Why Choose to Set Up Business in San Marino
San Marino, one of the world’s smallest countries, is located within Italy where the huge Mount Titano (756 meters above sea level) dominated the landscape. Just like Vatican City, landlocked San Marino is an independent nation-state within Italy. San Marino is the home to a population of nearly 34,000. They can access San Marino from central Italian cities like Rimini, Bologna, and Florence without border formalities with Italy. Therefore, it is great to set up business San Marino and be the first investment destination for you.
The Overview of San Marino’s Economy
As a jurisdiction within Italy, San Marino’s economy can closely link to economic of Italy. San Marino became a member of the United Nations Organisation in 1992. Though San Marino is not an EU member, it maintains a customs union agreement for trade with the EU. Furthermore, San Marino signed 22 double tax treaties (DTTs) based on the OECD Model Convention. Countries that signed DTTs with San Marino are Austria, Azerbaijan (not ratified yet), Barbados, Belgium, Croatia, Cyprus, Georgia, Greece, Hungary, Italy, Liechtenstein, Luxembourg, Malaysia, Malta, Portugal, Qatar, Romania, Saint Kitts and Nevis, Serbia, Seychelles, Singapore, and Vietnam. Besides, San Marino has inked 31 Tax Information Exchange Agreements (TIEAs).
Foreign investment has been one of the important pillars of San Marino’s economical mainly due to the country’s low corporate taxes and low taxes on interest earnings. San Marino’s income tax rate is about one-third the average EU level – a relatively low-income tax rate if compared with other countries in the region. Tourism, banking, and manufacturing sector are the important pillars of San Marino’s economy. The three sectors contribute a huge chunk of the country’s GDP. The tourism sector is one of the major contributors to the country’s GDP with a steady record of tourists visiting the country annually.
Meanwhile, the manufacturing industry has been the backbone of San Marino’s economy with key sectors. These key sectors are tiles, building materials, quality spirits and wines, clothes, furniture, fabrics, paints, as well as electronics. The banking sector in San Marino, at the same time, is an integral part of the Italian banking system and the important source of government revenue. Tax incentives (granted to the companies) and the favourable interest rates are the determining factors behind the growth and development of the banking industry.
Advantages of Doing Business in San Marino
It ranked 92 out of 190 economies in the 2019 World Bank annual ease of doing the business rating. San Marino has a vibrant business environment with a simplified and straightforward company incorporation process. San Marino’s tax regime is relatively competitive if compared with other countries in the region. In San Marino, they require new companies to pay tax at 8.5% for the first 6 years of their incorporation. After the first six years, the tax rate is fixed at 17%. It is also one of the lowest and competitive corporate tax rates in the world.
Furthermore, all businesses in San Marino are eligible for the following tax incentives:
- taxable income has been reduced from 40% to 90% up to the value of capital goods or real estate investments;
- deduction of tax losses from taxable income capped at 80%;
- the tax rate for dividends paid to individuals is 5%;
- the tax rate for royalties paid to non-residents is 20%.
Despite its small size, San Marino has a vibrant investment climate and favourable business environment. The investor-friendly business environment has long been the reason that attracts foreign investors into the country. If you are exploring opportunities to expand your business to European countries, Then, San Marino can be the first investment destination for you to establish a foothold in the region!