Nicola Serragiotto: Investing in Italy is not easy for American investors but there are huge margins for improvement.

Edoardo Bonatti
25 novembre 2019


Nicola Serragiotto is the President of the Italy-America Chamber of Commerce West, Inc. since 2018. He and his companies, WERYO, Cibeso, Veneto Hills and AXO America, have been present in America since 2004. He has been involved in various sectors, occupying the top positions within these companies, while always keeping an eye out for potential synergies between the Italian and the Los Angeles economy.

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The interview

InvestorVisa: Aside from your role as the Chamber’s President, your resume is extraordinarily diverse. How did your experience as an Italian entrepreneur in America influence how you approach your job as President?

Serragiotto: I consider myself lucky, as I had the chance to build up my knowledge of the entrepreneurial world by working in many different sectors and occupying various roles. This first-hand experience gave me a deeper understanding of each entrepreneur’s background, and thus I can better connect with my colleagues, with which I share the same joys and concerns. At the same time, dealing with and comparing many different sectors allows for some “cross-pollination” between them. Now, as IACCW’s president, I can count on an even more privileged point of view because the consciousness of new sectors and entrepreneurs is growing exponentially. In the end, my job is to “connect the dots” providing very practical solutions to actual necessities. In this, I try to hit the ground running and then adapt, while having a clear goal in mind.

Saying that your Chamber operates in the United States can be misleading. The entire West Coast falls under your purview, including the State of California. The latter is essentially an alternative reality when compared to the rest of the country. What does operating in the Californian microcosm entail for a Chamber of Commerce? 

If we were to consider it an independent country, California would be the fifth-largest economy in the world. The Los Angeles metropolitan area alone is worth well over 50% of the Italian GDP. This means that, depending on traffic, I can cover an area of immense potential in just two hours. This has a positive impact on the variety of business opportunities at our disposal; on the other hand, dealing with a very fierce and dense competition puts us at a slight disadvantage. In this environment and with nightmarish traffic, the Chamber, like any other organization, is going to face tremendous difficulties when planning an event or trying to reach a qualified audience. However, here on the West Coast, many projects are steeped in a pioneering spirit, so much that I say that we are so far out west, that we are the first eastern country, where the sun rises. In Los Angeles, we are constantly influenced by the entertainment industry, which moulds our mindset and forces us to be as creative as we can in everything we do, starting from events promoting Italian cuisine to the gala honouring Lina Wertmuller and her Academy Honorary Award, which we just celebrated.

Some states under your responsibility, for example, Alaska or Idaho, are more peripheral, at least in the Italian collective imagination. Is there any tale, involving companies operating there, that deserve to be told?

The Italian presence in these states is not very strong and, if there is some, it is usually mixed with local companies. Therefore, it is rare for us to find an Italian business with which we can cooperate. Furthermore, following the reform of the system of the Chambers of Commerce, as carried out by Minister Calenda during Renzi’s government, funding has been significantly cut, leaving us in a situation where we must be selective in who to serve and, of course, we are forced to concentrate our efforts in higher density territories.

The United States is one of the favourite destinations of Italian investors. What do their overseas counterparts see in Italy and, above all, what do they seek in a potential foreign partner? Are there marked differences among the mentalities of the investors of the different states in which the Chamber operates? 

Italy has some advantages, such as the low cost of employees in scientific sectors. They are highly educated, and their salary may even be a fifth of that of a Silicon Valley employee. Besides this, Italian unique industrial and artisan districts, bustling with constant innovation and boasting a high production quality, represent another of Italy’s strong points. I think that, in Italy, Americans are looking for the most sought-after skills in the job market, but they would like to access them without assuming too many risks and therefore are not keen on direct investments. A partnership of any kind will be the preferred option.
I think that the higher cultural level of coastal states when compared to the one found in the interior, can somehow favour a higher affinity for foreign investments, but I have no data to corroborate this claim.

Promoting Italian economic opportunities in such an unbalanced group of states must not be an easy task. Did your American audience reach a satisfactory level of awareness when it comes to the opportunities offered by our country? Is there room for improvement in this regard?

There are huge margins for improvement. I think that some Italian companies are one of the “best-kept secrets” in the business world, but our culture constrains our ability to promote ourselves abroad. Our false humility, coming from a distorted reading of Catholicism, profoundly damaged Italians’ self-perception. I also think that the fundamental problem is that we have politicians who want to be administrators, unlike the USA, where administrators have a habit of acting like politicians. This means that with each change in the government how Italy presents itself abroad changes too. I can assure you that, as for how Italy is perceived, there are more discrepancies inside the Italian promotion system than among American states. As an American great-grandson of Einaudi told me: America grows because there is a stable and professional administration making up for the fluctuations in politics.

Many start-ups call California their home. Do you think they can establish favourable partnerships with their Italian counterparts, even when they often are small, if not micro, businesses? 

No. All that is said in Italy is just demagogy. You need to be here to play the game in the big leagues and, above all, play a game that violates the rules of common sense. In Italy, nobody is crazy enough to lose billions of dollars in a venture he believes in. This kind of crazy people live in California, and that is why we have Google, Amazon, Facebook, Uber, etc. Our message must be heard loud and clear: coming here means be willing to grow. Small is not beautiful.

