Bank Account in ItalyLast year, opening a bank account has become one of the most difficult activity for a foreign investor. And I am not speaking just about Italy. Terrorism, money laundering, offshore banking, in order to (barely) reduce these phenomena, banks have made miserable the life of any honest entrepreneur. In this post I will try to help, at least for opening a bank account in Italy.

Rule no. 1 : It’s not the size of the fish, it’s the location of the pond.

A couple of years ago I had to work very hard to open the bank account of a big Chinese company and a big Indian company, because – guess what? – they were a Chinese company and an Indian company.

In both cases the director saved just a few hours in their agenda to go to the bank, and the last day of the Italian trip. We are speaking of two companies with a turnover of hundred millions, one of the two has more than a billion revenue in fact. Running a small a small firm, I usually help this company to start the business, than they move to the traditional (and more expensive) big law firms.
They were both used to work with big banks but none with a subsidiary in Italy. They both went to the bank counting on their fame. And they were both shocked to find that (i) nobody knew about them in Italy and (ii) none of the managers of the bank wanted to check their size on internet (this last issue is directly connected to Rule no. 2 below).

And lesson no. 1 is …

You can be famous in your country, you can run an international empire, if you are a big fish outside but you are new in the Italian pond, you need to prepare the meeting in advance like everybody else.

Rule no. 2 : Never forget that you are an entrepreneur. They are NOT.

Your company can bring great business to the bank, I agree. So what? The bank manager isn’t paid on commission. The Italian culture punish mistakes and doesn’t reward successes. If 9 companies on 10 bring millions to the bank, and the last company no. 10 made a small fraud, the manager will lose the job or – worse – will be downsized to a low level activity for years.

Don’t get me wrong, I have met many bank managers that are very business oriented and aggressively looking for clients. But they are usually not rewarded enough for their attitude, and sometimes they don’t have internal procedures to help you even if they want.

And lesson no. 2 is …

Don’t be shocked if the manager refused to setup your bank account. Give him paperwork to prove that you company is good, the more papers the better, and you have better chance to open your account if you talk business.

Rule no. 3 : Going in person to Italy or open the bank account on distance?

A few years ago it was very common for us to open the bank account on behalf of the entrepreneur. Our client was used to come to Italy only after a few months, when the business was setup and usually he had to meet a few candidates to employ as local director.
This isn’t true anymore. Many banks refuse to setup an account without meeting the client in person. Thus you should not only fly to Italy but also bring all the corporate documents to prove that (i) your company exists (ii) your company – although newly born – can bring good business to the bank (usually bringing documents of the mother company in your country) (iii) you are the owner/director of the company.

And lesson no. 3 is …

Try to go to Italy in person. Organize the meeting in advance with your lawyer because the bank will require many of these documents translated and sometimes legalized.

What to do if you really don’t have the time to open the account in person?

As an alternative – if you really can’t fly to Italy – you can check with your bank if they have a subsidiary in Italy. Because your bank knows you, in theory its sister company in Italy will be happy to take you on board. I stress the words “in theory” because Rule 2 is always around the corner (see above).

Moreover, even if you have two managers willing to help you, don’t underestimate the language barrier. If your manager doesn’t speak Italian, and the Italian manager doesn’t speak any common language, you can see quite a few weird phone calls and email exchange. They can be amusing but they are time consuming. And you need a bank account as soon as possible to start trading.

So if you plan to do business soon, try to go to Italy in person, organizing the meeting in advance with your local lawyer or chartered accountant.

Documents required to open a bank account in Italy

Here is a list of the most common documents required by the bank to open your account:

  1. Director’s passport or European Union identity card. Identity card issued outside Europe are rarely accepted. Moreover, if your identity card has fancy colours or looks like too much as a credit card (such as the ID of The Netherlands) it can be not accepted. In short: bring the passport every time you can.
  2. Director’s Italian identification code. Any director, even foreigners and non residents, is required to have one.
  3. Certificate of good standing of the Italian company. This certificate prove that the company exist and show the name of the directors and shareholders. In Italy ask for a “Visura” or a “Certificato della Camera di Commercio”.
  4. Certificate of good standing of the major shareholders (see the “Matrioska Law” below)

The “Matrioska Law” applied to opening a bank account

Due DiligenceI am sure you have seen many times a Matrioska, the Russian wooden doll like in the picture. When you open one of these dolls, you find another smaller doll. And so one, until you have no more doll to discover.

From 2011 Italian banks are required to know any shareholder with more than 20% of your company. So if your foreign company owns more than 20% of the Italian company, prepare to bring the certificate of good standing of your foreign company.

And – this is the frustrating part – if a shareholder owns more than 20% of your foreign company, be prepared to bring the certificate of good standing of this shareholder too. And if it’s owned by a company for more than 20% … you see the picture.

The Italian bank is required to open the Matrioska’s doll one after the other until there are no more hidden dolls. Well, at least no dolls that own more than 20% of the shares.

If you have a complex structure, or if you use offshore companies, it could become more challenging. Prepare to be very patient, and email document back and forth until the bank confirm in writing that the documents are fine.

Opening a bank account can be very frustrating, but once is done you are part of the game. Enjoy.

One last note: if you see the banker looking at you in complete confusion, you have probably quoted the Matrioska law. Well, this is just a nickname among lawyers. The Italian Parliament has never officially approved a law called “Matrioska” (but they should have, I love this name).

Image source: 401(K) 2012 at Flickr.com and Virgirm at Flickr.com

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