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Business start-up costs in Italy

Updated on Tuesday 31st March 2020

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Creativity, initiative, and willingness to get involved are features needed for an entrepreneur willing to start a business in Italy. However, to turn ideas into a company, an entrepreneur needs to assess the risks, must know how to write a business plan, choose the legal form of business that best suits his needs and must also be aware of the business start-up costs in Italy and also further taxes that must be paid.
 
For example, the procedure of opening a company in Italy requires a constitutive act, that shall be delivered in a public document and therefore requires the presence and involvement of a notary which will charge a tax in accordance to services provided.
 
At the same time, there are other taxes that must be paid, such as the registration fee and imposta di bollo (stamp duty).
 
Estimating the business start-up costs can be an important step in determining the future of the business and the financial plan. Entrepreneurs will often have an underestimated budget for the startup expenses and for the company’s first year of functioning. We recommend to review these expenses carefully and in detail in order to be able to manage them accordingly. 
 
Below, our team of agents presents a general list to take into consideration when determining the business start-up costs in Italy:
 
  • - start-up share capital: this is in the form of money deposited in the bank account and represents a startup asset; the amount varies according to the chosen type of company;
  • - legal work: the notary and legal fees, the consulting fees and for other services need to draw up the company’s documents and conclude agreements and/or any type of company-related documents;
  • - registered office/headquarters: the costs associated with the location from which the company will operate, either for renting or purchasing a property.
  • - equipment: will differ according to the type of business, from office materials to specialized equipment and production materials.
  • - employees: the labor costs are included in this category and differ according to the number of employees.
  • - logo and copyright: companies that want to hire a professional design firm for their logo, as well as those that wish to register trademarks, will need to consider these costs.
  • - other permits: some companies may incur additional costs after they register the company for the purpose of obtaining special types of permits and licenses; insurance costs should also be included, especially for some businesses.
  • - additional costs: part of a thoughtful costs estimate is taking into consideration that there any additional or unplanned expenses; a spare amount should be reserved for these. 
Our Italian company formation consultants can offer more information on the procedure of setting up a business in this country.
 

The value of the minimum share capital in Italy

 
Among the business start-up costs related to opening a company in Italy, an investor must also take into account the bank account opening fee and the minimum amount of money to be deposited as a share capital.
 
For a limited liability company or the S.r.l., the minimum share capital is between 1 € and 10,000 €. When the capital has a maximum value of 10,000 euros, the contributions can only be made in cash and must be paid in full upon subscription. When the share capital is greater than 10,000 €, at least 25% of this value (or 2.500 euros) must be paid to the directors.
 
When opening a joint-stock company (societa per azioni), a minimum of 50,000 euros is needed and the value is to be stated in the Articles of Association. The number of shares a held by a shareholder does not have to be identical to his overall investment in the company. Like in the case of the S.r.l., 25% of the share capital of the S.p.a must be paid when signing the Articles of Association and the rest of the amount at a later date. When the companies are incorporated by a single shareholder and in this case, the share capital is to be paid in full. All contributions that are made in kind, not cash must be paid in full.
 
There is no mandatory minimum share capital for a general or unlimited partnership and for the limited partnership. However, like in the case of the sole trader, it is advisable to weight in the advantage of lower start-up costs with the liability these types of structures impose on the founders.
 
Included in the business start-up costs in Italy are also the corporate and accounting books, which must be bought by the entrepreneur in order to start the company's activity. 
 
Because the minimum share capital requirements for the S.p.a is more substantial, this type of business is often used when a large number of shareholders gather to make this investment and also when the company is incorporated with the purpose of being listed on the stock exchange. The share capital is one of the most significant portions of the initial start-up costs and investors are advised to choose a business form that will reflect their needs as well as the need for further expansion. 
 

Company registration fees in Italy

 
Before starting the company registration process, an entrepreneur must make some preparations, among these the most important one being the company’s incorporation documents which must be drafted and notarized. For this purpose, the notary fee must be taken into account. With respect to drafting the Articles of Association, these can be prepared by our consultants and would generate lower costs as it is part of our company registration package in Italy.
 
Investors must also know that they must pay a government fee to have the corporate and accounting books authorized by the Trade Register.
 

Taxes for a start-up

 
The entrepreneur must also take into account the grant tax which must be paid in the current account of the post office.
 
The business start-up costs in Italy also include the taxes that must be paid for the registration with the Chamber of Commerce and Register of Enterprises. By this procedure, the company gets automatically the tax identification number, VAT number and it is also registered with the Social Security Administration (INPS).
 
