Death and taxes

The only two things are certain in life. Fortunately (and somewhat morbidly…), Keen has death ‘covered’ with our investment in Farewill. Unfortunately, taxes continue to be a proverbial shit show. Whilst big businesses have the services of the Big 4, small business owners don’t have the Small 4 have to navigate tax complexities with fewer resources and more costs.

Taxes compliance ain’t easy…

We’re not generalising here. A 2018 study by the European Commission on the cost of tax compliance found that tax compliance for a SME costs ~2.5% of turnover. In terms of headaches: VAT leads the pack, followed closely by income tax and third to the podium is wage tax. The EC goes on to conclude that total enterprise tax compliance costs are higher for smaller businesses. Their (empirically tested) words, not ours.

The Italian (tax) Job

Enter Fiscozen, on a mission to eliminate tax bureaucracy in Italy. “But you said it’s a European problem?” It is, but it’s also an acute problem in Italy. For starters, Italy has over five million freelancers and SMEs. They play a pivotal role in the Italian economy, especially when you consider they make up 25% of the working force, well above the European average. That’s a lot of small businesses. Secondly, small Italian businesses find tax really burdensome. Like, really, really burdensome. From the same EC study, you can see below that Italy has the highest percentage of people who find tax processes very onerous. Problem-market-fit…check.

This is why we’re so glad we met Enrico and Vito. They’ve set out on the not-so-simple mission of creating a digital tax advisory platform that automates the tedious and complex task of tax returns and electronic invoicing with just a few clicks. ‘Solving a headache’ doesn’t even begin to capture the benefits Fiscozen provides. The freelance and SME segment is subject to Italian tax laws that are just as complex and laborious as those that apply to larger corporations. To stay compliant, small business owners can face up to 200 different types of deadlines and obligations in privacy, security, reporting, or tax deadlines over the course of a year.

Accountant in the loop

In building the product, the team was conscious that taxes are a very personal affair and that prospective customers, typically using a local tax accountant, also wanted a ‘human’ touch. So as well as providing a dashboard with visibility on tax obligations, customers also get access to tax advisors who can provide real-time answers. The platform isn’t meant to compete with accountants but instead works with them, automating the complex while personalising the experience if needed by a customer.

A product for the masses

Initially tested on a market of 100,000 digital freelancers, Fiscozen moved to serve those under the flat rate scheme. Feedback on the product and growth has been amazing. They’ve grown their customer count by 10x since the seed two years ago and now work with thousands of solopreneurs. Product-market-fit…check. Additionally, in January, they’ll launch a product that allows them to move upmarket into the standard tax regime. Their two tax products will enable them to serve three out of five million solopreneurs.

If taxes are accrual (terrible joke…check), then we couldn’t be more thrilled to partner with Enrico, Vito, the entire Fiscozen team, and United Ventures to make taxes less cruel in Italy.