Establishing a Company in Italy – 6 Factors You Should Consider First

Italy is the eighth largest economy in the world and the fourth largest in Europe in terms of GDP. The country has implemented a new plan to position itself among the largest and most welcoming economies for foreign investors.

Thus, it is important to discuss how to establish a company in Italy, which is considered one of the easiest European countries for foreign investment, with the company establishment and registration process taking only about 15 working days.

So, what are the required procedures and steps for establishing a company in Italy? If you are interested in knowing the answer to this question, keep reading until the end, and you will find the answer to this question and other questions that may be on your mind.

Investment in Italy

In recent years, Italy's business environment has shown positive results, making it an attractive destination for entrepreneurs looking to establish a company and benefit from the country's market potential.

Establishing a company in Italy also provides the opportunity to leverage a market with a rich tradition of trade and a thriving market economy. Italy enjoys a strategic location in the heart of Europe, offering access to a wide consumer base of around 550 million people through its membership in the European Union.

As a foreign investor, you can benefit from the appropriate business structure in Italy, which encourages and welcomes international investments. The country also boasts a skilled workforce, ensuring high productivity and quality production for any company.

Benefits of Investing and Establishing a Company in Italy

What are the main advantages of investing in Italy?

Investing in Italy represents a great opportunity for foreign investors looking for a European country to invest in. Among the benefits of investing in Italy are:

• Italy is the third largest economy in the Eurozone and the eighth largest economy in the world, with a GDP of about $2 trillion. Its local market offers many business opportunities, with a population of over 60 million and a per capita GDP of more than $30,000.
• Italy serves as a key gateway to the European single market with its 500 million consumers, and it is close to North Africa, the Middle East, and other potential customers, totaling around 270 million people. At the same time, it acts as an ideal bridge between Southern Europe and the Central and Eastern EU countries.
• For over 30 years, Italy has been the second-largest industrial economy in Europe, surpassed only by Germany. It ranks sixth or seventh among the world's largest manufacturers.
• Italy enjoys a large industrial trade surplus, ranking first among global leaders with 935 products out of 5,117 marketed goods.
• Establishing a company in Italy helps you enter a more developed market, enabling you to easily and quickly develop your products and make them among the most demanded products globally.
• Italy's higher education quality is excellent, with more than 20 universities ranked among the top 500 academic institutions in the world. Over 300,000 students graduate annually, making it easier to obtain a highly skilled workforce.
• Labor costs in Italy are below the average in the Eurozone, being 18% lower than in France and 10% lower than in Germany.
• Strong tax credit plans help companies improve their competitiveness, including a 50% tax exemption for private investments in research and development, a 40% discount for capital goods investments, and a 150% increase for investments in digital, technology, and industry sectors.

Establishing a Company in Italy

Establishing foreign companies in major economies has become an important investment option for many investors, especially from the Middle East. For example, many investors choose to establish companies in China or other European countries, where they can access the facilities required to complete the company registration process.

Italy is no different from China or any other country in attracting foreign companies, and it remains one of the top destinations for entrepreneurs looking for an opportunity to establish a business.

But why do they choose to establish a company in Italy? What are the benefits they receive?

Benefits of Establishing a Company in Italy

Establishing a company in Italy offers foreign investors many advantages, including:

• Easy access to global markets, as Italian products can quickly reach international markets and gain significant fame.
• Italy is one of the strongest European economies, providing investors with greater opportunities in both local and global markets, benefiting from this powerful economy.
• The ability to choose from a wide range of companies that can be established in Italy, depending on factors such as budget, investment size, number of employees, and other considerations.
• Italy offers entrepreneurs and new companies several incentives, including investments in research and development, as well as educational and developmental programs for small investors.
• Italy allows foreign investors to establish companies with minimal restrictions and provides them with the necessary support and facilitation to complete their investments.

Factors to Consider Before Establishing a Company in Italy

Before establishing a company in Italy, several factors should be taken into account to ensure a smooth and successful venture. Below are some key factors to consider:

Legal Structure of the Company

There are various legal structures available for companies in Italy, and most profitable companies can be classified into the following types:

• Sole Proprietorship (Ditta Individuale): This structure involves one person who owns and manages the business independently.
• Partnerships (Associazione): Partnerships involve two or more individuals or entities who come together to manage the business and share profits and liabilities. There are two types of partnerships:
  • General Partnership: All partners share unlimited responsibility.
  • Limited Partnership (SAS): Involves both general and limited partners, where limited partners are only responsible for their invested capital.
• Corporations (Società/Corporazione/Compagnia): These are legally distinct entities owned by shareholders who contribute capital and have limited liability. Shareholders are not personally liable for the company’s debts.

