In Italy, there is a wide range of legal forms for setting up companies depending on the company’s organization model, its business objectives, the level of capital to be committed, the extent of liability of the founders, as well as tax and accounting implications.
Italy’s corporate law primarily differentiates between the following types of legal entities:
Capital companies:
They share the following characteristics:
Partnerships:
They share the following characteristics:
A limited liability company (società a responsabilità limitata or S.r.l.), is a company where the capital stock is represented by quotas.
It is possible to open it with only 1 shareholder.
The issued capital required is 1 Euro.
Each shareholder will hold only one ‘quota’ in the company that represents the percentage holding they have in the company.
Is allowed to sign contracts with local clients.
It allows individual and corporate shareholders.
A joint-stock company (società per azioni or S.p.A.) is a company where the participants’ equity is represented by shares.
It requires a minimum investment of Euro 50,000 (funds need to stay in the account).
The capital can be invested either by cash contribution or, whereby expressly provided in the Memorandum of Association, as an in-kind contribution or contribution of receivables, whose value shall be equal to the amount of capital subscribed.
A statutory audit is required.
1 director and 1 auditor who is resident in Italy must be appointed.
A foreign company may perform any business activity in Italy through a branch (permanent establishment).
A branch is an organizationally independent part of a company, which is territorially or otherwise separated from the principal company and commercial activities are systematically performed at the location of the branch on behalf of the company.
Be mindful that a branch office is not a separate legal entity from the parent company. This means that the foreign parent carries full liability for the branch’s operations and there can be lengthy and complicated dealings with the tax authorities to fulfill the branch’s obligations.
The taxation of an Italian branch is the same as the taxation of an Italian corporation.
They need to keep their books, and it VAT and income tax returns to the tax authorities (revenue agency or Agenzia delle EnDelle) each year, and file an annual report of the foreign company with the Italian Registrar of Companies.
Upon initial registration, the branch must provide various documents to the Italian authorities, that contain company information on the parent company, as well as various documents attesting the incorporation of the branch.
Keep in mind that non-EU citizens who want to start a business, such as a sole proprietorship, or to become partners of a new general partnership, managers of a new limited company, legal representatives of a foreign company, or managers of an existing company, must meet the following conditions:
The principle of reciprocity implies that, in a foreign citizen’s home country, an Italian citizen is granted the same rights as the foreign citizen is applying for. Reciprocity conditions can be verified by anyone at the Italian embassy in their home country and must be checked, in particular, by the public official/public body receiving the request (i.e. the notary, when a company is set up, the chamber of commerce, when a manager is appointed).
Once all the necessary conditions have been met, the company/sole proprietorship must be registered in the Italian Business Register.
Starting a new business activity in Italy requires:
Registration in the business register is managed by the chamber of commerce registration. It is mandatory for all entrepreneurs who carry out one of the following activities:
To enroll into the Business Register, one has to electronically submit the form: “Single Business Communication”.
This procedure enables the entity to obtain a VAT number/tax code, and to be assigned a specific insurance and social security code.
In order to send the Single Business Communication form, it is necessary to:
You will need to notify the chamber of commerce of the business start date.