How to set up a business in Italy

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Updated 2023-04-15 21:23

Are you interested in moving to Italy and setting up a business here? Italy's reputation for bureaucracy and structural problems has historically disadvantaged the country, with potential foreign investors and expatriates looking to start a business here. However, in recent years, the system and procedures have been simplified, and many businesses, including start-ups, have emerged.

In 2023, starting a business in Italy has never been easier, especially in industries such as manufacturing, mechanical and construction, chemicals and transport.

Moreover, Italy is a country that favors small and medium-sized enterprises, the Piccole e Medie Imprese (SMEs). These account for 90% of the national market.

Important:

To start a business, you must have the legal right to live and work in Italy. In addition, if you come from outside the European Union, you will usually need a visa and a residence permit for Italy before you can run a business there. You will also need an authorization, nulla osta, before starting operations. Read our article “Long-stay visa for Italy” for more information.

Who can start a business in Italy?

Italy operates its market on the condition of reciprocity, so any entrepreneur who wishes to set up a company and do business in Italy can only do so if an Italian citizen can set up a company in turn in that entrepreneur's home country.

The principle of reciprocity is governed by international agreements. If you do not know whether your home country is subject to the condition of reciprocity with Italy, visit the Italian Ministry of Foreign Affairs website.

Exceptions to this rule include EU and EEA citizens, citizens of countries having an international agreement with Italy, refugees and stateless persons.

Good to know:

Do you want to set up a company, a branch or a representative office in Italy? Unlike a company, a branch is the foreign unit of a company rather than a separate legal entity. Branches do not exercise organizational and decision-making autonomy and are subject to VAT, income tax and annual reporting.

The representative office is registered with a foreign company and exists solely for promotional, advertising and research purposes. It is prohibited from carrying out commercial activities.

The different types of companies in Italy

Italy offers a wide range of legal structures for setting up businesses, depending on the objectives, model, amount of capital, extent of liability of founders and tax implications.

For those seeking to start a business and establish a company with other shareholders, the most common legal structures for starting up as an entrepreneur are the following:

The Società Cooperativa (SC) or cooperative society

There is no limit to the number of shareholders and no minimum capital. The partners may have limited or unlimited liability, but this must be determined in advance. This form of enterprise has a mutualist purpose linked to the satisfaction of the partners' interest in carrying out the activity.

Società in Nome Collettivo (SNC) or partnership

There is no limit to the number of shareholders or minimum capital. All partners are jointly and severally liable for the company's obligations without any limitation.

Societa' per Azioni (SPA) or joint stock company

This type of company provides for the limited liability of all shareholders and the division of capital into shares. There is no limit to the number of shareholders. At the time of incorporation, a minimum capital of EUR 50,000 is required, of which at least 25% must be paid into an Italian bank account and mentioned in the incorporation deed. The share capital divided into shares has legal personality and patrimonial autonomy.

The Società in Accomandita Semplice (SAS) or Limited Partnership

There is no limit to the number of shareholders or minimum capital, and the liability of the partners is unlimited. This type of company provides for two distinct categories of partners, namely limited and general partners. They must be specifically mentioned in the articles of association and differ according to the extent of their liability.

Società in Accomandita per Azioni (SAPA)

This company also differentiates between the different types of shareholders and is identified as a company with capital divided into shares. However, there the limited partners are directors with unlimited liability for the company's obligations.

The Società a responsabilità limitata (SRL) or limited liability company

This type of company has a legal personality and is exclusively liable for its corporate obligations to the extent of the shares paid by the shareholders. There is no limit to the number of shareholders. The minimum share capital for any limited liability company (ordinary, start-up, or simplified limited liability company) is at least 1 euro and has been since 2013. Previously this amount was set at EUR 10,000. This makes the limited liability company particularly suitable for the creation of small businesses. It is also the most common company form in Italy.

Società a responsabilità limitata semplificata (SRLS)

This form of company was introduced in 2012. It differs from a traditional SRL by the ceiling it sets for the share capital, which cannot exceed 9,999.99 euros.

Good to know:

If you want to run a business without personal commitment, the SRL seems to be the best option for shareholders. This is because this type of company separates the business risk from the entrepreneur's assets. In a joint stock company (JSC), liability is also limited to the capital invested and not to the personal assets of the shareholders. However, this type of company works best for larger investments and allows for high-profit margins.

Individual companies in Italy

If you want to be the sole owner of a business, the following structures are the most common in Italy:

Società per Azioni unipersonale (SA)

You will be the sole shareholder of the company and will be solely responsible for its assets for any debts. As with a SPA, a minimum capital of EUR 50,000 is required. You can either set up a board of directors with several members or appoint a single director to manage your Società per Azioni unipersonale.