Types of Companies Available in Italy

• Limited Liability Company (SRL): This is a private company owned by one or more individuals. To start an SRL in Italy, the company must have a minimum capital of 1 Euro.
• Simplified Limited Liability Company (SRLS): This structure encourages entrepreneurship, especially for young entrepreneurs. It has simpler requirements than the regular SRL, with a minimum capital requirement of 1 Euro and a maximum of 9,999 Euros.
• Public Limited Company (SpA): Public companies can buy and sell shares publicly. Creating an SpA requires more legal requirements compared to an SRL, including a minimum capital of 50,000 Euros.
• Cooperative Association: This type of company focuses on benefiting its members and employees rather than making profits for shareholders. To establish a cooperative, at least three members are required, with each member contributing between 25 and 100,000 Euros as capital.
• Freelancers (Libero Professionista): These are individuals who work independently under their own names and cannot hire employees.

How to Choose the Right Legal Structure for Your Company in Italy

Choosing the appropriate legal structure for your company is one of the initial steps when starting a business in Italy. Consider the following to make an informed decision:

1. Legal and Regulatory Requirements: Understand the legal framework governing business activities in Italy, including company registration, taxes, labor laws, and industry-specific regulations.
2. Consult Legal Experts: It's essential to seek legal advice from specialized experts to avoid legal issues and ensure successful company registration.

Market Analysis

Conduct a thorough market analysis to understand the demand for your product or service in Italy. Assess competition, target audience, market trends, and potential challenges. This analysis will help you make informed decisions on pricing, marketing strategies, and overall business planning.

Financial Considerations for Establishing a Company in Italy

Key financial factors to consider include:

• Investment Costs: Understand the costs required for investment, company registration, equipment, and employees.
• Taxation: Familiarize yourself with Italy’s corporate tax system, including corporate income tax, VAT, and social security contributions.
• Access to Financing: Consider financing options, bank facilities, and any available grants or incentives for entrepreneurs.

Local Culture and Language

Italy has a unique business culture, and Italian is the primary language used in business transactions. Consider language barriers and the need for translation services or linguistic support.

Building strong relationships with local partners, suppliers, and customers is crucial for the success of your company.

Infrastructure and Location

Evaluate the infrastructure and location options that suit your business needs. Consider factors such as proximity to target markets, availability of skilled labor, transportation routes, and access to suppliers or distribution channels.

Cities like Milan, Rome, and Turin are major business hubs, but other regions may offer unique advantages depending on your industry.

How to Register a Company in Italy

If you want to establish a company in Italy and register it legally, you must first meet the basic regulatory requirements:

1. Capital: Depending on the legal structure of your company, you need to provide the minimum required capital.
2. Registered Office: You must have a registered office in Italy, which is the legal address for the company. This can either be a physical office or a virtual one.
3. Tax Identification Number (TIN): Obtain a tax identification number for your company (TIN), which is required for tax purposes. This can be obtained from the Italian tax authorities.
4. Business Permits and Licenses: Some industries may require specific permits or licenses. Research the regulations and requirements for your business activities to ensure compliance.

Once you review and confirm that you meet all the basic requirements, here are the steps to legally register a company in Italy:

1. Choosing a Company Name
   Choosing the right company name is crucial. Ensure that no other company is using the same name, and register the name in accordance with Italian naming conventions. The name should accurately represent your business activities and be distinctive.
2. Drafting the Articles of Association
   The Articles of Association outlines the company's internal regulations, including its purpose, capital, organizational structure, and governance rules. It is recommended to consult with a legal expert to draft this document correctly.
3. Registering the Company
   To register your company in Italy, you need to submit the necessary documents to the local Chamber of Commerce or Company Register. The required documents typically include the Articles of Association, identity documents for the shareholders and directors, proof of capital, and other relevant forms.
4. Opening a Bank Account
   Once your company is registered, you need to open a bank account in Italy. This account will be used for depositing the capital and conducting financial transactions for the company. Prepare the necessary documents to open the account, such as the company registration certificate, identity documents, and Articles of Association.
5. Tax Registration
   Register your company for tax purposes with the relevant tax authorities and obtain a VAT number if your business is involved in taxable activities. Ensure compliance with tax obligations and maintain proper accounting records.

