The establishment of a branch in Italy is regulated by the Italian Civil Code, providing certain requirements and rulings for creating this type of doing business in Italy for entrepreneurs willing to invest in Italy.
Investors who want to establish a branch in Italy will do so in order to set up an extension of the foreign company. The branch will have no separate legal entity from the mother company. The latter will be responsible for the actions of the branch and will also have to provide the needed assets. The branch can only be set up if there is a mutual decision to do so among the shareholders of the foreign company.
The rights and obligations of a branch in Italy
A branch can issue invoices and has the right to hire employees and may also perform trade activities under the foreign company's name. If the branch is planning to hire personnel, it’s important to register any hired individuals at the labor office. A local resident must be appointed as the branch representative in Italy, even though the company and implicitly the branch is managed by the parent company’s board of directors.
When establishing a branch in Italy, the founders must keep in mind that any legal entity in the country is subject to corporate taxation and must fulfill its accounting obligations. The accounting documentation must then be submitted to the local Revenue Agency, along with the income tax returns and VAT. A major difference between a local company and a branch of a foreign company is that the branch must provide the financial accounts of the parent company and the reports of the audited accounts.
The advantages of a branch
The branch has lower set up costs than the subsidiary, for example. Foreign investors will need to consider this when choosing the most appropriate business entity but they will also need to remember that the company abroad is fully liable for the branch and can be indebted by it. Although the branch will not be able to perform any other business activities than those already performed by its mother company, it will work closely with the clients and business partners in Italy and it will provide valuable knowledge and insight about the Italian market to its mother company abroad.
Our company registration agents in Italy can help you throughout the incorporation of your branch. Although the process is simpler than for other types of companies, the investor still needs to provide a set of documents. The registration takes place in front of a notary who notarizes the incorporation documents. The following documentation is requested upon registration:
-the mother company’s decision to open the branch;
-its registered address in Italy, types of activities, identification details for the branch representative;
-the foreign company’s certificate of registration and copies of its articles of association;
The documents, together with an application for registration are submitted to the Registro delle Imprese of the Chamber of Commerce. Additional documents may be needed for the registration procedure and the Italian branch cannot have a different name from that of the company abroad.