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BUSINESS

Here’s how to apply for €24,000 to run a business in Italy

The small Italian region of Molise made headlines around the world when it announced it would offer grants to people moving to its smallest villages to set up a business. Here's what you need to know to apply.

Here's how to apply for €24,000 to run a business in Italy
Fancy moving here? Capracotta in Molise has under 2,000 residents. Photo: DepositPhotos

Since announcing its 'active residency allowance' scheme earlier this month, Molise's council has found itself inundated with inquiries from people interested in taking up the offer of €24,000 over three years to move to a town of under 2,000 people and run a business.

The aim is to repopulate shrinking villages in Italy's second emptiest region, where more than 100 out of 136 municipalities have fewer than 2,000 inhabitants.

READ ALSO: Seven reasons Molise (yes, Molise) is Italy's best kept secret

The regional council of Molise has since released further details about how to qualify – and begun accepting the first applications.

Here's the lowdown.

Who is eligible?

Molise says it will consider applications from any adults outside target towns: in other works, people who live either in an Italian municipality with more than 2,000 inhabitants, or outside Italy altogether.

Italian citizenship is not a requirement. But – and this is a big but – you must be able to move to your chosen town in Molise within 90 days of your application being approved. 


Villages like Cerro al Volturno in Molise have seen their population shrink. Photo: DepositPhotos

If you're from a country outside the EU and require a visa to live and work in Italy, that doesn't leave you much time to apply for and obtain your permit.

Nor does the region of Molise have the power to offer special visas for applicants. You must obtain your own visa via the normal channels and subject to the usual conditions.

You must also commit to running your business for at least five years – the last two of which without the allowance – or face paying back the grant.

How do I apply? 

If you're considering it, you have until 12:00 Italian time on November 30th, 2019 to apply.

Applications should be sent to the following email address: [email protected]

Applications must be sent by PEC (posta elettronica certificata or 'certified email'), which means you'll need to set up a PEC address if you don't have one already. Costs usually start at a few euros per year for a basic PEC account. For an official list of providers, see here.

The subject should read: “Public notice – Active residence income for access to the Fund in favour of individuals who are going to reside in municipalities with a population up to 2000 inhabitants” (or in Italian, “Avviso pubblico – Reddito di residenza attiva per l’accesso al Fondo in favore di soggetti che vanno a risiedere nei comuni con popolazione fino a 2000 abitanti“).

Your email must include:

  • A completed application form, available on the region's website;
  • A copy of a valid, government-issued ID;
  • Your CV;
  • A business plan for the company you intend to start in Molise, including the location, the financial details and how you'll make it feasible.


Castel San Vincenzo in Molise. Photo: DepositPhotos

Which applications will be successful?

A special commission will assess all the applications and select the ones they think will benefit Molise most.

The council says the criteria will be the following:

  • How well does the planned business fit with the local town?
  • How likely is it to survive?
  • How soon can it be set up?
  • How many people will it employ?
  • Will it use existing property?

Points will be awarded for each criteria, with the maximum going to businesses that in fit in with the location and community, that are feasible and can be established in less than one month, that involve more than five people and will be based in existing real estate rather than requiring new building.

Proposals must score at least 60 out of a possible 100 points to be considered. Here's a full breakdown of how points will be awarded:

When choosing between applicants with the same score, the council says it will give priority to the people with the lowest income, highest number of dependent children and youngest age.

How will the grant be paid?

If you're lucky enough to be selected for the active residency allowance, you'll receive the grant in instalments of €8,000, payable once a year for three years.

To get the first payout, you'll have to produce a copy of your residency certificate from the town registry office showing that you've officially transferred your residence, as well as proof that you've rented or bought a place to live and (if applicable) a place to run your business.

You'll have to show the same documents, plus utility bills and a detailed report on how your business is going, after 12 months and again at 24 months to qualify for the following instalments.

Then you have to promise to continue running your business in Molise for at least two more years.

Colli al Volturno, Molise. Photo: DepositPhotos

The region reserves the right to check up on you and your business at any point throughout the five-year period and, if they find you've broken the rules, they can claim back the allowance plus interest.

For more information, including a list of all eligible towns, see the region of Molise's website.

Please note that The Local cannot help you apply for the active residency allowance. Please address all your inquiries directly to the region of Molise via [email protected].

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PROPERTY

EXPLAINED: Will Swedish housing prices plummet as interest rates rise?

The Swedish financial supervisory authority warned on Wednesday that rising interest rates could lead to house prices falling "quite sharply". How likely is it that this will happen?

EXPLAINED: Will Swedish housing prices plummet as interest rates rise?

What financial circumstances might make it difficult for borrowers to repay loans?

