Author: Andrea Sergo
The story of an Italian, who decided to base his company’s headquarters in Slovenia
I’m an Italian and a few years ago I decided to move to Slovenia. After graduating, I wanted to do something creative. I spent some time in the music business (I played in rock groups in UK and all over Europe), but then I realized that I am much better in arranging paid performances than in singing. So I decided to start my own business, since then I am singing only in the shower.
I have settled down in Slovenia, mainly because it is not far away from home in Italy, and as it seemed to me the Slovenian system is more similar to the Anglo-Saxon one, which I know very well because I have lived in the UK. Of course, what also attracted me in Slovenia was the lower corporation tax rate.
The taxation of companies in Italy has indeed reached an incredibly high level and entrepreneurs are often not rewarded, as in many cases companies are better off not increasing their sales, since they can fall into a higher tax rate category. Simply put: if you earn more, there is a risk that you could earn less. This is the result of an unhealthy system, which is dominated by the rule “find loopholes and evade taxes”. Or using a metaphor: if the mechanism is running smoothly, it need not be greased, but in many countries “greasing someone’s palm” unfortunately is still a regular practice.
In my opinion, the main difference between Italy and Slovenia is the fact that Slovenia (as most other Western European countries) has generally very clear procedures that are necessary for starting a business or for obtaining documentation, while in Italy there is a high level of bureaucracy and poor online access to documents. Usually, access to online information is a major factor in business. All this speeds up processes and because you do things faster, you can concentrate more on the mission of your business.
My company is known primarily for the distribution of the Danish line Biokock (fire starters for fireplaces and grills), which can be found in large distribution chains, as well as in smaller shops, so I have experience with major players like Obi, Bauhaus, Tuš … as well as with smaller village shops. I am constantly adapting to different markets and situations. My experience is that everywhere there are good partners and bad partners and that everywhere the problems are more or less the same.
However, I would like to mention the problem with late payments. It is very difficult to recover your investment if bills are not being paid within the agreed time. In many cases, due to legal costs and lack of common European laws, struggle for a repayment simply does not make sense. I very much appreciate how some European countries have solved this problem: if the buyer is late with the payment, the creditor is forced by law to notify the state, which prompts the debtor to pay, and issues an invoice for the payment of interest in the form of tax. That’s how the state protects creditors.
As regards the documentation needed to start a business, I was strongly impressed by the fact, that in Slovenia you can open a single-member company without having to visit a notary (this is usually expensive). Since I am dealing with international trade, I also find very important that after selling the imported goods VAT is refunded really fast. Let me explain: if you import goods from third country, it is necessary to pay customs duty and VAT, levied on the value of the goods. In Slovenia, when you sell these goods, the state refunds the VAT by bank transfer in less than a month. In Italy, it is a whole different story, as the state is usually delaying refunds for several months, and sometimes you are even told that you will only get a tax credit note. But what if you finish the year with zero or low-profit and you are not liable to pay tax? In that case, the money is actually lost for years, which is obviously not acceptable.
I must say that in terms of access to credits I haven’t noticed major differences between Slovenia and Italy. Banks are simply not the right answer for me. If you do not have the initial money, you do not get a loan, so the question is why would you be searching for a bank loan, if you already have the money. In short, I think this is not a solution. Therefore, starting a business is very difficult, in terms of initial investment as well as long payment terms. For many big players in Italy and Slovenia three- or four-month payment periods have become an established custom, while in most of the Europe they are much shorter. My advice is to move step by step with your own money and turn to a bank as late as possible.
Even if everything could be improved and perfected, my general feeling is that being a foreign entrepreneur in Slovenia is still easier than being a foreign entrepreneur in Italy. Due to the simple and stable rules, transparency and trust in the institutions. These are the aspects that create a hospitable business environment for all who really want to invest in Slovenia.
Andrea Sergo is the director and owner of the company “Fokus Plamen”.