Italy Company Formation
Italy, formally the Italian Republic is a unitary parliamentary republic in Europe Located in the heart of the Mediterranean Sea, Italy offers open land fringes with France, Switzerland, Austria, Slovenia, San Marino and Vatican City. Italy covers a zone of 301,338 km2 and has a great extent mild regular atmosphere and Mediterranean atmosphere; because of its shape, it is frequently alluded to in Italy as lo Stivale (the Boot) with 61 million occupants, it is the fourth most crowded EU part state. The capital and largest city of Italy is Rome.
The official and spoken dialect of Italy is Italian.
Italy is one of the most important countries in the European Union and it undoubtedly carries a tremendously rich cultural and historic heritage. Its good geographical position gives investors easy access to southern, central and northern Europe markets as well as to the ports of the Mediterranean. Many businesses that start in Italy are involved in trading or import and export activities.
Italy is the birthplace of some of the most iconic and luxurious brands in the world and, while some business fields are clearly more favored than others, the country has an open policy towards foreign investments of all kinds. Some of the most important foreign investment sectors include: tourism, the food industry, agriculture, manufacturing or the real estate sector. The Italian government also provides certain incentives for foreign companies that invest a certain amount in the country or choose to base their business in certain selected locations.
Business Entities and Company Formation in Italy
Incorp International’s experts can guide you to whole company formation and selection of best suitable business entity for your business.
Documents Needed: For a sole trader, all that is needed is an identity card (passport will do), a codice fiscale, permesso di soggiorno (non EU citizens only) and, if necessary a license for the activity you wish to carry out. Further documents needed for the setting up of a company might include bank statements from your country of origin and residency certificates. Incorp International can assist in the obtaining of some of these documents.
Initial Capital: For an SRL in Italy, you need to deposit the working capital in the bank account of the company. Prior to incorporation, however, you need to prove to the notary that these funds exist. For companies with more than 1 shareholder this amount is equivalent to 25% of the declared capital (minimum requirement is 10,000, therefore minimum deposit is 2,500) but for companies with only 1 director/shareholder the full amount must be available. The most common way to prove the existence of funds is to have a cheque or bank draft in the name of the new company, drawn on the account of the shareholder(s). You will also need to open a bank account for the company, where the minimum required share capital will be deposited.
Company Directors: The Company must also appoint one, or more, administrators, basically a CEO. At least one administrator should also be a fiscal resident of Italy, though it is sometimes not the case. The Administrator is responsible for signing off the accounts at year end and is also responsible for the bank account Incorp International can act as an administrator for companies whose directors may not be resident of Italy but prefer to do so for a limited time only and will reserve the right to do this on a case by case basis.
The business environment in Italy is now much more liberal than it used to be. Capital and dividends can be freely repatriated in line with EU rules, and Italy has a number of double taxation treaties. However, public authorities are weighed down with bureaucracy and the legal system is slow. Foreign ownership is permitted in all industries except for defense-related areas such as aviation and shipping. Certain restrictions apply in the telecommunications sector. The business start-up costs can vary according to the type of company and the materials and equipment required for your specific business activity. The costs will also include notary fees and any necessary registration fees with the Italian authorities. You company will also need an accountant that will make sure you comply with the requirements for accountancy in Italy. Our company formation experts can help you with professional accounting services.
Business Entities in Italy
There are several types of legal entities that can be incorporated in Italy:
- The limited liability company;
- The joint-stock company;
- The general partnership;
- Limited partnership;
- Sole proprietorship
The Limited Liability Company
The Limited Liability Company is a business type preferred by investors who want to start a This form of versatile business organization combines elements of partnerships and corporations and it represents the most widespread type of business entity in Italy because of the wide space reserved to the freedom of contract. This form of versatile business organization combines elements of partnerships and corporations and it represents the most widespread type of business entity in Italy because of the wide space reserved to the freedom of contract. Anyway, concessions in favor of freedom of the members are compensated by the accentuation of their control powers and of the rules on management liability.
