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Company Registration in Italy - COST-EFFICIENT!
Updated on Tuesday 03rd August 2021 Rate this article
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Italy is currently one of the most important countries in the European Union. Its good geographical position gives investors easy access to southern, central and northern Europe markets as well as to the ports of the Mediterranean. Many businesses that start in Italy are involved in trading or import and export activities.
Italy is the birthplace of some of the most iconic and luxurious brands in the world and, while some business fields are clearly more favored than others, the country has an open policy towards foreign investments of all kinds. Some of the most important foreign investment sectors include tourism, the food industry, agriculture, manufacturing or the real estate sector.
| Quick Facts | |
|---|---|
| Types of companies | Limited liability company (S.r.l.) Simplified limited liability company (S.r.l.s) Innovative start up Sole proprietorship Public limited company by shares Partnership Cooperative corporation Benefit corporation |
| Minimum share capital for LTD Company | EUR1 |
| Minimum number of shareholders for Limited Company | there is no minimum number, 1 shareholder suffices |
| Time frame for the incorporation | 5-7 working days |
| Corporate tax rate | 24% corporate tax rate (IRES) + 3,9% regional tax rate (IRAP) = 27,9% |
| Dividend tax rate | - dividends received from resident companies are taxed on a taxable base of 5%; - dividends received from companies located in countries with a preferential tax system are fully taxable; - dividends paid to companies based in member states of the EU and in members of the EEA that allow a suitable exchange of information with Italy are taxed at source (WHT) at a rate of 1.2% |
| VAT Rate | - standard VAT rate = 22% - reduced rates = 4% - 10% |
| Are Shelf Companies Available? | Yes |
| Do you supply a Registered Address/Virtual Office? | Yes, at 1,200 Euro per year |
| Local Director Required | No, unless the condition of reciprocity between countries is given. |
| Annual Meeting Required | Yes. The annual meeting can also be held virtually or in the form of written resolutions. |
| Redomiciliation Permitted | Yes |
| Electronic Signature | Yes |
| Is Accounting/Annual Return Required? | Yes |
| Foreign-Ownership Allowed | Yes (percentage up to 100%), however subject to the condition of reciprocity between the respective countries. |
The Italian government also provides certain incentives for foreign companies that invest a certain amount in the country or choose to base their business in certain selected locations.
LEXIA Avvocati provides company incorporation and other legal services in Italy. It has five offices and employs more than forty lawyers. LEXIA provides complete company formation services, as well as many other types of services, suited to all type of companies. Specialization is important, and our team is dedicated to providing complete services in a number of areas including corporate, startups, tax, labor, insolvency, trust and asset protection as well as new technologies such as fintech.
Awards and organizations we are part of
LEXIA lawyers received a number of distinctions and are also recognized partners for a number of organizations. We list them below:
• Top Legal Awards 2018: LEXIA Avvocati was nominated as a finalist for the law firm of the year in the innovation category and the law firm of the year islands, after its head, Alessandro Dagnino, was nominated as the best professional for litigation before the Supreme Court,
• Top Legal Awards 2016: LEXIA Avvocati was nominated for the Most innovative law firm in Italy 2016.
• LEXIA Avvocati is partner of the Italian Stock Exchange “Elite Program” – in April 2018, the law firm became a partner of ELITE, a Borsa Italiana platform dedicated to Italian SMEs that will be listed with the Stock Exchange;
• LEXIA Avvocati is partner of “Invest in Lombardy”, the Government Agency of the Lombardy Region – the law firm became the legal partner of “Invest in Lombardy” in 2017 for the purpose of assisting foreign companies that want to operate in the region.
The company is also present on the International Comparative Legal Guides – a website offering comprehensive guides for fifty practice areas, in more than 180 jurisdictions.
LEXIA Avvocati is a also a member of The British Chamber of Commerce for Italy.
Below, our team describes the company formation process in Italy as well as the general conditions for company formation.
Steps for company formation in Italy
A limited liability company can be incorporated in a few steps:
- Registration with Italian Tax Authorities – there is necessary to obtain a tax identification number (codice fiscale);
- Execution of the articles of association with a public notary – this is an obligation for the shareholders and it can be done personally or through a power of attorney;
- Obtain VAT number – this is issued by Agenzia delle Entrate after an online request;
- Obtain the certificate of incorporation – after filing all the documentation required;
- Open a bank account for the company.
How to open a company in Italy
Our company registration agents in Italy can assist you throughout the company incorporation procedure. The first step for company formation in Italy is preparing and drafting the necessary company documents, such as:
- - the articles of association,
- - specimen signatures form the company directors,
- - affidavits,
- - others.
You will also need to open a bank account for the company, where the minimum required share capital will be deposited. The business start-up costs can vary according to the type of company and the materials and equipment required for your specific business activity. Your company will also need an accountant that will make sure you comply with the requirements for accountancy in Italy. Our company formation experts can help you with professional accounting services.
