Business Opportunities in Italy
Italy is the third-largest economy in the Eurozone and the world’s eighth-largest economy. Engineering, design, product engineering, steel and iron, and agribusiness are the industries with the highest relevance regarding turnover, jobs, and the number of businesses. These industries have made Italy well-known worldwide and one of the EU’s top exporters (2nd in Europe).
Small and medium-sized firms (SMEs), which account for more than 90% of Italian businesses, make up the majority of Italy’s manufacturing industry, the sixth largest industry in the world. Even though hospitality is the sector most severely impacted by the COVID-19 outbreak, agribusiness, and the tertiary sector are both crucial.
Companies can take advantage of Italy’s open and diversified economy. The country invites many investors, and government policy for investors is highly profitable. Moreover, the Italian Trade Agency provides a ‘one-stop shop’ for pre-investment data, company formation, and business growth. The country’s Foreign Direct Investment (FDI) grew by 4.3 USD billion in August 2022.
Read this guide to understand how to start a business in Italy and how to register a company in Italy.
Benefits of Starting a Business in Italy
There are several advantages of doing business in Italy which include:
- Italy is located at the heart of the Mediterranean Sea. It is a critical center for connecting southern, central, and eastern Europe. Starting a business in Italy gives companies a strategic entrance to consumers in the European Union, Northern Africa, and the Middle East.
- A large portion of Italy’s enormous transportation system is one of Europe’s top logistical hubs. Italy’s ports receive 20% of global maritime traffic, 30% of energy traffic, and 25% of container shipping due to its strategic Mediterranean location. Forty port cities and 42 airports in Italy handle 432 million tonnes of cargo and 1 billion passengers annually. Companies can take advantage of Italy’s duty-free access to more than 50 million consumers and 30 national marketplaces because it is a member of the European Union.
- Investors are welcome in Italy’s open economy. To win the faith and confidence of investors, the nation has carried out substantial reforms, such as establishing a high-level committee under the Ministry of Economic Development.
- Italy is one of the major nations in Europe in terms of manufacturing. Italian-made goods are still regarded as having excellent design and craftsmanship. Companies incorporated in Italy have access to a sizable pool of expertise in various industries, including industrial machinery, pharmaceuticals, apparel, food, and automobiles.
- Italy is Europe’s fourth-highest investor in R&D, spending about 25 billion euros annually. Innovative tools are being used increasingly in its industrial base’s production procedures. Italy is creating a network of technological and scientific parks and accelerators, many of which are linked to institutions and regional development organizations. Through this network, Italy has supported thousands of spinoffs and companies to introduce new ideas and technology to the market.
Requirements for Starting a Business in Italy
Setting up a company in Italy could seem like a brilliant idea, but it can be easier with the right advice.
Businesses should learn about and comprehend the correct steps for forming a company in Italy. The requirements for setting up a company in Italy after that are as follows:
Company name: While selecting a company name, businesses must consider the following
- Conduct preliminary investigations at the Italian Companies’ Register to avoid selecting names identical to or strikingly similar to those of competitor companies.
- Lastly, companies must include the legal basis in the firm name (i.e., “S.r.l.” or “S.p.A.,” as the case may be).
Directors and shareholders: The bylaws outline the maximum and minimum number of directors allowed. Typically, 1 is the minimum number of directors (in this case, the company’s management body consists of a sole director).
Capital: Depending on your company’s legal form, the minimum capital varies. For instance, an S.r.l. may be incorporated with a capital investment of less than EUR 10,000
Types of Business Structures in Italy
The following are the primary business structures that global companies frequently employ to set up business in Italy:
Joint stock company (S.p.A)
- The minimum share capital needed to form a joint-stock company is EUR 50,000. For finance and insurance, high capital is required.
- Companies have to pay a minimum of 25% upfront.
- One stockholder is required, and the share capital is paid immediately after the company’s incorporation. An S.p.A. may have either Italian or international people or corporations as shareholders.
- An S.p.A.’s standard corporate governance model is founded on the following:
– a shareholders’ meeting;
– an administrative authority
– an advisory board composed of the independent auditor and a recognized audit company chosen by the stockholders.
- Companies must conduct a minimum of one annual stockholders’ meeting no later than 120 days or, in extreme cases, no later than 180 days after the conclusion of the fiscal year to certify the company’s yearly financial statements.
Limited Liability Companies (S.r.l)
- Limited liability firms (S.r.l.) are the most popular in Italy.
- S.r.l is appropriate for businesses with flat management structures and few (or even one) quota holders.
- An S.r.l. must have at least EUR 10,000 in capital, of which companies must contribute a minimum of 25% at incorporation.
- One quota holder is required. Companies must pay up the organizational capital in this situation at the time of incorporation. There are no limitations on the number, location of residence, or citizenship of the quota holders, just like with an S.p.A.
- A representative office, as in other European nations, is a location set up by an official legal entity to carry out advertising and other non-transactional functions when S.p.A. or S.r.l. organizations are not needed.
- Companies established as representative offices do not have legal status.
- It doesn’t need to maintain books, provide financial information, or submit tax or VAT filings. Ordinary accounting must be maintained, too, to track the costs (for staff, office supplies, etc.) that the overseas company’s main office is responsible for paying.
