INTRODUCTION AND GENERAL INFORMATION ABOUT THE ITALIAN ECONOMY

This short report provides a synthesis of the Italian social and economic system which is becoming more and more complex and integrated with Europe and the rest of the world, infact markets around the world have become an only one market, "the market". Actually Italy is the fifth largest industrialized country and the sixth largest exporter in the world, presently is committed to a tight fiscal discipline aimed at meeting the criteria set by the Maastricht Treaty for the accession to the European Monetary Union. Of the industrialised European countries, Italy has three distinguishing characteristics: a high number of companies, a strong preponderance of small-and medium -sized enterprises and a high per-capita value added, typical of a country without raw materials and of an industrial system founded basically on transformation. As a matter of fact, only four italian companies (FIAT, IRI, ENI and Ferruzzi Finanziaria) make the Fortune list of the world's 500 largest Corporations, whilst thousand of small and medium-sized family companies busily turn out a wide variety of goods ranging from machinery and precision instruments to textiles, shoes, fashion, furniture, ceramics, housewares, jewelry. Talking about the structure of the production system, the important role of very small enterprises and self-employment has always been stressed in our country, due to the traditional sectoral specialisation of our industry. A comparison of the average size of Italian enterprises with enterprises in the European Union further underlines the peculiarity of our system: Italian enterprises are smaller, they have 4 employees against 6 in the European Union. Employment in industrial enterprises with 250 employees and over represents 25.4% and in the European Union 47.2%; services enterprises with less than 10 employees represent 61.1% of employment for this sector while in the European Union it is 42.3%.

Some peculiarities of industry structure can be traced for agriculture as well. Italian farms are smaller than European farms and are still rather
underdeveloped, except for few innovative examples. The number of farms is still falling as in other European countries. In Italy, northern farms were mainly affected and this reduction determined an increase in the average farm surface by over 10% The development of services follows modern foreign organisational patterns, though development is still delayed, especially for services to enterprise and commerce. The processing of new national accounting shows that our  industry tends to work under non-regular conditions. Services employed the greatest share of non-regular employees (about 70%), though the highest ratio of non-regular employees to total sectoral employment was recorded in agriculture.

The Italian economic growth model is based on flexible strategy and the diffusion of a network of small, but highly profitable enterprises. The industrialisation path mapped out in recent years has enabled Italy to achieve a goal which is enviable and unique if compared with the production systems of other European countries. Of the more than sixteen million enterprises in Europe, 24% are located in Italy, 16.2% in the U.K., 15.2% in Spain and 14.1 % in Germany. In addition, 21.1% of Europe's enterprises with a workforce of less than 100 are to be found in Italy. There are 68 enterprises every one thousand inhabitants and every hour, round the clock, 45 new enterprises are born.

BUSINESS ENTITIES

As a rule, foreign investors do not require any special authorisations, although a licence or prior authorisation is required for some sectors of
national importance. A foreign investor who wishes to establish a business entity in Italy may operate by forming an incorporated company, this being the most common approach, or by setting up an incorporated company or branch.

Stock corporations and limited liability companies

The foreign enterpreneur can develop his presence on Italian market through different forms, the Italian "Civil Code" provides for the following legal structures through which it's possible to embark on a commercial enterprice:
- Società per Azioni or S.p.A. (Stock corporations or Limited company),  whose capital is represented by shares.
- Società a responsabilità limitata or S.r.l. (Private Limited company), whose capital is divided into quotas.
- Ditta Individuale (Individual firm).
Other forms of  business organization are: Sole traders; Association in participation; General Partnership; Limited Partnership; Limited partnership with a share capital; Joint Ventures.

The most used form between middle and big firms is the "Societa' per Azioni" or "S.p.A". It must be founded with a public act which must be ratified and registered by the competent court, in it the principle of the limited liability of partners established on the ground of the nominal amount of the shares underwritten. There are different classes of shares, each of them give the owner different rights as to the vote, their amount and the right of refund in case of winding-up.
The most used companies for firms of little dimensions are the Partnership and are characterised by the unlimited liabilty of the partners for the bonds of company except for a class of partners (limited partners) present in the limited partnership. Each unlimited partner is also, for the only fact of being partner, manager of the company.

General Fiscal aspects

The Italian fiscal imposition, even if it's considered high, it's similar to the other European countries.
You  must distinguish between companies and partnership. In fact, while the first undergoes a direct fiscal imposition (the profit of the company is taxed inside the same company) with fixed tax rates; in case of partnership, the profit is fiscally given again each single partner who will be proportionally taxed with increasing tax rates jointly to all the incomes received.

The income taxes are carried out both to residents and to non-residents, but with the difference that the taxable value for the two categories of contributions is different. In fact, the standards adopted are the following:
- For residents: the taxable value is composed of all the incomes possessed in Italy and abroad according to the principle of the world wide taxation system.
- For non-residents: only the incomes produced in the territory of  State according to the principle of territoriality.
As to avoid a double fiscal imposition in the relations with foreign operators, several International Conventions are applicable, these have stipulated with their respective contracting countries and they usually allow to obtain a tax credit for the income taxes paid in Italy.

Industrial Property and  Licensing

Italy, like other industrialised countries, has agreed and ratified the several International Conventions concerning the inventions, the national and international brands and the industrial drawings, assuring in such a sense a protection to the foreign entrepreneur. The violation of these rights is severely punishable and all that implies the right of a compensation for damage suffered and the possibility of issuing the relative sentence on newspapers or of confiscating goods, object of an unfair competition.