Types of companies in Italy
There are several types of legal entities available for those interested in company formation in Itay:
- - the limited liability company, which can be traditional of simplified limited liability companies;
- - the joint-stock company, also known as public limited liability companies;
- - the general partnership, which must have at least 2 members called partners;
- - the limited partnership, which must be formed by a general and a limited partner;
- - cooperative, which is not exactly a type of company, but more of an organization employed by those who want to operate in the agricultural industry;
- - sole proprietorship, which is the simplest form of doing business in Italy.
The limited liability company is a business type preferred by investors who want to start a small or medium scale business. This is the most popular business form in Italy. The new company registered in Italy will be managed by a director or a board of directors who will follow the company’s articles of association. The financial issues will be managed by statutory auditors and the representatives in charge with financial business will keep a list of financial statements and balances.
The joint stock company is chosen by those investors who want to run a large business. The minimum share capital for this legal entity is 50.000 EUR and at least a quarter of this amount must be paid upon incorporation. The joint stock company is managed by a director or a board of directors. The shareholder’s liability is limited to the number of contributions made to the share capital.
Business forms available for foreign companies in Italy
Foreign companies are encouraged for doing company formation in Italy by registering one of the following types of structures:
- - branch offices which are legal entities depending entirely on the parent company;
- - light branch offices which can only be found in Italy and which allows for certain activities;
- - subsidiaries which are independent entities can which can be created as limited liability companies;
- - representative offices which are not legal entities but can help foreign companies determine if the Italian market is suitable for them.
Our company registration advisors in Italy can help the representatives of foreign companies choose the right structure for their companies.
We invite you to watch a video about how to register a company in Italy:
Documents needed for company formation in Italy
Both local and foreign investors need to consider the preparation of the following documents for company formation in Italy:
- - their personal information is required – the ID or passport are the main documents needed;
- - in the case of foreign companies, the Certificate of Registration and the incorporation documents are also required;
- - the Italian company’s establishment documents are needed – these will be drafted by an Italian public notary;
- - depending on the type of company, other documents could be required.
We can help foreign investors who need to have the Articles of Association for new companies drafted and notarized. If you want to open companies in other countries, such as Bulgaria or Dubai, we can put you in touch with our partners.
Costs for company formation in Italy
The main costs related to incorporating a company in Italy are:
- Trade Register fee – EUR520 (this fee will be paid for registering a company with the local Trade Register);
- Virtual office – EUR100/month (this is necessary if you don’t have an office for your business);
- Incorporation fee – approx. EUR2300;
- Accounting fee – starting from EUR130/month, depending on the number of invoices and yearly turnover ;
- Minimum share capital – EUR 1 for a limited liability company and EUR 50,000 for a joint stock company.
The company incorporation procedure in Italy
The company incorporation procedure in Italy is not very difficult and is similar to those in other countries. An application for registering the company must be made at the Italian Trade Register and, after the application is processed, a registration certificate is issued for your new company.
Another obligation for the foreign investor in company formation in Italy is to execute a public deed of incorporation at the notary office, buy the corporate and accounting books and pay a government grant tax.
The investor must also submit an application to the Register of Enterprises in order to obtain a tax identification number and a VAT number. The company must also be registered with the Social Security Administration. In order to hire employees in Italy, an entrepreneur will need to observe the provisions of the Labor Law and announce the employment to the Labor Office.
Our company formation agents in Italy can give you detailed information about the steps required to set up a company in Italy. We can provide you with complete assistance and advice if you want to start a business.
Opening a company bank account in Italy
One of the most important aspects of opening a company in Italy is related to the establishment of a corporate bank account. This account is needed for depositing the share capital and for conducting commercial activities.
- - submitting the company’s incorporation documents with the chosen bank;
- - completing the necessary paperwork issued by the Italian bank;
- - appointing a company representative who will keep in touch with the bank;
- - choose the services which best suit the need of the Italian company.
Apart from the company bank account, a business can also create merchant accounts for accepting online payments. These types of accounts are mostly used by e-commerce companies, such as online stores, in Italy.
Our Italian company formation representatives can help foreign entrepreneurs choose the right type of structure for their businesses here and can represent them in the procedure for opening the bank account.
Common questions about the company registration process in Italy
Italy is very appealing to foreign enterprisers who usually have many questions related to the requirements and process related to company formation in Italy. Among these questions are:
- Can I register the company as a sole shareholder, even if I am a foreigner?
Yes, full foreign ownership is possible in Italy even for single shareholders. Among the types of structures, foreign enterprisers can use are the sole proprietorship and the private limited liability company.
- What is the minimum amount that I need to set up the company?
It depends on the type of company you want to establish: in the case of the private limited liability company, you will need 1 euro, while in the case of a public company, the new requirement is 50,000 euros.
- Can I register my company remotely?
Yes, remote company registration in possible in Italy, however, you must appoint a local representative and grant him or her power of attorney to complete the process.
- Does an Italian company need a resident director?
No, the law no longer requires for resident directors in Italian companies.
- How long does the company registration process take in Italy?
The usual procedure for setting up a company in Italy takes about a week, however, this timeframe will depend on how much time it takes for the documents to be prepared.
How to decide between a branch office or a subsidiary in Italy
Foreign companies that want to develop business activities in Italy also benefit from the option of registering a branch office or a subsidiary. These entities are generally used for the purpose of expanding a company on a domestic or foreign market and the decision should be based taking into account several aspects.
