Key considerations for incorporating in Italy
Italy routinely ranks as an attractive destination for foreign investors, but its high level of complexity can make it a challenging environment in which to do business. Here we take a look at the drivers of this complexity and the steps you need to take to make your incorporation journey seamless.
In our latest annual GBCI (Global Business Complexity Index) report, Italy ranked as the 8th most complex business environment, a significant increase in complexity from 15th in 2021. Some of the reasons for this upward trajectory include a complex regulatory system and frequent regulatory changes that often require interpretation.
Despite these issues, Italy offers investors a number of benefits, including: a sophisticated infrastructure, a highly developed economy, and a strong manufacturing sector. The country boasts the third largest economy in the EU, and it serves as a major shipment hub and entry point to the European single market.
Italy has been slower than many other countries to fully embrace digital transformation. This means that many business incorporation and reporting activities still involve submitting paper forms to governmental agencies and banks, often in person.
Limited liability companies (joint stock companies and private limited companies) are the most common business entities used by foreign investors in Italy.
To set up a limited liability company (società a responsabilità limitata or S.r.l) in Italy, you will need to appear before a notary public, who will finalise the incorporation deed.
The incorporation deed consists of two parts:
- the first part (the deed of incorporation drawn up by the notary) details key company information
- the second part consists of the articles of association (bylaws drafted in accordance with the company’s needs and attached to the deed of incorporation), and also lists the rules relating to the operation, organisation and winding up of the company.
The minimum share capital to incorporate a regular limited liability company is €10,000. If a company is founded by a single quotaholder, 100% of the capital must be deposited, upon incorporation, into either the notary’s bank account or into a restricted bank account opened in the name of the new company.
Company registration in Italy and the steps to incorporate fully can be challenging. Here we outline some key considerations for setting up a business in the region.
The incorporation procedure can take a couple of months and you may be required to finalise multiple documents before a notary located in the same country as your company’s parent company and before an Italian notary. Each document must be translated into Italian by a translator who is approved by the Chamber of Commerce and Industry or sworn before an Italian notary public.
To be appointed as a director of an Italian company, and to register an office in the trade register, the director must apply with an Italian tax code (if they do not already have one).
Italy has implemented an ultimate beneficial owner (UBO) register that obliges all companies to register their UBOs. UBO data must be updated annually.
The VAT and tax systems in Italy are complex, and opening a business bank account can be challenging as Italian authorities and banking institutions may ask your legal representatives for numerous documents that they will likely need to sign in person to confirm their identities. To successfully navigate these issues – and to do so in Italian – foreign companies may require local advisors and directors.
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Our experts on the ground offer services across the three core business lines of accounting and tax, global entity management, and human resources and payroll. In addition to assisting with incorporation procedures, we help you streamline your operations and stay compliant.
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