Business individuals who are looking for opportunities for new opportunities shall look at Italy. In fact, establishing a business in Italy means taking advantage of the condition that Italy is able to offer. Generally speaking, there are three methods for establishing a business in Italy:

–        Incorporation of a subsidiary company;

–        Establishing a representative office;

–        Establishing a branch office either of the foreign company itself or of a subsidiary.

Establishing a Subsidiary Company

The most typical types of limited liability corporate scheme in Italy are the Joint Stock Company (“Società per azioni” or “SPA”) and the limited liability company (“ Società a Responsabilità Limitata” or “SRL”). The rules governing SPAs and SRLs are both included within the Italian Civil Code. In general, unless the setting up of an SPA is necessary given the type of activity the company undertakes, it is suggestable to use an SRL to start a business start-up in Italy. In fact, SRL allow a greater flexibility from perspective of corporate governance, accounts and control over company’s management.

The minimum capital required for an SPA is €50.000 while €1.00 for a SRL. While SPA’s capital must be divided into shares with a related share certificates to be recorded in shareholder register, the capital of an SRL is divided into quotas that are merely recorded in company’s register.

There is another type of Italian Limited Liability company named “ Società in accomandita per azioni” that allows two types of shareholders: one having limited liability, the other having unlimited liability. However, given that it is not commonly used, SRL incorporation is still the first solution.

Opening a representative office in Italy

A representative office may help to minimise costs and expenditures connect to the incorporation of a separate business in Italy. Even though this might attract favourable tax treatment, a representative office is not a proper legal entity from either corporate and tax perspectives. Operating through a representative office bring the following advantages:

–        Corporate and local income taxes are not due since the office does not constitute a permanent establishment;

–        A representative office in Italy is not subject to VAT payment or registration;

–        A representative office is not required to keep accounting books nor producing financial statements;

However, operating through a representative office is associated with some disadvantage. For instance:

–        A representative office may conduct only ancillary activities such as public relation, market research or information provision to the foreign company;

–        Representative office’s responsible has not the right to act for and on behalf of the foreign company (entering into contracts in the name of the foreign company);

–        An Italian VAT representative will be required in order to recover Italian Vat on purchased made in Italian territory

Establishing a branch office in Italy

An Italian Branch of the foreign company is able to carry out all business activities on an autonomous basis with a separate tax and accounting identity. In order to establish a branch in Italy, the foreign corporate body must file a resolution and other documents such as the Certificate of Good Standing and the name of the representative of the Italian Branch (“Institore”). Previous documentation shall be presented before an Italian notary.

Registration of the Italian branch can normally be achieved in 20-30 days, even though the registration mainly depends on company register workloads.

VGS lawyers professionals are able to assist you and your company in starting a new business in Italy. Our lawyers have already provided our clients with many business opportunities for companies involved in Cosmetic, IT, and Hospitality activities. Should you have any inquiry please contact us through the form you find in this page.