Company Formation Italy
Updated on Monday 18th May 2020
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The basic regulations for company incorporation in Italy are the following: the shareholders of an Italian company can be natural persons or legal entities, the directors of Italian companies must be EU citizens or EU residents and the company must have a local registered office; BridgeWest offers this type of service and you can address to our specialists for advice on how to obtain a local business address. Our specialists can also represent investors in starting a business in other countries and we can provide legal representation for offshore company set up.
The first step when deciding to open a company in Italy is choosing the name. Each shareholder and director must obtain a fiscal code (codice fiscale) which is an identification number. The shareholders must present identification papers copies, the passport copies are usually required and recent utility bills that prove the residential address of the owners.
The first step when deciding to open a company in Italy is choosing the name. Each shareholder and director must obtain a fiscal code (codice fiscale) which is an identification number. The shareholders must present identification papers copies, the passport copies are usually required and recent utility bills that prove the residential address of the owners.
For legal entities, a certificate of good standing or the incorporation certificate will be required. The certificate must be notarized, bear an apostil and must also be translated into Italian. Other information to be provided upon incorporation are presented below and our team of consultants in company formation in Italy can provide extensive information upon the following:
- the description of the company’s activity – the investors must clearly state the types of operations carried out here;
- the authorized share capital and its division among shareholders, which can vary based on the legal entity selected for incorporation;
- a financial plan for the first two years of the company – all companies must submit a business plan;
- information on the company’s hired workforce, if this is applicable;
- the countries that the company will enter business activities.
It must be noted the same documents are required for opening a bank account, but other specific documents may be required also. The requirement of having a bank account is imposed for all companies types in Italy and this is a basic legal step that must be taken by the investors regardless of the country where they want to incorporate a business. It must be noted that businesses operating in offshore jurisdictions must also have an offshore bank account.
Once the fiscal code has been obtained, all documents must be signed by the shareholders and directors, notarized by an Italian public notary and submitted with the competent authorities. If desired, the owners of the company may appeal to a representative who will act on their behalf, through a power of attorney.
Once all notarized documents have been submitted to the Italian Trade Register and approved, the company must also obtain a tax ID. Additionally, if the company will hire personnel, the Labor Office must be notified. The notification can be sent via e-mail. Bridgewest provides the following services for company incorporation in Italy:
- drawing up the articles of association that can be signed through power of attorney (the Italian laws require powers of attorney for any public notary proceedings);
- drawing up documents for company incorporation in Italy - specimen signatures, identification papers copies, fiscal number, application forms required for company registration;
- arranging public notary proceedings (all procedures for company incorporation are done in front of an Italian public notary);
- providing a registered office in Italy on demand - the registered office serves as headquarters for the company in Italy and it will be made public;
- setting up a bank account for the company in Italy - BridgeWest will help in setting up the share capital bank account, as well as a current bank account once the company is incorporated.
- recommending an Italian accountant, as accounting services are needed for new businesses in Italy.
The limited liability company in Italy (Societa a Responsabilita Limitata - SRL)
The Italian limited liability company is chosen by foreign investors wanting to start small businesses. The Italian legislation prescribes two types of limited liability companies – the traditional limited liability company and the simplified limited liability company. This company type is the most popular way to open a company in Italy, considering the large number of advantages investors have.
The limited liability company is a common way to start a company anywhere in Europe and it is also used for offshore company formation. With regards to the Italian limited liability company, it must be noted that this company type is generally used for investors who want to start a small or medium-sized company. The traditional type and its simplified version have the following common features:
- these legal entities can be incorporated by a single shareholder and they can be represented by a single director;
- the company’s shareholder can also be the person who is appointed as a company’s director, a feature that is also applicable for those interested in offshore incorporation;
- the legal entity is legally required to have its registered address in Italy;
- the company’s representatives (the shareholder and the director) must obtain a tax identification number for the Inland Revenue;
- both company types are incorporated based on the same statutory documents, the articles of association, but certain differences will arise in each case.