Here are some common taxes in Italy that you should be aware of:

• Corporate Income Tax (IRES): Corporate income tax is levied on the profits made by Italian companies and permanent establishments of foreign entities. The standard rate is 24%.
• Regional Tax on Productive Activities (IRAP): A regional tax imposed on the value of production and services provided by the company. The rate varies by region and activity, ranging from 3.9% to 5.9%.
• Value Added Tax (VAT): A consumption tax applied to the sale of goods and services. There are different VAT rates, including 22%, 10%, and 5%, with exemptions for certain categories.
• Social Security Contributions: Employers are required to contribute to social security funds for their employees. The rates depend on the salary and the type of social security.

1. Hiring Employees
   After hiring employees, the company owner must register with the National Institute for Social Security (INPS) and the National Institute for Insurance Against Accidents at Work (INAIL).
2. Seeking Professional Assistance
   Establishing a company in Italy can be complex, especially if you need to navigate local legal and administrative procedures. It is advisable to consider seeking professional assistance from experts who can guide you through the process and ensure compliance. You can request this service by speaking with a legal expert for companies via WhatsApp from here.

What Are the Required Documents for Establishing a Company in Italy?

Both local and foreign investors need to consider the following documents for setting up a company in Italy:

• Personal information such as an ID card or passport, which are the primary required documents.
• For foreign companies, a certificate of registration and incorporation documents are also required.
• Incorporation documents for the Italian company, which must be drafted by an Italian notary.
• Depending on the type of company, additional documents may be needed.

What Are the Costs for Setting Up a Company in Italy?

The main costs related to the process of setting up a company in Italy are:

• Commercial Register Fees: €520 (this fee is paid to register the company in the local commercial register).
• Virtual Office: €100 per month (required if you do not have an office for your company).
• Incorporation Fees: Approximately €2,300.
• Accounting Fees: Starting from €130 per month, depending on the number of invoices and the annual business volume.
• Minimum Capital: €1 for a limited liability company, and €50,000 for a public limited company.

How to Easily Set Up a Company in Italy

If you are looking for the easiest way to establish a company in Italy, you can get assistance from legal experts for companies in Zajl.

Learn about our key services, where you can get:

• A virtual office for your company in Italy with ease.
• Assistance in drafting the company’s incorporation documents in the required legal format.
• Ensuring the completion of company registration and setup legally and as quickly as possible.
• Obtaining the company’s tax number.
• Getting help from the best accountants to manage the company's tax records.

All these services are available with us. You can request the services and find out all prices by downloading the Zajl app available on the Play Store.

Establish your company in Europe easily with comprehensive legal, financial, and administrative solutions from Zajl!

How to Set Up Your Own Company in Europe with Zajl

FAQ

• Can I register a company in Italy as a sole shareholder, even if I am a foreigner?
  Yes, full foreign ownership is possible in Italy, even for individual shareholders. Among the types of structures that foreign companies can use are the sole proprietorship and the private limited liability company.
• What is the minimum amount I need to establish a company in Italy?
  This depends on the type of company you want to establish: for a private limited liability company, you need €1, while for a public company, the new requirement is €50,000.
• Can I register my company in Italy remotely?
  Yes, it is possible to register a company remotely in Italy, but you need to appoint a local representative and grant them a power of attorney to complete the process.
• Do I need a resident director for my company in Italy?
  No, the law no longer requires resident directors for Italian companies.
• How long does it take to register a company in Italy?
  The usual procedure for setting up a company in Italy takes about 1 to 2 weeks. However, this time frame depends on how long it takes to prepare the documents.
• What are the main taxes applied to companies in Italy?
  Companies engaged in business activities in Italy are subject to taxes. A company can be taxed in Italy as long as it has a place of administration or a major business activity carried out in this country. Companies are responsible for VAT, corporate income tax, and other taxes if they operate in Italy for at least 183 consecutive days (in this case, the company will be considered a permanent establishment in Italy).