On par with innovation, the Italian tradition also represents a valuable asset to attract foreign investments. Does the American entrepreneur favour one over the other?

Italy’s real assets are its university-educated science workers and those formed by working in highly specialized districts. I do not deem the Italian tradition very attractive, if not for tourism, which in any case is much less significant for the country than we like to think, and is a sector with a low growth perspective. It is a political slogan, but the truth is that manufacturing is our nation saving grace.

You also work in the luxury tourism sector. Given your experience, do you think that an American may want, after a vacation there, to move to Italy, perhaps even purchasing real estate of some relevance? Alternatively, if their economic capacity allows it, could they seek to enter directly into the Italian hospitality sector?

We are organizing a conference in mid-2020 precisely on this issue. I have met, both in Italy and in the USA, some of the sector’s players. We also have been discussing the matter during the brainstorming sessions of the Chamber of Commerce’s board of directors. For the time being, I believe that the Italian luxury hospitality sector can be a target for American investments only if compliant with American criteria. The ground rules are quite easy to explain: the return on investment must be 6-7%, and the rule of law must be granted. Under these conditions, investing at least twenty or thirty million is the norm. For an American coming to Italy to renovate a property and fighting with the local and sometimes corrupt bureaucracy is unthinkable. Italians intending to take advantage of this opportunity must navigate the bureaucratic jungle and present the property as ready for use.

Private individuals would also have the financial resources to move to Italy or at least spend part of the year there. Purchasing a villa worth five or ten million euros is within the financial possibilities of thousands of Angelenos, but we have to promote our country better and explain how Italian bureaucracy works.

The Italian investor visa allows the entrepreneur to obtain an extremely advantageous visa after investing 500,000 or one million euros in an Italian start-up or company, respectively. Can this incentive be a decisive factor for a West Coast American entrepreneur planning an investment in Italy?

No. Keep in mind that Americans are taxed for life wherever they live and on all their incomes, so investing abroad is not easy, as much reporting is required. In this sense, the United States is a panacea for accountants. Moving to Italy not because you love the country but only to “follow” your half a million does not have any practical sense, as you must file complicated tax returns and risk substantial fines even for an omission. I think that American investors would consider a reform of the bilateral treaty on taxation as a better incentive. In doing so, we should create a kind trade partnership free from international bureaucracy. In practice, it should be possible to create a specific legal form for companies or identify some type of investment and then subject them to the tax regime of their country of origin rather than to one of the target countries. I am a supporter of the free movement of persons, goods, and capital and therefore I believe that visas should not be necessary but, if they are, they should always be a benefit for the applicant regardless of any additional condition. The Berlin Wall, just to mention a recent case, teaches us that the removal of borders increases wealth, although at the beginning there may be some inconveniences. Providing a more advantageous visa following an investment, which also is not very significant, is a form of international prostitution. Entrepreneurs usually invest abroad because they find fertile ground for their business, not because they can apply for a visa. As it happens in the USA, the opposite is also true for the EB-5 green card. Those who want to immigrate to the USA invest half a million (often as a non-repayable contribution to farcical projects), but it is just a way to move to the country, they do not care about the money.

The same type of visa is also reserved for patrons who donate towards the preservation of the Italian cultural heritage. May higher-income persons be willing to engage in this kind of philanthropy?

I know a person in charge of Friends of FAI, who engage in philanthropic work for the preservation of the Italian cultural heritage. However, I believe that Italy is incapable of promoting its cultural assets, through the creation of sufficient income to be self-sustaining, without seeking the charity of foreigners. The Louvre alone has a higher turnover than any Italian museum. How is it possible? Furthermore, if tourists are willing to spend several hundred dollars to go to Disneyland, I do not think that charging tourists to access our cultural wonders, such as Venice, would be outrageous. As I said before, living in Los Angeles, we got used to the importance of image and presentation. Italy still has a long way to go in understanding how to present itself to the world, “sell itself” and then preserve its heritage on its own.

The last measure implemented by Italy offers, to those who transfer their tax residence in the country, a favourable tax regime, a flat 100,000 euros per year, on foreign income. Family members can also benefit from the scheme for an additional 25,000 euros per year. The “Growth Decree” also introduced a subsidized regime taxing at a 30% rate, or 10% in some regions, income produced in Italy. Are these appropriate measures for the American investor intending to do business in Italy or are non-factors, considering US taxation?

This tax law is, in theory, neutral for Americans, who are subject to global taxation on their incomes, but I cannot say for sure. We should further investigate this topic with a tax consultant, perhaps during a nice dedicated conference. However, we always come back to the starting problem: people emigrate not so much for tax breaks, but because they found a community in which they like to live. In California, we saw many leave the state because it is too expensive, then today I read an article explaining that many are returning. A footballer like Ronaldo has better incentives to move to Italy because there he will find a work environment and a community conforming to his expectations. If someone else will benefit from the law is because they were already thinking of moving.