guido_Carli)

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jkot
And why register company in Italy? We have EU and foreign companies can be
present in Italy. I would register in Ireland or Estonia.

~~~
Kurtz79
If you are BASED in Italy and register in Ireland or Estonia I'm pretty much
sure you are breaking the law, EU or not.

~~~
nodata
How?

~~~
Kurtz79
You are working in country which as to pay for things like roads, military,
firemen, police, health services, schools, pensions using taxes from companies
and citizens living there and this country is not seeing a single euro from
you (which are taking advantage of the infrastructure paid by those taxes).

How would you expect this to be remotely legal ?

Sure, there are plenty of people doing that, just as there are companies
registered in the Cayman or Gibraltar, or people having secret Swiss bank
accounts.

~~~
davidw
> How would you expect this to be remotely legal ?

If you pay taxes (in Italy, say) on the income from your company, wherever it
happens to be.

I get the impression that it's all something of a legal gray area. It'd be a
lot simpler if people could easily have companies in their own countries.

I'm all for paying one's fair share of taxes on income in the country you live
in. What I intensely dislike about the laws in Italy surrounding companies is
that there are all kinds of expenses that have to be paid even if you are
losing money.

~~~
mauricemir
Cross country working like this is tricky in the EU and its still a grey area
legaly speaking

Its mainly about which country's employment laws apply.

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danmaz74
Good job David ;)

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stefantalpalaru
> More than anything, I think that it resoundingly demonstrates that as a
> person, you can make a difference, even if you are not rich, powerful, or
> well-connected politically.

Yes, you just need to be naive enough. The resulting law only allows €1
charges for people under 35 and it does nothing about the other expenses that
stifle small businesses:

\- the payment of anticipated VAT for the next fiscal year as estimated by the
government based on this year's ledger

\- the market studies that establish the average income of a similar business
in your field and then taxes you according to this hypothetical income if your
documented one is bellow average

\- certain taxes that have a fixed minimum forcing you to reach a certain
income immediately or dig yourself deeper into debt

\- an aversion towards bankruptcy - you are usually guilty of fraud until
proven otherwise and the legal process is long and costly

\- insane fiscal policies like the one forcing retail shops to only have large
price reductions 2 months per year, at the season's end, after communicating
it to the local authorities and only being allowed to charge bellow the
acquisition price in certain conditions, as to maximize the state's return
(they reason that reducing the price also reduces the taxes)

While small timers have to deal will all this, big businesses get public money
in order to "save the jobs" or protect strategic industries, they get to use
the government's resources to secure deals abroad and they get to negotiate
with the revenue service when they are caught red handed.

The signs are clear: become an employee or pay the price of your foolishness.
You can't fix the system. At most you can provide some PR material for one
politician or another and write a self-congratulatory blog post about it.

~~~
davidw
If you read the article, you will notice that I never claim to have fixed
_all_ of Italy's problems, but rather that I lit a fire that helped improve
one small one.

> The resulting law only allows €1 charges for people under 35

The did end up fixing that one actually, and now it's available for everyone.

Most of the other things you point out are certainly real problems. I hope
other people will do their part to help fix them!

> You can't fix the system

That is _exactly_ the kind of problematic attitude that I am talking about. No
one ever claimed it was easy, but if you do not try, it's obvious nothing will
improve!

