Italian investments in the USA: end-of-year review

What have the opportunities been and what will they be for Italian investors in the United States: the so-called “Promised Land” of business?

Let’s have a walk through it with this quick recap.

Financial investments

Thanks to the new developments in US domestic policy, investing in Wall Street has, once again, proved to be a great opportunity for Italian entrepreneurs thanks to both a renewed confidence in the markets and the improvement of the dollar/euro rate.

The US Stock Exchange is still a reference point for global investment, despite the rise of other stock exchanges (China, Brazil, South Africa, Korea).

By analyzing equity returns, the increase of bond yields and the growth of corporate profits, the trend is very likely to stay the same in 2018.

We can, therefore, conclude that the growth of US economy is strong and consistent and that, despite the international issues with North Korea, markets are still promising (though investment diversification is still recommended).

Real estate investments

Although the market experienced a downturn during the year, real estate is generally booming in the US. Both property purchases and new construction projects have been attracting foreign investors (including Italians). And prices keep rising.
According to experts, the American cities where it would be more convenient to invest are Fort Worth and Dallas, Texas and Raleigh, North Carolina (which has been elected as the third best American state to do business in 2017).

However, we would like to focus on the South Florida area (particularly the Miami district). In 2009 real estate prices literally dropped, but during this 2017 growth has boosted, for both real estate trading and other types of multi-millionaire investments (e.g. the tunnel construction from Miami port to the Convention Center).
Important to remember: holding a property in the US does not automatically entitle you to the Green Card and, in order to purchase, and you need to have a bank account in the US.

Export

“Made-in-Italy” export has always had the US as one of its biggest buyers. The USA is the third destination country for Made-in-Italy products, after France and Germany.
In figures: in 2016, Italian SMEs exported goods worth $ 44.159 billion to the USA.
In 2017, despite some “protectionist measures” were announced, Italian export has been experiencing non-stop growth. Surely due to the increasing appreciation of our products, and to all those Italian entrepreneurs who have become increasingly aware of how important it is to consider some essential aspects such as:

• Knowledge of the market and how to best approach it (by being aware of its cultural, communicative, logistical and distribution aspects).

• An increasing local presence to best interact with their US partners.

• A deeper awareness of their competitors and the industry trends.

Internationalization

Given the excellent export results (and the positive forecasts), many Italian companies have decided (or are currently considering the idea) to relocate to the US, at least from a commercial point of view.
When assessing all the different risks a company may face when going international, the following should always be included:

– Economic risk
– Political risk
– Exchange risk

The US is certainly listed as a low-risk country, since, in 2017, internal variations have not been significant enough to shift the “alert level”.
Starting-up a business in the United States is faster and less expensive than in Italy but bear in mind that legislation may differ (remarkably) from State to State.

Tax Cuts and Jobs Act

Last but not least, we cannot but mention the Tax Plan, which has been at the center of the public debate and has grabbed a lot of international investors’ attention as well.
As many may already know, the recent Republican bill would, if approved, cut the US corporate tax rate from 35% to 20%. Other important points:

• Deduction limitation for executive compensations of over $1 million

• One-time tax payment for US multinationals on overseas profits

• 10% US tax on foreign subsidiaries’ income

The Tax Plan will probably generate $1.5 billion income over the next ten years by cutting taxes on employees and businesses. With certainly positive spillover effects on the domestic market.

If you’ve decided to invest in the US because you believe (and you are right!) it is still a great opportunity for your business, you will definitely need a specialist international consultant who can support you in all the administrative, fiscal and legal aspects this project entails.
We are here to help you! Contact us now.