Alessia Ajelli: Once you enter Italy, you perform an investment. Then you apply for the two-year residence permit, and you're able to renew it as long as you keep the investment. You can’t modify the investment in any part.

Salman Siddiqui: Welcome to the Investment Immigration Podcast Uglobal.com, with weekly in-depth interviews with the world's leading investment immigration professionals. Welcome to another episode of the Investment Immigration Podcast, brought to you by Uglobal. I'm your host, Salman Siddiqui. So today we are going to focus on Italy. Now we all know that Italy has this investor visa program. It also has the startup visa program for quite some time now. And we're going to talk about whether the options there are still feasible for foreign investors and immigrants, given the fact that there are a lot of changes happening in Europe.

There are also some updates happening with some strange new laws coming in. For example, we heard recently that €2,000 have to be paid by foreigners if they are living in Italy. But does that apply to foreign investors and businesspeople? We don't know that.

We're going to clarify that in this episode. We're also going to find out whether there are some changes to the tax regime. There are some talk about that. So we're going to cover that as well. But we are going to also delve deeply into the different streams under the investor visa and startup visa, and what foreign applicants can look forward to in the country. So to help us unpack all of this, I have a very special guest. Her name is Alessia Ajelli. She's a Senior Associate at the Milan-based law firm LCA. Welcome to the show, Alessia.

Alessia Ajelli: Thank you very much for having me.

Salman Siddiqui: Thank you. So, without further ado, Alessia, if you could give us a brief overview, firstly, of Italy's investor visa program, including the key requirements for potential applicants and whether there have been any recent changes, given the fact that there's now a new government in place. So if you could introduce us to that.

Alessia Ajelli:  Yeah, of course, this program is quite recent. It has been introduced in late 2017, so it's running for approximately a little bit less than five years. Some changes have been made during the years to make it more attractive to potential foreign investors.

So basically we have different categories of investment that could qualify a foreign investor. To apply for the visa, you may choose to invest in equity of companies incorporated and operating in Italy. You may choose to invest in innovative startups, which are startups with like the requirements set forth by Italian law to be registered in a special section of the company's register. Due to the innovative features of the company, you may also invest in philanthropic projects sponsored by the Italian government, or you may choose to invest in government bonds.

Of course, the amount of the investment is different depending on the target of the investment. In this respect, we had a couple of years ago, a change the government decided to reduce the amount of the investment for equity and startup companies. So now you can invest €250,000 in equity of startup companies, or €500,000 in the equity of normal companies listed or not listed on the Italian stock market. And this is a big change because at the beginning it was like the double amount. So this amendment has been introduced to try to make it more interesting and attractive for foreigners to choose the Italian investment program rather than other European countries.

The main feature is, of course, the availability for the investor of the financial resources to perform the investment. So when you apply for the visa, you actually apply, first of all, for an authorization, a clearance authorization from the investor visa committee, which is the authority in charge of processing the applications. And you have to demonstrate that you have the sufficient economic resources to perform the investment. And such resources should have a like a licit and legitimate origin. So you need to prove where those funds are located. The transferability of the funds to Italian banks, because, of course, the other requirement is that you must be able to perform the investment within the three months from your entrance in Italy.

So you need to plan in advance and also check with the banks whether the financial resources are easily transferable to Italy, because one of the main obstacles that some clients and some applicants had, especially during the last months, was to open a bank account in Italy and transfer the resources from abroad to Italy. This happened especially for Russian citizens, and eventually this led also to the suspension of the investor visa program for Russian and Belarusian citizens, according to the recommendation of the EU Commission.

Generally speaking, this program is quite interesting for any investor. For an investor who wants to enter the Italian market and make an investment, depending on the target of your investment, you have different options to choose from.

Salman Siddiqui: You touched on a lot of things that I want to talk more about, so I'm going to go step by step. First I want to talk about what you mentioned on how the investment thresholds were reduced to €250,000 from €500,000. Before it used to be double, but correct me if I'm wrong. It was actually more than double. I think it was like €2 million of investment that you've previously required. And this change that has happened. Do you think this has helped the program, or is this a need to maybe further reduce the threshold or somehow make more changes?

