Incorporate an Italian Company

Question: I represent a non Italian entity. Can you assist us incorporating an Italian company? We want to start with a basic one with limited liability. What do I need to get started and how much would it cost?

Answer: We would be glad to assist you with the incorporation of an Italian company and with any related matter.

Though hiring an Italian lawyer is not required by law, engaging a legal representative experienced in the matter will make the company incorporation process smoother and more convenient financially, resulting in the best outcome for the lowest cost possible. Legal fees depend on the extent of the requested services. After our review of the case circumstances we would be glad to provide with our a quote and fee structure details.

Please find below some general information regarding law requirements, applicable costs, employment regulations and professional fees.

General information regarding setting up an Italian company

Unless there are particular requirements, you would typically set up the Italian company under the form of a limited liability company (Società a responsabilità limitata – S.r.l.).

The shares of an S.r.l. are allowed to be held by a sole shareholder or by multiple shareholders. Both individuals or companies are entitled to be shareholder/s.

An S.r.l. is incorporated by means of the signature of bylaws and an incorporation deed in front of an Italian notary public;

In order to sign the bylaws and incorporation deed, the future shareholder/s must attend an incorporation meeting in front of a notary public to sign the bylaws and the incorporation deed. The shareholder/s can attend in person or be represented by way of a power of attorney (PoA). If the shareholder is a company, the authorized representative of said company shall give the notary evidence of representation powers, e.g., by way of PoA or company resolution.

In order to start with the incorporation activities, the notary would need the following information and documents:

1. Name of the company: e.g., Italian NewCo S.r.l.;

2. S.r.l.’s subject and purposes to be included in the bylaws and Chamber of Commerce record, i.e., description of the business activities. If needed, you could provide us with a summary of the activities to be carried out by the Italian company and we would draft and propose the company subject and purposes for your comments.

3. S.r.l.’s address: Town/City (“Comune”) and address. Please indicate whether the S.r.l. shall have registered offices separate from operative offices in the country; for instance, the registered office might be the same address of the office or at our firm’s office address.

4. S.r.l.’s shareholder/s details:

a)    If the shareholder is a non Italian company (Incorporating Company) you would typically be expected to provide following information regarding the Incorporating Company:
– Name
– Address
– Director
– Law governing the bylaws or article of organization
– Certificate by the Chamber of Commerce or other official Registry regarding the following aspects

• (i) company’s existence
• (ii) incorporation laws
• (iii) good standing
• (iv) true copy of the article of organization
• (v) director’s powers
• Under certain circumstances, said information must be sealed under the apostille procedure as per the Hague Convention 1961 and afterwards needs to be officially translated to be used in Italy.
• (vi) Italian Tax Code (Codice Fiscale) of the Incorporating Company;
• (vii) Italian Tax Code (Codice Fiscale) of the Incorporating Company’s director representing the company.

b) If the shareholder is a non Italian individual, you would typically be expected to provide following information regarding said shareholder:

– Copy of passport;
– Date and place of birth;
– Home address;
– Occupation;
– Italian Tax Code (Codice Fiscale).

c) With respect to the director of the New Italian Company S.r.l. you would typically be expected to provide the following information:

– Name;
– Date and place of birth;
– Citizenship;
– Home address;
– Copy of passport;
– Italian Tax Code (Codice Fiscale);

5. Bank receipt of deposit of the corporate capital (minimum EUR 10,000 in case of sole director, EUR 2,500 in case of multiple shareholders). The deposit order description must be consistent to the S.r.l.’s name. In order to deposit the corporate capital to a bank, it is not necessary for the shareholder to open a bank account prior to the incorporation. Banks accept corporate capital presentation by informal representatives. After incorporation it will be necessary to give the bank the incorporation S.r.l. details for the director, or an authorized representative to be allowed to collect the presented corporate capital, to use it for the purposes of the business.

Contracting employees

National and local laws might provide benefits for hiring employees. On the other hand, it is important to bear in mind that Italian labor laws are very strict and typically in favor of the employee rather than the employer. It would be advisable to check and find an efficient way to contract employees under the Italian law.

Relevant information for this purpose would need to cover the following aspects:

a) business description;
b) description of the activities that each employee will be expected to carry out, salary structure for each employee, terms of employment, such as duration (with term, with no term);
c) name, date and place of birth, citizenship, home address, copy of passport, Italian Tax Code (Codice Fiscale).

Italian Representative Powers and Operating Agreement

When an Italian Company is incorporated or directed by a non Italian subject, the latter might find it appropriate to keep the Direction within the incorporating company management and to give one of the local employees in Italy wide powers to represent the director, to be able to carry out ordinary daily management activities as well as limited extraordinary activities. This power of attorney should be issued according to proper indications and restrictions. Also, an internal “operating agreement” might be established between the local Italian employee and the non Italian entity (e.g., director or shareholder), to regulate the way to manage the daily activities of the business, how to make decisions, how and when to report updates or information to the parent company or to directors etc.

Estimate of involved costs

Start up costs include notary public fee, Chamber of Commerce costs and stamp duty.

The total start up cost above is approx. EUR 1,800
Corporate income tax (IRES): 27.5%
Corporate Regional tax (IRAP): 3.90%

Employment cost depends on the employee role. The salary minimum amount is typically established by the law depending on the employee’s role. A typical low level entry salary is approx. EUR 1,800 per month, including taxes and benefits. A company monthly cost of EUR 1,800 results in approximately EUR 1,000 in employee’s pocket. 13 or 14 months of salary per year are due to employees. Sometimes national and/or local laws and regulations cut taxes and benefits costs in favor of companies and/or employees, to be reviewed on a case by case basis.

Accountancy: approximately EUR 800 for start up activities and formalities + EUR 350 per month including execution of all tax obligations, corporate income tax, corporate tax, VAT etc.;

The EUR 350 amount above includes the following activities, if applicable:

Daily activities of recording payment receipt and invoices issued by the Italian branch:

– VAT book-keeping
– Income tax bookkeeping
– Completing VAT returns;
– Completing income tax returns
– Filing VAT and income tax returns with the tax authorities
– Completing income tax and VAT payment forms
– Indicate to the Italian branch tax amounts to be paid and related deadlines
– Ordinary accountancy advice

The amount above does not include the following activities:

– Completing and issuing invoices on behalf of the company
– Executing VAT and income tax payments
– Any other activity not included in the list above
– Extraordinary activities

Labor consultancy

Each employee implies approx EUR 170 start up activities and formalities + EUR 60 per month.

All consultancy fees above are subject to VAT (currently 20%), if applicable.

Relatated information

• VAT on Italian legal services
• Italian Tax Code – Codice Fiscale
• Power of Attorney (PoA)
• VAT on Italian property purchase
• Italian Income Taxes