- A representative office must be set up and recognized with the Trade Register.
- A branch is the parent company’s extension. It is administered directly by the corporate entity, which appoints one or more lawful permanent agents rather than having its own domestic regulatory body. These representatives are given the authority to publicly run the branch and promote it.
- A branch is not obligated to prepare annual accounts and does not possess its capital. The Trade Register must receive a duplicate of the headquarters’ banking statements.
- Only the Italian taxable income and VAT return preparation process require annual banking statements.
Company Registration Process
Refer to this section to understand how to start a company in Italy
Step 1: Plan your business
- Writing a solid business plan is essential to starting a company in Italy.
- Recognizing the marketplace and the target consumer is essential for a firm’s success.
- Your organization’s goals, aims, tactics, ideas, and target audience can all be included in a business plan, along with other crucial details.
Step 2: Determine your business status
- The business strategy you create will likely offer you a better notion of the kind of firm you want to start.
- The anticipated size of the firm, the primary activities, and the total budget are just a few of the many variables that will influence the legal organization you decide to create.
Step 3: Purchase a long-term Residence Permit (Questura)
- Among the crucial to consider when setting a business in Italy is getting a long-term residence permit.
- You must be legally authorized to live and work in Italy to open a business there.
- While inhabitants of the EU who are covered by international treaties with Italy are excluded from this, entrepreneurs from outside the EU will need a visa to launch their business.
Step 4: Directors and stockholders must register with the Italian Tax Authorities
- It is not necessary to be a citizen of Italy or to reside for company incorporation in Italy.
- Any expatriate may establish a corporation in Italy following Italian law, provided that their home country abides by the reciprocity principle.
- All shareholders and board members must nonetheless acquire an Italian tax ID number.
Step 5: Articles of Association
- According to Italian law, the stockholders must execute the articles of incorporation through public deeds.
- This requires that the articles of association be approved in the presence of a Notary Public.
- Therefore, there are three ways to sign the articles of association when forming an Italian limited liability company: in the present, through the authority of an attorney, or via a virtual meeting.
Step 6: Issuing the business’s VAT number
- The next step is to secure the Company VAT number (Partita Iva) provided by the Agenzia Delle Entrate.
- Online requests typically result in the same-day issuance of the VAT number.
Step 7: Issuance of the Certificate of Incorporation
- Obtaining the certificate of incorporation is the last step in the incorporation procedure (Visura).
- All the integrating company’s paperwork, including the articles of association, rules, VAT number, and codice fiscale, must be submitted to the Chamber of Commerce.
- Within two to three days after reviewing the formal components of the paperwork, the Chamber of Commerce will release the Visura.
Step 8: Open a corporate bank account
- Opening a corporate bank account is necessary for any firm before it may perform transactions.
- You must give the bank specific documentation that attests to the validity of your company when creating a corporate bank account.
- Due to the conservative lending practices of Italian banks, you will need to prepare your start-up funds in advance.
- Depending on the state of your business, you will need to put at least 25% of this amount into this account.
What is the Cost of Incorporating a Company in Italy?
The following are the primary costs for forming a business in Italy:
- Virtual office: EUR 100/month (required if your firm doesn’t have an office)
- Trade Register fee: EUR 520 (paid to register a corporation with the regional Trade Register)
- Around 2,300 euros for incorporation
- 130 euros each month for accounting services, based on the volume of invoices and annual revenue
- For a limited liability corporation, the minimum share capital is EUR 1, while for a joint stock company, it is EUR 50,000.
Are Foreigners in Italy on Certain Passes Allowed to Start a Business in Italy?
You should be aware that most countries have no particular restrictions when starting business in Italy if you’re a foreigner. The director or stockholder only needs to present a valid ID or passport; they need not have Italian residency.
However, if you intend to relocate to handle your firm locally, remember to obtain a valid work and residency visa for Italy.
Government Assistance for Foreign-owned Businesses
To invite foriegn-owned businesses to set up an offshore company in Italy, the government offers the following assistance:
- Italy is open to FDI from abroad (FDI). The country is subject to the European Union (EU) agreements and regulations, of which it is a member.
- Italy is generally required to give universal access to American investors operating in Italy or another EU country by the EU agreements with the United States and OECD obligations.
Italian authorities can examine acquisitions and mergers for market control under EU and Italian antitrust rules.
- The government offers numerous tax credits and incentives to attract FDI to the country. These include a tax credit for employment and tax deductions for energy efficiency. The government also offers tax reductions on specified tangible assets.
- Foreign investors hold sizable stakes in 12,768 Italian enterprises, according to the Italian Trade Agency (ITA) 2020 report. These businesses had 1,211,872 employees and 573.6 billion euros in total revenues by the end of 2019. ITA does business under the auspices of the Italian Ministry of Economic Development.
How Multiplier Can Help
Starting a business in a foreign country like Italy requires compliance with local rules and regulations. Every nation where you intend to create a company has its laws, incorporation procedures, and tax regulations. You must follow all applicable tax laws and regulations to open a business in Italy. Multiplier and other international PEO service providers can be of assistance here.
Multiplier manages infrastructure to employ talent for your company without starting a subsidiary in the country. You can focus more on testing new markets and establishing teams in new countries. This helps you to attract cheaper and more talented employees to your workforce.