Alessia Ajelli: Well, you are correct in a sense, because the amount of the investment to be made in government bonds is still €2 million, and the one in philanthropy project is still €1 million. The amounts that are being reduced are just the ones for equity and startup companies, which have been reduced by half. Of course, this reduction has helped a lot engaging more people in this program, especially because other countries in the European Union are offering or have been offering not the same, but a very similar program for years. And the threshold in those countries is much lower than the one established, at least at the beginning, by the Italian government.

Of course, if we want to attract more investors, it would be even better to have lower amounts. I don't think that it will be the case, at least in the short period, because we haven't heard any announcement or even a proposal for further reduction of the amount of the investment. But you never know. Of course, the less is the amount of the investment, the more attractive it is for foreign nationals when they have to choose between, for example, the Portuguese program or the Italian one. But still, I think that this change in particular has helped a lot. So we have registered an increase of applications, especially for equity of listed companies. And startup companies have always been a target, but there is always some sort of fear when you talk about startup companies because they are incorporated companies, the business is starting, so you are a little bit exposed to the risk of not having like a long term investment, because the business may not be supported for a very long time. So a lot of our clients choose to invest in listed companies because the investment is safer in that sense.

Salman Siddiqui: I want to know from you what you would think would be a more attractive investment threshold. For example, we talked about how €500,000 million in equity instruments in a company is currently the investment threshold. Would you like to see it reduced to maybe €300,000 so that more people are attracted to the program? What would you say is the ideal threshold as a professional for you, you think? I think that.

Alessia Ajelli: The amount that you mentioned, the €350,000, could be like a good compromise in the sense that we understand the need to put like a threshold. That also helps in choosing the people who are actually interested and have financial resources to actually perform the investment, and therefore leaving any other applicant who might be interested in participating in the program. But at the end of the day, it does not have the sufficient resources. I think that also taking into consideration the amounts of other countries, €350,000 or €300,000 could make for a valuable and correct amount. We have to see if the government is going to take these suggestions that during the years have been proposed, but still, the changes that we have made so far at least, have improved a lot the situation since the beginning.

Salman Siddiqui: And speaking of the government's outlook on the investor visa program and generally the investment immigration program in Italy, what is your sense of the current government's outlook on the investor visa? Do you think they are thinking about changes, or are they making some noise about maybe expanding the program or maybe even reducing it? So could you give us a sense of how they look at investment immigration in Italy?

Alessia Ajelli:  I think that the investor visa program has been proving that is a valuable asset for Italy, because we are actually attracting capital from abroad, which Italy would not be very able to do. So what the government has been considering, but still haven't taken a decision or a position is to introduce or not is, the real estate investment that could qualify for an investor for this type of visa. We know that there are other countries in the European Union that offer this kind of option. I think that there's been a lot of discussions regarding the possibility or not to incorporate and implement this option.

I don't think that in the near future there will be a change in this regard, but it's something that the authorities are considering, which I think that could give some benefit to the program, because one could choose to invest in a company, but someone could be interested just in investing in real estate. So offering this possibility, while also setting the amount of the minimum investment to a pretty high figure, could be an option if the government wants to attract more people.

Salman Siddiqui: Would you like to see that real estate option on the table, or do you think it would bring more business, more clients away? If that was there?

Alessia Ajelli: I think it would definitely increase the number of applicants because we always receive questions from potential clients asking for this particular option, which Italy at the moment does not offer. Of course, the government and the authorities in general should think deeply about the possibility of adding this option. Also, in terms of what would be the impact from a tax perspective, if from a tax perspective, for someone who invests in real estate, there are sufficient tax benefits or tax regimes which could make the investment more attractive. Because one thing is to buy the real estate and then the other is to maintain and pay taxes on it. So it's something that goes by hand.

Salman Siddiqui: There was something else that you also mentioned earlier was about how opening a bank account is a huge challenge for some applicants, especially for Russians and Belarusian, and I've heard that before. Also in other programs, especially in the EU countries. What is the current status? Is it just for Belarusian and Russian applicants who find that trouble in opening an account, or is it also quite common for applicants from other non EU countries?

