Investing in Italy
Piccato Paletto & Associates provides support in creating and managing your branch office or subsidiary company in Italy.
Piccato Paletto & Associates serves foreign investors willing to set up a business in Italy.
Our areas of expertise cover:
- Setting up your branch office, subsidiary company or representative office;
- Accounting services or account keeping;
- Monthly report based on your standards;
- Drawing and presenting your declarations to Tax Authorities (VAT, tax return, Intrastat, withholding agents);
- Drawing up and filing of your annual financial statements;
- Drawing and updating your company books (corporate records, minutes of administrative board meetings, shareholder’s register);
- Fiscal policy choices and extraordinary company operations (capital increases, mergers, demergers etc.) drawing up of contracts and legal due diligence;
- Drafting monthly pay-vouchers;
- Danaging duties towards employees;
- Drafting and filing all mandatory declarations to provident societies and pension bodies, accident insurance etc.
Piccato Paletto & Associates will be your partner in Italy, guiding you in an extremely complex and constantly changing social and fiscal environment.
A foreign investor has essentially three ways through which he may work in Italy:
- 1. setting up your branch office with stable representation,
- 2. setting up a representative office,
- 3. setting up a subsidiary company established in Italy.
Branch Office with stable representation
It is a stable organization under economic coordination from the foreign company, but provided with a certain degree of autonomy, both in terms of administration and work, and entitled to act in the name and on behalf of the foreign company on an ongoing basis.
The branch office will compulsorily require inclusion in the Business Register that has territorial jurisdiction over the place in which the office is located.
The foreign company will have to file the statutes of company and the corresponding budget, accompanied by a certified Italian translation. If these documents have been written abroad, it will be necessary to refer to the process of authentication, unless an international treaty, allowing to derogate from them, can be applied.
It is the simplest way to enter the Italian market.
It is a fixed place of business, used by the foreign company for advertising, giving pieces of information, research and similar activities only. These activities must have an auxiliary or preparatory purpose.
It allows self-promotion in the country, with low setting up and managing costs, and without having to acquire, differently from all the other possibilities, tax liability in the host country.
This office cannot be used for productive or commercial activities as such.
As a mere cost centre it does not generate income and is not qualified as stable organization. The foreign company does not have to require inclusion in the Business Register and to file the statutes of company and the corresponding budget. Once obtained the fiscal code by the IRS, the legal representative of the foreign company will simply communicate the establishment of the representative office to the relevant Business Register, in the context of updating the REA (Economic and Administrative news repository)
The establishment of a trading company based in Italy, shared entirely or partially by the foreign parent company, is the most widespread among foreign entrepreneurs willing to carry on business in Italy, especially on an ongoing basis.
It is a “stronger” and more “transparent” solution than a branch office, while, differently from a representative office, allows to carry on business in the host country, which would be otherwise forbidden. Should the foreign shareholders (legal entities or individuals) belong to EU countries or countries with whom Italy has concluded international agreements relating to civil rights, that is to say EFTA countries (Iceland, Norway, Liechtenstein), the establishment of an Italian private-law company would be free from any kind of constraints.
For all other entities the establishment of the company shall be subject to checking of the so-called “reciprocity principle”. To demonstrate compliance with this condition a list provided by the Ministry of Foreign Affair for the purpose will be accessible.
It will then be necessary to choose the most suitable business entity depending on the business needs of the foreign entrepreneur.
The entrepreneur will have to choose among the ones provided for in national legislation. (Capital companies, partnerships, cooperative enterprises). Considering their nature and characteristics, SpAs and Srls appear to be the most suitable ones for the case.
These business entities are characterised by:
- separate legal entity from the ones of the shareholders,
- limited Liability in bonds owned by the shareholders,
- free transferability of membership, be it by agreement between living contractors or by cause of death.
Società per Azioni – S.p.A. (Joint Stock Company)The share capital shall not be less than € 50.000, 00 and consists of shares. Should there be a plurality in founding members only 25% of the stock capital will be necessary, and the payment of what is left will be postponed to a second moment.
A S.p.A can be established with a single stockholder (this being the case, the entire social capital will be required).
S.p.A can issue debt instruments (bonds) up to a certain amount of money.
The assembly formed by the shareholders is the sovereign body, and decisions are taken collegially.
The administrative body can be established in different ways: ordinary, one-tier and two-tier. The ordinary model is the most widespread one: the administration is devolved to either a manager or a management board, in charge up to 3 years.
Managers do not have to be shareholders and can be re-elected. Deliberations are conducted collegially. The appointment of an audit board, formed by three full members and two alternate members, is mandatory. Under particular circumstances, the appointment of an Auditor is also mandatory.
Società a responsabilità limitata – S.r.l. (Limited liability company)It is a simpler legal form than a S.p.A, being characterised by a greater freedom recognised by law as far as characteristics, business and social organisations, which can be adapted to the concrete needs of the company.
The share capital shall not be less than € 10.000 (or € 1 in the simplified form of this company, called SRLS) and consists of shares. For the S.r.l. also, should there be a plurality in founding members only 25% of the sock capital will be necessary, and the payment of what is left will be postponed to a second moment.
Differently from the S.p.A, in order to subscribe the share capital, a shareholder can offer provision of services instead of money.
A S.r.l. can be established with a single stockholder (this being the case, the entire social capital will be required).
Within bounds, S.r.l. companies can issue debt instruments (different from bonds).
The assembly formed by the shareholders is the sovereign body, and decisions are taken collegially. In certain respects, it is possible to deliberate through consultation and under written consent.
The administration of the society shall be entrusted to either a single manager or an administrative board. An open-ended mandate is possible. Managers do not have to be shareholders and can be re-elected. Deliberations are conducted collegially.
The appointment of an audit board, formed by one member at least, or the appointment of an auditor are mandatory under particular circumstances only.
For the establishment of the company, all founding members shall be present. Should the founding member (or one of them) be a foreign company, it will have to be represented by an attorney provided with proxy for the purpose (certified by a notary who belongs to the Country in which the foreign company is based, except for specific situations of exclusion, legalised by the diplomatic or consular Italian authority of the Country in which the foreign company is based, and translated in Italian).