The payroll taxes must also be taken into account as business start-up costs in Italy and the costs depends on the number of employees. Please take into consideration that these costs can vary from different payroll service providers. 
 

The certified e-mail address for Italian companies

 
One of the fees related to opening a company in Italy is related to the certified e-mail address (P.E.C). The creation and registration of such address are subject to a fee which must be paid with the service provider offering this service.
 
Such e-mail address is required to the Trade Register to send the business owner relevant information about the company’s status and to grant access to the official portals of the authorities.
 

Incentives in Italy

 
Some types of companies may benefit from various incentives that can lower the general costs and can also allow for beneficial setup conditions. State and regional aids are generally offered according to the region in which the company is registered. For example, the Mezzogiorno region in the south of Rome and in the Trieste Free Port zone. Companies that derive profits from the country and re-invest them in the Mezzogiorno area can, for example, benefit from a corporate tax reduction allows under certain conditions. Moreover, the Ministry of Industry can, under certain conditions, allow for research and development incentives depending on the types of business activities. Apart from the Mezzogiorno region, the Abruzzo region is another area where investors can benefit from state aid. We recommend that you contact one of our Italy company formation agents for specific details according to the area in which you wish to invest.
 
The startup expenses will vary from one type of business to the other and will include different items according to the specific business activities. The general costs, those that are to be incurred by any new business owner in Italy can be summarized to those related to the share capital, bank fees, legal and notary fees, various registration fees as well as those expenses associated with renting/purchasing an office space and equipping the premises and the payroll/employee expenses. Once this list is complete and includes these basic expenses as well as the business-specific ones, entrepreneurs can also plan their startup funding strategy. 
 

What are the taxes for Italian companies? 

 
When considering the costs associated with starting a business in Italy, businessmen must also verify the types of taxes to which their business will be liable to; any company developing a commercial activity in this country is liable to taxation, and this is also the case of the sole trader, the most basic business form available for incorporation in Italy
 
Thus, besides the costs related to the registration of the company, the issuance of various documents, permits, licenses, the costs related to renting an office space, there are also the utility costs, the company’s operating costs, the costs associated with hiring employees, the taxes applicable to their company etc. In this sense, we strongly advise foreign investors to seek tax counselling from our team of Italian lawyers, who can present the current list of taxes. It is necessary to know that the following apply:
 
  • the value added tax (VAT) – the current VAT rate in Italy is 22%;
  • it is necessary to know that the country also benefits from reduced VAT rates: 10%, 5% and 4%;
  • the corporate tax rate in Italy stands at 24%, but financial institutions can be charged with a higher rate - 27.5%;
  • the transfer of assets can be charged with the registration tax, which is generally imposed at a fixed fee of EUR 200;
  • the registration tax can also be imposed on a progressive system (ranging from 0.5% to 3% from the value of the asset), but this is the case of real estate properties transfers;
  • company documents, deeds and others can be charged with a fixed fee, that can vary between EUR 1 to EUR 300;
  • the business profits of an Italian company can also be charged with the regional tax on business activity, imposed at a rate of 3.9%; 
  • Italy also applies a withholding tax, which is generally imposed at the standard rate of 26%. 
 

What is the cost of renting an office in Italy? 

 
Companies operating in Italy also need to have an official business address where they can carry their business activities. Having an office is a legal requirement that must be met by all Italian businesses; our team of lawyers in Italy can provide in-depth assistance on the rental contract that must be signed when renting an office space in Italy (or on the purchase contract, in the case of a real estate transaction), which is generally defined by the below mentioned costs
 
  • the average price for a square meter in an office space in 2018 was EUR 3,791 in Venice;
  • a square meter for an office space in Rome had a price of EUR 3,150;
  • in Milan, the price of office space units (per square meter) stood at EUR 2,835;
  • business offices in Naples had a price of EUR 2,598 per square meter, while in the region of Catania, the price was much lower, of only EUR 1,446 per square meter;
  • in 2017, the highest rental price for a retail location was on Via Montenapoleone (in Milan), where the value of a square meter per year was of EUR 13,500;
  • the prices per a square meter/year in an office space in other Italian regions were the following: Via Condotti – Rome (EUR 11,500), Piazza di Spagna-Rome (EUR 6,500) and Corso Vittorio Emanuele – Milan (EUR 6,000).
 
If you are interested in the total amount of costs for a start-up in Italy, you can call our agents in company formation who will offer you personalized packages of services.

 

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