Alessia Ajelli: Generally speaking, opening a bank account for a foreigner who is not a citizen of any European Union who does not have any, at least a double passport is tricky. What we have seen in the last months, especially for Russian and Belarusian citizens, is that some Italian banks have decided not to even take in consideration the opening of a bank account for those citizens because of the current political and situation there and also with the measures that have been taken by the European Union towards Russia. Now the controls and the verifications and the checks that the banks should carry out would be an enormous amount of time, which at the end of the day would be basically wasted for them because their anti-money laundering section would not approve the file.

So they decided since the very beginning not to take in consideration those applications. And for other foreigners. I think that it's also important to choose wisely the bank you want to work with for the opening of the bank account. There are some banks which are more used to process applications from US citizens, some others from other regions.

So for other citizens, I don't think that there is like an obstacle that prevents them from arriving to the result. Still, the process is going to be pretty bureaucratic and difficult because at the end of the day, they are opening a bank account. In Italy, the bureaucracy is a nightmare for anybody, so I don't think that this situation will expand to other countries just to Russian Belorussian. For other citizens, a solution can be found.

Salman Siddiqui: Speaking of the solution bit. So that's where you come in and you then provide the solutions to your clients. Let's talk a little bit about how do you then guide them towards the solution, and what is the common mistakes some clients make in terms of documentation. And how do you solve that problem then?

Alessia Ajelli: Well, the most important thing is to prepare in advance all the documents that we know that banks are going to ask for the opening of the bank account to make sure that the documents which are prepared and issued abroad are translated in Italian, that the translation is in a format accepted by Italian institutions, that the legalization of the document is made according to the rules applicable in Italy. So make sure that every document is prepared in advance and if not issued in Italian, with the proper localization and translation.

The most important thing is to have a communication with the officers of the bank. So our plus is to guide and be side by side with the client at every step, and make sure that the communication from the bank to the client, and vice versa, is effective, because sometimes banks use some I don't know, for example, words or terms which are not very familiar for a foreigner, so we make like a translation in terms of carrying forward the message that the bank really needs to send to the person, and vice versa, so we can make sure that no time is wasted and no energies are wasted.

Salman Siddiqui: The entire process for this whole application for the investor visa in Italy. What are the current timeframes these days? Is it taking more than six months or maybe a year? What's happening right now?

Alessia Ajelli: Yeah, no, I would not say that the timing is longer than three months. Of course, a huge part of the process is preparing the documents. So I can say that the investor visa committee will issue the decision after 30 days from the filing of the application, which is true, and it's what the law says. But you also have to take into account the timing for the preparation of the documents that you will file along with the application. And this is something that it's a little bit up to the client, because we can guide the client in terms of what documents are needed, how they should be issued, how they should be translated and legalized.

But at the end of the day, one important factor is for the client to be able to get the documents from the banks, basically because those are the most important. documents. So make sure that the bank where the financial resources are kept issues the documents in the format that the investor visa committee will accept, and the content of the declaration signed by the bank officer is acceptable for the investor visa committee because most of the time waste is to modify or integrate some documents which have been filed at the beginning, but that the investor visa committee wants in a different format or with additional information.

Salman Siddiqui: I also want to understand from you the trends of the kind of applicants that you're seeing in the investor visa program. So, you know, we talked about how a conflict in Europe right now, we saw that a lot of people started to apply for the program from Russia, from Belarus. And now there's another war going on in the Middle East involving Israel. So are you seeing more applicants or do you expect more applicants from, for example, Israel to apply for this program? And traditionally, who has applied for the investor visa program? Is it mostly the US or from some other countries? So if you could share some trends that you have observed.

Alessia Ajelli: Of course, I think that from the beginning of the program, the majority of the applicants came from the Russian region. So Russian countries, Belarus, and that part of the world, those are the main sources for applicants that we have seen so far. Israel as well. We have seen many applications coming from that country. I would say the third place would be from the US and then generally from any other part of the world. But I think that the biggest amount, at least as of now, has been from the Russian region. So I don't know actually how it would work since the program has been suspended for now, at least for citizens of Russia and Belarus.

Salman Siddiqui: Let's also now talk about this startup visa program. So Italy's startup visa program appears to be a unique opportunity for international entrepreneurs. If you could just give us a brief overview of the program and its primary objectives.

