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of corporate tax in Italy (IRES) is 27.5% and for both companies and individuals, capital gains are added to general income. The current rate of value-added tax is 20%, which is comparable to many other EU member states, including the UK. However, there are reduced VAT rates of 4% and 10% on basic products.


Italian Politics Italy operates with a bicameral legislature, and is an amalgamation of a republic and democracy with people’s representatives within Parliament. It is a multi-party system, with representatives from these parties advising the Prime Minister on issues affecting the running of the country. The functions of the Italian government are divided into three phases - executive, legislature and judiciary. The executive power ultimately rests solely with the Prime Minister, but both the government and the twin chambers of the Parliament exercise the legislative powers of the country, while the Judiciary is an autonomous body, free to exercise the judicial powers according to its volition for the best interest of Italy. The list of political parties in Italy is vast – numbering


approximately 22 – including the Italian Liberal Party, the Forza Italia-National Alliance and the National Alliance, to name but three.


Legal System An inquisitorial civil law system forms the backbone of the judicial authorities in Italy. Based on a combination of Roman law and French Napoleonic law, the Italian legal system was revised in the early 1990s, leaving the country with the current accusatory system which emulates that of common-law countries. As the judiciary is independent to the executive and legislature, only magistrates can perform jurisdictional duties and judges cannot be dismissed. The Italian legal system is incredibly complicated


and is comprised of thousands of laws. Many of these laws date back hundreds of years, and are largely ignored. Problems tend to arise here as there are no set rules stating which laws are ignored and which are enforced, an issue which makes navigating the Italian legal system a difficult task pitted with potential risks. In addition, legal proceedings run at a very slow speed in Italy, and it is not uncommon for cases to take years to get to court, with the average time taken to get from indictment to a court judgment standing at ten years. With this in mind, it is


invest ing and doing business in i taly


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advisable to take every precaution available when looking to invest or carry out a business transaction in Italy, and investment in good quality legal advice to avoid going to court is a highly recommended move. Despite the complexities of the legal system,


according to Doing Business 2011 data for Italy, starting up a business can be relatively simple and can , in theory, take as little as six days. It estimates that one day is needed for each of the following set-up actions: placing a cash deposit with a bank of at least 25% of the amount contributed, executing a public deed of incorporation and the company bylaws before a public notary as well as paying registration tax. Then there is the purchase of corporate and accounting books, paying government grant tax to the post office current account, and registering online with the Register of Enterprises (Registro delle Imprese) at the local chamber of commerce. Finally, the competent Labor Office (DPLMO) needs to be notified of worker employment.


Summary All in all, Italy has a lot to offer. Although the economy is shaky, it is on the up, which is a lot to be thankful for in the current climate. With GDP on the rise and a strong foundation of export and agriculture to build upon, the future looks fairly bright for Italy. fi


fi MONTHLY MARCH 2011


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