It has to be noted that, recently, a new form of LLC has been introduced: the Simplified LLC, which can be established with a capital minimum of € 1.00 and which represents the most suitable form of business organization for innovative start-ups.
In order to set up a limited liability company, the minimum share capital must be at least € 10,000 (€ 1.00 for LLCS) and, upon incorporation before the notary, the 25% of it is to be paid. The share capital is divided into quotas, as many members, and may have different value and entitlements.
The administration and the management of a limited liability company is entitled to a body called the Board of Directors or to a Managing Director, if it is a single person. The Directors of the LLC are not said to be necessarily the same members, but they can also be externals. The Board is responsible for drawing up the Balance Sheet, Income Statement and Explanatory Notes, which must be approved by the shareholders and subsequently filed in the Companies’ Register.
The sovereign body is the Shareholders’ Assembly, which includes all the company members. The Assembly’s duties are the approval of financial statements, the appointment and dismissal of directors, appointment of auditors, change of the articles of the Company Bylaws and any changes in the company’s purpose, the decision to commence the liquidation of the company et alia. The Assembly’s decisions are taken by the affirmative vote of the shareholders who appoint the majority of the share capital.
Finally, the Board of Auditors has the duty to exercise a controlling function over the management responsibility; limited liability companies who have less capital than 120.000 €, this body is not mandatory but optional.
The main advantage of this form of Corporation is that, in case of bankruptcy, it is only the company to fail and not its individual members.
The Joint Stock Company
In this type of business organization, the capital is formed by the individual contributions of shareholders each of which receive shares for each contribution, and the shareholders are free to transfer their ownership interest at any time by selling their stockholding to others. The Company can issue different classes of shares with different rights attached to each class: for instance, not all classes of shares issued to the shareholders give the right to vote in the company Assembly.
In a Public Limited Company, only the company is liable for the corporate obligations with its own assets.
The minimum capital required for the establishment is € 50,000.00.
The Company has the ability to issue bonds. In general, corporations are preferred over other types of company, when the aim is to receive substantial funding: in particular, public limited companies are permitted, within certain limits, to issue bonds, access the listing of Stock Exchange and invest in its own shares.
In this kind of Corporation, the appointment of an internal Supervisory Board is mandatory.
As for the administration of the company, Joint-Stock company members may appoint individuals as Directors, who are not needed to be members, and they have the sole responsibility for managing the company and perform all the operations that are necessary for the implementation of the corporation purpose.
The General Partnership
The general partnership in Italy has no legal personality and all of its partners are jointly and severally liable.
- There are no minimum limits for the shared capital;
- The company’s tax losses may be deducted from the income of the partners (subject to compliance with legal requirements);
- The Company’s capital is not subject to publication in the Register of Companies;
- In certain circumstances, partnerships can have a simplified accounting system and therefore sustain lower operating costs;
- Less complexity in the legal and accounting management than corporations.
- On the other hand, partnerships’ drawbacks are, firstly, the unlimited and joint liability of the partners – except for Limited Partnership – and secondly that the company’s income is imputed (and thus taxed) to shareholders, even if it is not perceived.
The Partnership Limited by Shares
The partnership limited by shares has two types of shareholders those with limited liability and those with unlimited liability. The limited partnership also has two types of partners: the general ones who are jointly and severally liable and have management responsibility and the limited partners who do not participate in the management of the company and have limited responsibility.
The sole proprietorship is the simplest business form in Italy. The entire liability for the business falls unto the individual running the business.
Branches and Subsidiaries are two other business forms preferred by foreign investors who want to expand their activities in Italy. Alternatively entrepreneurs can start by opening a representative office in Italy.
Innovative Start-up Companies
The Italian Government has recently implemented a special legislation package to favor the creation and development of startups in Italy providing one of the most favorable and innovative legislation in the world for start-up companies. To establish an innovative startup company there is no need of authentication of the incorporation deed by a public notary.