Alessia Ajelli: The Italian startup visa has been introduced in 2015. The main goal of the program is to attract foreigners who want to incorporate an innovative startup company in Italy, either personally or through the help of a certified incubator located in Italy, so they can also have the help and the resources of the incubator, which could make more substantial their application. The amount of the investment is low in comparison with the investor visa because it's €50,000, but the main goal here is to incorporate a company so you don't have to invest in a company already existing, but present like a program and a business plan for the incorporation and activation of a new company in Italy, which could be qualified as an innovative startup because of its features.

And therefore the main goal is to attract new ideas, basically talented people who want to develop new ideas in Italy and offer them the possibility to do so through the startup visa program.

Salman Siddiqui: Right. And I was looking at the website, I think it mentions that the startup Visa program offers a fast track for non-EU startups. If you could explain how this expedited process works and what benefits it provides to startup founders.

Alessia Ajelli: Sure, it's expedited because all the application is handled digitally. So same as the investor visa program, but differently from any other type of visa provided by Italian law. The application is filed through a dedicated web portal. The committee that is in charge of evaluating the applications should and actually does issue their decision within 30 days from the submission of the application, which is a very short time compared to other types of visas, and everything is carried out through the web portal.

So then the applicant goes to the Italian embassy or consulate and applies for the visa, enters Italy and completes the process in Italy. And this is a very big step forward if you compare the process with other typical and standard visa process for other types of visas, because the waiting time to get to the point of having the possibility to get the visa in the passport and enter Italy in the most cases is not 30 days.

Salman Siddiqui: And if you could explain what is the visa that they get, is it just for one year? Is it for three years? And also I should have asked for the investor visa as well. It's a renewable visa, right, that you have to renew every year or every three years.

Alessia Ajelli: For the startup, you usually get a one year visa and then you are able to renew it as long as the conditions for the issuance are met. You don't renew the visa, you actually renew the residence permit that is granted to you.

The startup visa falls under the category of Self Autonomous Work Visa, so it's linked to the number of quotas available each year set by the quota mechanism. So it's a self-employed visa.

Salman Siddiqui: So sticking with this sort startup visa thing, Italy is known for its vibrant startup ecosystem, especially in cities like Milan and Rome. So how does the startup visa program integrate entrepreneurs into this ecosystem, and what support can they expect from the government and local organizations there?

Alessia Ajelli: Yeah, there are a lot of local organizations, a lot of incubators which are present all over Italy. So startup founders may want to apply for seed programs or other acceleration programs offered by those incubators. And so they get the consultancy and all the services that the incubator can provide. This will help, of course, developing the business once they are landed in Italy with their project.

There are always opportunities in terms of financings and other benefits that a startup company can apply for because they are dedicated to these kind of companies. Overall, I would say that being a startup founder and startup company in Italy is quite beneficial in terms of tax benefits, in terms of financing, access to credit and access to services provided by incubators.

Salman Siddiqui: This program has been there for 2015, right? So it's a popular program compared to the other visa options that we have. Or if it's not, what needs to change to make it popular in your opinion?

Alessia Ajelli: I think it's popular in terms of the interest shown by potential applicants, because it's very attractive for founders who want to incorporate a business in Italy, the amount of the investment is not as high as the one of the investor visa. And the startup ecosystem in Italy is quite developed, so it can be helped once they arrive in Italy.

The only thing that may prevent them to use this particular path is the fact that it's not an unlimited program, in the sense that each year, the Italian government sets the amount of the quotas that can be dedicated to self-employment visa. And since the startup visa falls under the self-employment category, it's not open to anybody within the number of quotas dedicated for each year. So that's I think it's the only negative thing when the founder wants to evaluate the different options.

Salman Siddiqui: Finally, on this point of the startup visa, I would also like to know from you the kind of startups the Italian government is interested in. Are there any specific industries or sectors that align with the program's goals? I know a lot of countries talk about the tech side of startups are the most popular. Anything to do with AI now is a buzzword. Is a guaranteed supposedly a route to the visa? Is it the same here?