It must be noted that the simplified version of the limited liability company has to be incorporated based on a standard model of the articles of association and its founders are not allowed to make any amendments to the standard version prescribed under the local law, unlike the articles of association signed in the case of the traditional limited liability company.
The share capital of each shareholder is measured in quotas according to their contributions. The company can have one director, two or more directors with independent powers or a board of directors, as mentioned in the articles of association. Italian limited companies must also have a board of statutory auditors and their own accounting systems that will maintain all the transactions, balance sheets, and financial statements.
The joint stock company in Italy (Societa per Azioni - SpA)
The Italian joint stock corporation is usually employed by large enterprises. The minimum share capital for an Italian joint stock corporation is EUR 50,000 and a quarter of it must be deposited before the company is incorporated. In case of a single shareholder, the start-up capital must be paid in full before incorporation.
The shares of a joint stock company can be related with limiting voting rights or shares offered to employees. The shares can also be represented by share certificates. The capital contribution can be made in cash or in kind. Contributions made in kind must be evaluated by a registered auditor.
In order to incorporate an Italian joint stock corporation, at least one shareholder is necessary. Shareholders are required to have an ordinary meeting once a year in order to approve the financial statements. The joint stock corporation must have its own accounting system that will be supervised by a board of statutory auditors.
The company is also allowed to appeal to an external auditor. The management of the joint stock corporation can be traditional, formed by a single director, a board of directors appointed by the shareholders’ meeting, a management board appointed by a supervisory committee. The supervisory committee is elected by the shareholders.
The Italian branch, subsidiary and representative office
Foreign companies are allowed to set up separate enterprises from the parent company, where the foreign company will be a shareholder in an Italian company. Foreign companies can also open extensions of the parent company in Italy. There are specific differences between the branch office in Italy and the subsidiary, which can be detailed by our team of consultants in company registration.
How many companies are incorporated in Italy?
Italy is one of the major economies of the European Union (EU). With a developed market, the country attracts foreign workforce, but also a large number of foreigner investors. Seen from a regional perspective, the highest number of companies can be found in Lombardy, Lazio, Campania and Veneto. With regards to the number of legal entities operating here, we present the following data:
- in September 2019, the Southern region and the Italian islands accounted for 2,045,815 companies;
- the North-Western region in Italy accounted for 1,566,395 businesses;
- the Central region of the country accounted for 1,338,687 companies;
- the North-Eastern part of Italy had the lowest number of companies, of 1,150,325 entities;
- Lombardy had the largest number of companies, of 961,683.
Taxation in Italy
The standard VAT rate in Italy is 22%. Reduced rates are also available. The Italian tax authorities provide four categories of reduced VAT rates, as follows: 10% for a wide category of goods such as foodstuffs, pharmaceutical products, hotel accommodation and restaurants, 5% to specific passenger transportation and foodstuffs, 4% to foodstuffs, e-books, online journals, the construction of new buildings built for residential purposes and 0% to intra-community and international transportation.
The corporate tax in Italy is set at 27.9%. The corporate tax is comprised of two main tax components, as follows: the general corporate tax, applicable at a national level and charged at a rate of 24% of the company’s income, and a regional production tax, charged at the rate of 3.9%.
Businessmen who want to invest not only in Italy and who consider starting a business in an offshore jurisdiction should know that one of the benefits of offshore company set up is given by the fact that such countries will typically not apply the corporate tax.
Companies that are involved in the shipping industry can opt to register for the payment of the tonnage tax, which is calculated based on the value of the shipping. Those starting a company in Italy must also be aware that additional taxes can be charged. When hiring employees, the company is required to pay the taxes associated with their employment.
For foreign companies, it must be noted that withholding taxes will apply on the taxation of dividends and interest at the standard rates prescribed by the national law, but reduced rates apply if any taxation treaties are enforced. BridgeWest is also able to offer ready-made Italian companies and VAT registration. Please contact us for more information and prices.
You can also rely on our specialists to help you in opening a corporate bank account in Italy and to prepare the company’s statutory documents. Investors can also receive information on how to set up an offshore bank account and our team can also represent foreign businessmen in the process of offshore incorporation.