With an increase in the cost of living, including rising interest rates and rising electricity prices, there are plenty of circumstances that may make it difficult for borrowers – especially those holding large debts in relation to their income – to repay their mortgages.

Households with large debts are therefore more sensitive to an increase in interest rates, according to the Swedish financial supervisory authority, known in Swedish as Finansinspektionen (FI).

The agency published its annual Swedish Mortgage Market report on Wednesday.

“Large debts also mean a higher sensitivity if you were to suffer unemployment during an extensive recession,” said Henrik Braconier, the authority’s chief economist.

Other factors that could stretch borrowers’ finances include rising energy prices, higher food prices, and growing inflation.

“Apples, oranges, tomatoes have gone up by 30 percent,” said Américo Fernández, a household economist at SEB. “Wheat is coming from Ukraine and it’s getting harder and harder to get hold of.”

READ ALSO: 

Will homeowners become unable to repay their mortgage loans?

Not according to Fernández.

“One of the last things Swedish households will fail to make their payments on is their mortgage and their houses,” he said. “They would rather decrease their spending on vacations abroad, or restaurants.”

The FI report noted that most new mortgages include margins that allow for fluctuations in the borrower’s finances. This means that mortgage holders have a cushion that allows them to handle financial changes.

“Our stress test shows that they can handle increases in the interest rate and also loss of income,” said Magnus Karlsson, FI’s director of macroanalysis. “New mortgages have margins in them calculating discretionary income, and will be able to absorb increases in interest rates and loss of income.”

SEB foresees an interest rise of up to three percent over the next two years, Fernández said,an increase that can be absorbed by most households.

Both Fernández and Karlsson agreed that if homeowners have to cut back on spending, those cuts will not come from debt repayment, but from their disposable income – the money they might ordinarily spend on entertainment, eating out, or travelling.

So while household spending may have to change, financial stability is not at stake for most households.

What’s going on with the housing market?

Right now, a record number of mortgage-holders have loans that are worth more than 4.5 times their income. This year, more than 14 percent of new mortgagors took on such large loans, compared to 6.3 percent last year.

A “low interest rate, increase in housing prices, increase in disposable real income and a housing market that is not functioning well” are all factors in the large debts that homeowners have incurred today, Karlsson argued.

Fernández noted that there is an imbalance between the low supply of housing and the high demand for housing, which is in part responsible for the high housing prices we see today.

He said a decrease in price of a few percentage points would not be surprising: “We’re coming from two years of exaggerated prices.”

Will housing prices begin to decrease after two years of increasing prices?

Calculations for three different scenarios tested by FI show that housing prices will decrease, Karlsson said.

While the agency does not predict housing prices, its report shows that under three different scenarios – the first an increase in mortgage interest rate, the second an increase in energy prices, and the third a combination of the first two with a reversal to pre-pandemic housing preferences – prices will decrease.

The Local Sweden reported last year about increasing housing costs in Sweden, spurred on in part by a desire for bigger homes further away from urban areas during the COVID-19 pandemic.

Fernández called the two years of increasing housing costs “surprising.”

“10-12 percent two years in a row, that’s historical in these uncertain times,” he said, noting that prices were still increasing in figures for March this year.

What sorts of housing will see the largest price decrease?

The FI report also included various scenarios of how the price of different types of housing may fluctuate based on changes in the interest rate.

One scenario assumed a 1 percent increase in interest rates this year and a 0.5 percent increase next year, and predicted that while the price of apartments owned in a cooperative – called bostadsrätter – would fall only slightly, the price of detached houses would fall by 10 percent.

Another calculation that accounted for rising electricity prices and a decline in new housing purchases found that the price of bostadsrätter and detached houses risked falling by an average of 30 percent.

Is there a plan to let borrowers end their mortgage terms early?

“We believe it needs to be simpler and more inexpensive for households to repay their mortgages early,” FI Director General Erik Thedéen is quoted as saying in a press release published by the agency on Wednesday.

To that end, Thedéen said at a press conference that the agency had sent a request to the government to change the calculation model for how banks are compensated when mortgages are terminated early.

“When you terminate a loan agreement and the bank incurs costs, it must be reimbursed,” Thedéen said. “But at present the banks are overcompensated, that is what our calculations show. If the government follows our line and changes the model and follows our line, then the banks must simply adapt.”

When asked about the likelihood of this request being granted, FI recommended reaching out to the Ministry of Justice for comment.

What does this mean for foreigners in Sweden?

If you’re already a mortgage holder, then as Karlsson and Fernández assured, mortgage calculations include a cushion that allow for changes in your financial circumstances.

If homeownership is in your future, housing prices may begin to decrease in the near future, so it’s worth keeping an eye on your local real estate listings.

By Shandana Mufti

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