Alessia Ajelli: Yeah, it's pretty much the same. I would say that the high tech startups, which are active, especially in sectors like logistics, I.T., life sciences, clean tech, they're the most considered and most attractive for the Italian government.

Salman Siddiqui: We're coming close to the end of our show. But before I let you go, I want to talk to you about this announcement that I've heard about changes to the tax system Italy has. Firstly, what is happening? Is it true that this is going to change, like hugely or is it just a rumor? So please, if you could enlighten our listeners about it.

Alessia Ajelli; Yeah, of course. First of all, in terms of tax regimes which are beneficial and attractive for foreigners, Italy offers to the flat tax regime, which is the most interesting one for investors, visa and investors in general, because it's like the flat tax of €100,000 to be paid, notwithstanding the amount of income generated abroad. And this regime is not touched by the last changes that are going to be implemented by the financial law.

Salman Siddiqui: And it has a particular name, right? ”Lavoratori Impatriati”

Alessia Ajelli: This is the second one, which is more, I would say, subordinate workers or autonomous workers who come back to Italy or come to Italy after residing abroad for a certain amount of time, who at least until now, could have access to 70% or 90% discount of the taxation in terms of the total income to be taxed, this is the one that's going to be affected by the changes announced by the Italian government.

They are under discussion in these days, but the product of the changes that we have seen so far, it's a revolution in the sense that not only the amount of the tax benefit is reduced by 50%, but also the individuals who can benefit from this tax regime is going to be limited because, for example, someone who was working for a company abroad and then moves to Italy to work for a company of the same group, at least in the current version of the law, won't be able to access this tax regime. And this is something particularly affecting highly qualified workers who work abroad for a company of the group and then are transferred back to Italy, or offered to come back to Italy to work for the same group.

If they cannot access this beneficial tax regime, they won't choose to be back in Italy. So this, of course, will have a negative impact on the attraction of human capital. The changes are not final; we expect by the end of the year to know exactly how the new regime will look like, and what adjustments will be made.

Salman Siddiqui: And also have a question about this recent. I think it was a Reuters story that I saw, which talked about how Italy plans to charge all foreigners €2,000 for health services. Does this apply to foreign investors or startup founders or skilled workers, or is this for a particular group?

Alessia Ajelli: Yes. No, it's just for a particular group of foreigners who moved to Italy. If you get a visa for work as a subordinate worker, autonomous worker, investor, you have the right and obligation to register with the national system. The registration is free of charge. So you then access the national system. But then if you are a foreigner, for example, gets the elective residence, visa holders of the elective residence visa have the right, not the obligation, to register with the national system. So far they have been obliged to pay around €350 per year. What has been done is that the amount of the registration fee is going to be higher, up to €2,000, but just for a limited number of individuals with a particular visa and residence permit, workers in general would not be affected by this change.

Salman Siddiqui: We've come to the end of our episode. There are so many other things that I wish we had the time to discuss. But before I let you go, I'll give you 30 seconds to make your pitch for Italy's startup visa program, investor visa program, all the other programs. And how would you tell people that, hey, this is the program to go for.

Alessia Ajelli: Thank you for the opportunity. I think that for well, anybody knows the beauties of Italy in terms of landscape, in terms of food, in terms of the social system. I think that with the investor visa program and the startup visa program, you also have the opportunity to invest in a business already existing and running in Italy, or start your own business with a lot of help from the Italian authorities.

So we have seen in the years an increase of the numbers of applicants and the numbers of positive applications of people who have actually gained and obtained the visa and the residence permit. We are available to guide you through the entire process, which at times may seem difficult to understand, but with our guidance, of course, you will find a solution most suitable for your needs.

Salman Siddiqui: Thank you so much Alessia for being part of this show and learnt a ton from you. So you know it's always a pleasure to talk to you. And in the end, I would want to make a shout out to our listeners that please stay tuned to our podcast. We'll be bringing you guests from all around the world to talk about more investment immigration programs. So stay tuned and thank you.

Alessia Ajelli: Thank you very much.

Salman Siddiqui: You've been listening to the Investment Immigration podcast by Uglobal.com. Join us again soon for more in-depth conversations exploring investment immigration opportunities from around the world.

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