Global expansion into Italy generally means that you need to set up an in-country entity. However, by partnering with us you create the possibility to bypass this process and utilize our Italian entity. By using our PEO-service we take care of the complicated paperwork.
Expanding into a new country is always an adventure, but we believe this adventure should be exciting instead of just frustrating and time-consuming. Therefore, we have been supporting companies in over a hundred countries with their expansion plans.
In this guide, we will share which documents you need to establish an entity in Italy, but also where you will need to register your business address and company’s name. We will also break down the advantages and disadvantages of setting up an entity in Italy.
How to set up an Italy Subsidiary
Setting up a subsidiary requires these steps:
- Decide on the company type that suits the nature of your business, your business goals and matches your own capabilities to meet establishment requirements. Common company types include: the Limited Liability Company (SRL), the Public Limited Company (SpA), The Free Zone Company, Branch Office (Filiale), Representative Office (Ufficio di Rappresentanza)
- Obtain a local business address in Italy.
- Decide on a company name and check on its availability.
- Prepare the appropriate registration documents.
- Open a local business bank account in Italy and deposit the appropriate share capital.
- Notarize registration documents at a notary’s office and acquire an Apostille Certificate for them.
- Register your company at the Trade Register and the Register of Enterprises.
- Register with the Tax Revenue Authority.
- Register with the National Social Security Institute.
- Register for a VAT Number.
- Receive a Certificate of Incorporation and a Company Registration Number.
Registration Times & Fees
- Get a bank account - Depends on the bank
- Trade Register Fee/Govt. Grant Tax - EUR 520
- Incorporation Fee - EUR 2300
- Share Capital - EUR 1 (LLC), 50,000 (JSC)
Overall, the company registration process takes around a week (without delays). Registration for a corporate bank account, however, may take a few weeks.
To enroll into the Business Register, one has to fill an e-form known as “Single Business Communication”, attaching the incorporation documents – which enables the entity to obtain their VAT number, tax code, as well as be assigned a specific insurance and social security code.
In order to access this e-form, one must:
- Register on the free web-service Telemaco
- Be in possession of a digital signature and
- Be in possession of a certified electronic email address (PEC)
Registration can also be done in-person at the Trade Register office of the business address’ province in Italy. After the application has been processed, a registration certificate will be issued.
What you need to set up an Italy Subsidiary
For foreign companies wishing to expand into Italy, certain requirements must be met:
- A local business address – leased or purchased with all relevant documentation.
- A local bank account with the appropriate share capital deposited (which varies according to the subsidiary type).
- Appointment of a company director or board of directors.
- Completed registration documents:
- Application Form
- The Memorandum of Association
- The Articles of Association
- Documents with information of the subsidiary’s shareholders, directors, and secretary
- Business address documentation
- Confirmation of the payment of statutory fees
- The parent company’s Certificate of Good Standing
- A trading certificate (depending on the company type)
- Notarized and legalized registration documents (with Italian translations if needed).
- Certificate of Incorporation and Company Registration Number.
- A Company Tax Code.
- A VAT Number.
- Registration with the Social Security Institute and Workers’ Insurance.
Benefits of Setting up an Italy Subsidiary
Italy is an attractive destination in Europe for subsidiary establishment and growing a business’ influence. There are also other significant benefits to establishing an entity in Italy:
- Subsidiaries in Italy are taxed the same as any other resident company.
- Subsidiary entities in Italy also benefit from close to 100 double taxation treaties, making the country an investor-friendly tax regime with an extensive network.
- Businesses in Italy have a gateway to the European Single Market, with access to over 50 million consumers in over 30 national markets.
- Subsidiaries in Italy also benefit from Italy’s strategic location, with its advanced infrastructure offering access to the rest of the European Union, as well as Northern Africa and the Middle East.
- The Italian government offers numerous tax credits and incentives for subsidiaries and other foreign investments, especially in research and development.
- Italy is one of Europe’s largest manufacturers, with a large and extensive network of experts in a wide range of sectors.
- Italy spends over EUR 25 billion in research and development, making it the fourth highest investor in Europe. The government agency, Invitalia, also provides extensive incentives to both local and foreign companies by financing projects in sectors such as industry, tourism, and environmental protection.
Italy Subsidiary Laws
In Italy, subsidiary laws may vary depending on the subsidiary entity type you wish to establish – but all are regulated under The Company Act. Compliance entails meeting these requirements:
Registration & Documentation
- Private limited liability companies require at least 1 director and 1 shareholder, who can be of any nationality, whilst public limited companies require at least 2 shareholders, and the appointment of a director and a resident auditor.
- For company incorporation, public companies require a share capital of at least EUR 50,000 (of which about ¼ must be paid during incorporation), and limited liability companies require a share capital of at least EUR 1.
- All entities are regulated by The Trade Register and the Register of Enterprises.
- All companies are required to have a local business address or virtual office address.
- Entity Founders Documentation – foreign founders must submit certain documents that confirm their identities, for both private individuals and legal persons/entities, including parent company information, information on beneficiaries and shareholders, etc.
Accounts and Taxation
- All subsidiary companies must pay a corporate income tax rate of 24% on profits generated from worldwide income, as well as a regional production tax of around 3.9%.
- Subsidiary entities are required to pay 26% withholding tax on loans and securities, but this amount might change according to the applicable Double Taxation Treaty.
- Entities must also register with their local Revenue Agency office, National Social Security Institute and Insurance Against Accidents at Work upon incorporation.
- In order to start recruiting, companies will also need to register with the province’s Labor Office.
- Registration for VAT is also mandatory for all company types.
- Annual tax returns and financial statements must be submitted to the Italian Revenue Agency. Audits are required if two of the following conditions apply: i) turnover is above EUR 8.8 million, ii) assets are above EUR 4.4 million, or iii) the company has more than 50 employees.
- The tax period for corporations in Italy is 12 months, but conformity with the calendar year is not obligatory. New established companies, however, may have a taxable period of up to 18 months. Both income tax and regional production tax returns must be filed by the 11th month after the tax year’s end.
- All shareholders and directors must be registered with the Trade Register and the Register of Enterprises.
- The number of directors required for incorporation depends on the type of company being incorporated.
- A subsidiary must be managed by a director or board of directors, who will ensure that the company follows the articles of association.
- They must appoint an auditing body for financial requirements in case certain thresholds are met (see above).
- For every change in particulars of the company or of its officers occurs, this must be logged with the Register of Enterprises and Trade Register no more than 14 days from the day of the changes made.
- All companies are required to submit a remuneration report for each financial year of the company, which must be prepared by the directors.
- Both directors and shareholders must hold an Annual General Meeting (AGM) for going over the financing reports and making or approving administrative decisions.
Working with Bradford Jacobs
Establishing an entity takes considerable time and resources, despite the ease of establishment you can find in Italy. To do this, you need to acquire the right people and the right resources, which will not be easy. A cost-effective and time-saving alternative to this is engaging the services of a Professional Employer Organization (PEO) such as Bradford Jacobs.
With over two decades of global recruitment expertise and our Employer of Record (EOR) solutions, we can have employees operational within days, ensuring that all laws and regulations (employment, payroll, tax) are followed. When you are expanding into a new territory, it is important to ensure your administration operates flawlessly for both you and your employees.
Our Human Resources’ experts will ensure a smooth transition of your onboarded employees into your new territory. International borders should not stand in the way of international expansion.
Contact us today to make your expansion goals a reality, with ease and confidence.