The Ditta Individuale (DI)

With this type of company, you own a craft business, but specific requirements apply. The initial capital or assets are not an essential criterion for its constitution. Moreover, there is no separation between the company and the entrepreneur insofar as the latter is liable via his personal assets for any debts incurred by the company.

The Società a responsabilità limitata Unipersonale (SRL Unipersonale)

The SRL Unipersonale is a company formed by a single shareholder, and, as with ordinary SRLs, the liability for the obligations contracted is limited to the company's assets. It is one of the most popular forms of company in Italy today, not least because it offers a useful system for protecting assets and running a company on your own. You are required to pay up a minimum of 1 euro in capital (up to 9,999.99 euros in the case of a SRLS unipersonale).

The creation of a memorandum and articles of association is required. In particular, the latter must define all the rules for the management of the company. In addition, the type of company must be defined, indicating that it will have a single shareholder. The deed must be drawn up in the presence of a notary who will also certify that the shares have been contributed.

Start-ups in Italy

The Italian government also allows the creation of so-called Innovative Startups under certain conditions. The main activity must be to develop, produce and/or market innovative products or services with high technological and growth potential. This type of company represents the spearhead of Italian industrial policy in recent years. An innovative start-up cannot, by definition, have been established for more than five years, its annual turnover cannot exceed 5 million euros, and it cannot be the result of a merger or demerger. In addition, a start-up is qualified as innovative if it meets at least one of the following criteria:

  • if it incurs R&D expenditure representing at least 15% of the cost or total value of production, whichever is higher ;
  • if it employs highly qualified personnel (at least 1/3 PhDs, PhD students or researchers, or at least 2/3 masters degree holders);
  • if it is the owner, depositary, or licensee of at least one patent or the holder of registered software.

Setting up and registering your business in Italy

Although the process of setting up a business in Italy has been simplified, it is still advisable to seek legal and tax advice. Most of the time, in the start-up phase, Italian entrepreneurs turn to a series of professionals, including a notary, a lawyer and a chartered accountant (Commercialista), who will guide them through the incorporation of the company: organization, structure, possible contributions, legal procedures to follow, etc.

Generally speaking, the setting up of a company in Italy can be summarised in six administrative formalities:

Creating the incorporation documents

The first step is the creation of the Articles of Association (Statuto) and the Memorandum of Association (Atto costitutivo) of the company. The latter contains data on the shareholders and the company. The articles of association regulate the functioning of the company and describe, for example, the powers of the directors, the sole director, or the board of directors.

Payment of capital

The partners must then pay the share capital. They are free to choose the amount, except for those forms of company that require a fixed minimum.

Incorporation at the notary's office

The next step is to go to the notary to incorporate the company. Since 2021, it has been possible to set up a company online with the notary using a webcam. All shareholders and directors of the company must be present or connected via video conference and have an active digital signature. The notary will identify those present, verify that the capital has been paid up, and formalize the incorporation of the company.

Initial tax obligations

The company must have its own tax code and VAT number. These codes are assigned by the Italian tax agency (Agenzia delle Entrate). These tax obligations are often carried out by the accountant (Commercialista), who handles the company's accounting.

Registration in the Business Register

Once the tax code and VAT number have been obtained, the company must be registered by the notary in the Register of Companies (Registro Imprese) held by the Chamber of Commerce of the municipality where the company is incorporated. Once this is done, the company becomes, in all regards, an autonomous entity from the individual partners (it acquires a legal personality).

Note that the company will only exist following this registration. If one of the shareholders cannot be physically present at the signing of the contract, the incorporation process can be carried out by a legal agent (a lawyer or a trusted person known to the investor).

Commencement of business communication

It is necessary to communicate about the beginning of the activity, in particular by sending certain telematic declarations to the competent bodies. Please note that these vary depending on the activity of your company.

Business plan and market research in Italy

It is advisable to have a good understanding of the Italian market, a clear idea of what you want to do, and a good knowledge of the feasibility of your business proposal before starting the process of registering a company in Italy.

You will need to conduct a market survey to research companies already operating in your field and identify your potential customers. You can then develop a business plan that outlines your business objectives, target market and strategy, including a thorough risk assessment that details potential obstacles along the way.

The Italian Ministry of the Interior has an Aziende section on its website for entrepreneurs, where you will find information on incentives, the market, patents, possible competitions or even call offers.

Useful links :

Ministry of the Interior - Enterprise

Italian Ministry of Foreign Affairs - Reciprocity principle

Camere di Commercio - Registro Imprese

Online management of company formalities - Impresa In un Giorno

We do our best to provide accurate and up to date information. However, if you have noticed any inaccuracies in this article, please let us know in the comments section below.