Company incorporation in Italy

If you do business in Italy there may be a point that it makes sense to set up a local company. Then you need to know how to comply with local regulations and who can help you.

This article describes:

the most likely types of company to set up;
how you do this and who can help you;
a few important fiscal regulations.

Your legal entity in Italy

Italy, with its strategic location, large consumer market, and strong ties to the European Union, is an appealing destination for foreign businesses.

Most Common Business Forms for Foreign Companies

The most popular legal entity for foreign businesses in Italy is the Società a Responsabilità Limitata (SRL).

Comparable to a limited liability company (LLC) in other jurisdictions.
Requires a minimum share capital of €10,000, with at least 25% paid at incorporation (or €1 for a simplified SRL, known as SRLS).
Shareholders’ liability is limited to their contributions.

Another option is the Società per Azioni (SPA), commonly used by larger companies, with a minimum share capital of €50,000.

Setting Up a Company in Italy

Setting up an SRL or SRLS involves the following steps:

Drafting and notarizing the company’s Articles of Association (Atto Costitutivo).
Depositing the initial share capital in an Italian bank account.
Registering the company with the Italian Business Register (Registro delle Imprese).
Obtaining a tax identification number (Codice Fiscale) and VAT number (Partita IVA).

Foreign nationals can serve as directors (Amministratore Unico or part of a board) of Italian companies. Residency is not mandatory, but a local address for the company is required.

Taxation and Withholding Taxes

Italian companies are subject to corporate income tax (IRES) at a flat rate of 24%, along with a regional tax (IRAP) of approximately 3.9%.

Regarding dividends:

Dividends paid to foreign shareholders are subject to a withholding tax of 26%, though tax treaties may reduce this rate.
Italy has a wide network of double taxation agreements to prevent double taxation and lower withholding tax rates for foreign investors.

Service Providers for Company Incorporation

These firms provide support with incorporation, compliance, and tax matters to simplify the process for foreign entrepreneurs.

Are you ready to convince foreign distributors?