For instance, the branch office will be dependent on its parent company, thus, it is not considered a different legal entity. In this case, the management decisions concerning the activity of the branch office will be taken by the parent company, which is also liable for the debts of the branch office. However, the branch office provides the advantage of having lower costs during the set up of the business in Italy.
On the other hand, the subsidiary has the advantage of being an independent structure from its parent company, and it is set up with its own share capital. Due to the fact that the subsidiary is considered a separate legal entity, the structure will be incorporated following the standard registration procedure applicable to all Italian businesses.
Thus, it is necessary to apply for a VAT number issued by the National Tax Office, register the legal entity with the local Chamber of Commerce, sign a public deed of incorporation in front of an Italian public notary – in this case, it is generally required for the company’s representatives to be present during the procedure; if not, they may grant the power of attorney to our team of Italian lawyers, who can represent them in this specific case.
Regardless if the investors will decide on the branch office or the subsidiary, it will be compulsory to register an official business address in Italy, where the company will carry out its activities. In the case of a subsidiary, it will be necessary to open a corporate bank account. Please note that companies importing and exporting goods should also conclude the steps for EORI registration in Italy, and our team of Italian lawyers can assist with information on the procedure.
What is the share capital for opening a business in Italy?
In the case of the most employed type of business vehicle in Italy - the limited liability company - the minimum share capital is established at EUR 1 as mentioned earlier. In order to register a s.r.l.s in Italy, the capital requirements state that the company may have a capital of maximum EUR 10,000, while in the case of a joint stock company, the minimum share capital is EUR 50,000.
What are the main taxes applicable to businesses in Italy?
Companies performing commercial activities in Italy are liable to taxation. A company can be taxed in Italy as long as it has a place of management or a main business activity developed in this country. Companies are liable to value added tax, corporate income tax and others as long as they have been operating in Italy for at least 183 consecutive days (in this case, the company will be seen as a permanent establishment in Italy).
No capital gains tax
Foreign investors are attracted by the tax regulations in Italy because they are not required to pay the capital gains tax or a wealth tax. The real estate market is growing each year as the economy is recovering from the crises.
The country is member of the EU and G8 (the industrialized countries) and that means it is an safe destination for foreign investors. The country has a well trained and skilled labour force and it offers high stardards for living. Italy, despite the economic crisis, it is the 6th economic power in the world and the economy of the country is based on small and medium companies. Italy is well-known all around the world for its luxury goods produced by famous companies.
The Italian market, with 60 million consumers, it is an important destination for foreign entrepreneurs who want to expand their business.
The country is member of the EU and G8 (the industrialized countries) and that means it is an safe destination for foreign investors. The country has a well trained and skilled labour force and it offers high stardards for living. Italy, despite the economic crisis, it is the 6th economic power in the world and the economy of the country is based on small and medium companies. Italy is well-known all around the world for its luxury goods produced by famous companies.
The Italian market, with 60 million consumers, it is an important destination for foreign entrepreneurs who want to expand their business.
Company Act in Italy
An investor who wants to open a company in Italy must observe the relevant legislation and comply with the legal requirements. The most important legislative documents for running and registering a company in Italy are:
- - the Italian Civil Code;
- - Legislative Decree 58/1998 (abbreviated TUF in Italy);
- - The rulings set forth by the National Commission for Companies and the Stock Exchange (CONSOB);
- - the code issued by the Italian Stock Exchange (Borsa Italiana)
- - the company’s own Articles of Incorporation.
Although the legal framework listed above only applies to listed companies in Italy, all company owners should have a solid knowledge of the laws and regulations applicable to their type of business.
The main provisions of the Italian Company Law
The Company Law, consisting of several legal documents, regulates a series of important aspects about company formation in Italy. Among the most important legal provisions we can list the following:
- - the types of companies that can be incorporated in Italy: limited liability company, joint stock company. cooperative, different types of partnerships, sole proprietorship, branch or representative office;
- - company governance: the duties of directors in Italy and those of the Boards in the company;
- - shareholders’ duties, obligations and rights and the protection of minority shareholders;
- - how corporate litigation must be resolved and the legal tools to be used in such cases;
- - financial requirements applied to all types of companies registered in Italy;
- - auditing compliance – not all companies in Italy must file audited accounts;
- - the company liquidation procedure, which can be voluntary or compulsory.
The Company Act also specifies the characteristics of each type of company, its mandatory minimum share capital and the manner in which shares can be distributed. There are significant differences for companies which are not listed on the Stock Exchange and those that are listed.
If you are interested in opening companies in other European countries, such as Malta, Cayman Islands or Russia, you can contact our specialists in company formation.
Meet us in Rome and Milan
Call us now at +39 023 663 8610 to set up an appointment with Francesco Dagnino, one of our lawyers in Rome and Milan, Italy. Alternatively you can incorporate your company without traveling to Italy.
As a LEXIA Avvocati client, you will benefit from:
- - 24 hour response time guaranteed
- - cost- efficiency
- - dozens of articles and free information on the best Italian structures.