Сompany registration in Italy: Legal aspects and advice

Company registration is the process of formalizing the status of a legal entity in accordance with the laws of a certain country. During this process, the company is officially recognized as a legal entity with its own legal capacity.

To receive this status, it is necessary to provide certain documentation and fulfill the requirements established by the state authorities. Due to registration, the entity is able to conduct commercial activities, conclude contracts, participate in court proceedings and perform other legally significant actions.

If you plan to start a business in Europe, Italy is an excellent choice for registering your company. The Manimama team has conducted in-depth research, analyzed the main subtleties of incorporating in Italy, and is ready to share its results and help you choose the right jurisdiction.?

What are the main advantages of incorporating a company (business) in Italy?

1. Promising location

The strategic location of Italy in the heart of Europe provides companies with advantageous access to both European and global markets. With well-developed transport networks—air, sea, and land—Italy serves as a key logistics hub for the export and import of goods. Additionally, its closeness to the Mediterranean Sea fosters trade with countries in North Africa and the Middle East.

1. Favorable tax system

Italy’s tax system offers attractive business conditions, featuring a corporate tax rate of 24% and regional taxes ranging from 3.9% to 5.9%. Innovative companies can benefit from additional tax incentives. The value-added tax (VAT) is 22%, but reduced rates apply to specific sectors. A flexible system for personal income taxation makes Italy an appealing destination for entrepreneurs and investors alike. Additionally, Ireland’s extensive network of double taxation treaties enhances its appeal for multinational corporations looking to optimize their tax efficiency.?

1. Well-developed infrastructure

Italy’s developed infrastructure includes modern transportation networks that provide efficient logistics solutions for companies. The network of highways and railways, along with seaports and international airports, enables the quick delivery of goods both within the country and beyond. Furthermore, well-established telecommunications and access to innovative technologies facilitate smooth business communications and effective operations across various sectors of the economy.

1. ?Political and economic stability

Italy’s political and economic stability creates a reliable environment for doing business, ensuring predictable conditions for entrepreneurs and investors. As a member of the European Union, the country guarantees access to the EU single market and international financial markets, facilitating financing and trade. Moreover, Italy promotes favorable conditions for foreign investors through various government programs, making the business climate even more secure and attractive for long-term investments.

1. Highly skilled workers

Italy has an extensive network of educational and research institutions that ensure a constant inflow of highly skilled workers. Universities and research centers train specialists in various fields, from engineering and technology to fashion and design. This allows companies to easily find employees with the necessary knowledge and skills, fostering innovation and enhancing competitiveness.

6. Strong international cooperation

Italy’s international cooperation provides access to global markets through close ties with the EU and other countries worldwide, allowing companies to integrate into the international economy effectively. Participation in international organizations such as the EU and WTO simplifies trade and attracts investments. Italy actively encourages foreign investments, offering support to global companies and projects in the fields of science, technology, and innovation.

How to register a company in Italy and what are the main requirements for such registration?

Step 1. Initial setup

• Initiating a preliminary project assessment, assessing risks, choosing the type of company, preparing the necessary documents and obtaining the necessary permits, determining the time frame, budget, and resources required to complete the process.
• Preparation and filing of the package of documents.

Step 2. Company registration

• Verification and reservation of the company name at the Chamber of Commerce;
• Facilitating the notarial process for the company’s official registration;
• Incorporating the company’s data into the Italian Business Register (Registro Imprese) belonging to the Chamber of Commerce;
• Obtaining the Certificate of incorporation and Articles of Association issued by the Business Register;
• Notifying the Economic and Administrative Index (REA) at the Chamber of Commerce of the business start date (the notification must be made via the ComUnica website within 30 days of the start date);
• Registering for tax purposes;
• Opening of a corporate bank account;
• Obtaining the licenses or permits, if applicable.

Requirements for registering a company in Italy on the example of a? Private Limited Liability Company (PLLC) / Società a Responsabilità Limitata (S.r.l.):

• Shareholders: the company must have a minimum 1 shareholder. Both natural persons and legal persons may be shareholders of a company. There is no no citizenship or residency requirement.
• Director: a S.r.l. must have at least 1 director. There is no requirement to appoint a local resident director.
• Company secretary: no requirement.
• Minimum share capital: the minimum share capital requirement is €1.
• Legal address: the company must have a registered office in Italy, the company’s legal address. It can be a physical or virtual office.
• Liability: the liability of the shareholders is limited only to the amount they have invested in the company.
• Accounting: a S.r.l. needs to observe the accounting principles in Italy and observe the requirements for preparing and submitting annual accounting and financial records.

What do you have to know about taxes when registering a company in Italy?

Corporate income tax (CIT):

• CIT is a tax on the profits earned by Italian companies and permanent establishments of foreign entities.
• The standard rate is 24%.
• The regional tax levied on the value of production and services rendered by a company. The rate varies by region and activity – from 3.9% to 5.9%.

Personal income tax (PIT):

• Italian residents and foreigners who earn money in the country must pay federal personal income tax. It is applied to the overall income (includes capital income, employment, self employment, entrepreneurial activity, and land income).
• The PIT rates are as follows:€0 – €28,000 – 23%above €28,000 up to €50,000 – 35%over €50,000 – 43%
• On the above rates there is a need to add the municipal tax supplement which ranges from 0.1% to 0,9% and the supplemental regional tax which varies from 0.7% to 3.33% depending on region and bracket of income.

Value-added tax (VAT):

• The standard rate is 22%.
• There are also reduced rates of 10% (water supplies, pharmaceuticals, hotel accommodation, and restaurants), 5% (children’s products and certain foodstuffs), 4% (foodstuff items, certain medical equipment for disabled persons, books, newspaper and certain periodicals), 0% (passenger transport, medical and dental care, and social services).
• The threshold for VAT registration for resident businesses in Italy is €85,000. Therefore, any business exceeding this limit must register for VAT.

For readers?

Manimama provides assistance in choosing the right jurisdiction for company incorporation and in registering a business specifically in Italy. We have a good understanding of the tax and legal peculiarities of specific jurisdictions, which helps our clients make an informed choice based on their unique needs and development strategies. In our work, we take into account factors affecting the business environment, such as the level of competition, access to financial and human resources, as well as opportunities for further growth and development in different jurisdictions.?

By choosing our company formation service in Italy, you are working with a law firm that values integrity, competence, and client satisfaction. Let us help you set up a company in Italy and pave the way for your business success!

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The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation.