How to establish a business presence in Italy

Dec 05, 2018

Foreign investors wishing to set up a business in Italy may start by establishing a limited liability company or SRL (Società a Responsabilità Limitata), the most popular business structure in Italy among foreigners.

What is an S.R.L.?

It is a Limited Liability Entity which benefits of a complete limitation of liability of the quota holders for company obligations. It is a “smaller-scale” company where the owners are usually a few individuals or entities (i.e. “quota holders”) holding “quotas” in the company rather than shares.

Why choose an S.R.L.?

• it has lower capital requirements (minimum share capital is only € 10,000).
• It allows to have a full presence in Italy and an Italian VAT number, but at the same time being less burdensome than a Joint-stock company in Italian S.p.A. (Società per Azioni). In the future, if needed, the limited company SRL can be “upgraded” to a joint stock company (“S.p.A”).
• Quota holders have more freedom in setting up the rules for its functioning, management, and organization

Is it a legal requirement to deposit 100% of the registered capital before the company incorporation?

Yes and no. Yes, if there’s a single quota holder (100% of the capital to be paid in full); no in case there are two or more quota holders. In this case, they can initially deposit a smaller share capital (25% in total – not for each!) and the rest shall be deposited when the directors call for it, in accordance with the needs of the company.

Advice: to favorably impress authorities (such as immigration authorities) banks, providers or clients it is advisable to have a higher capital (no less than 50,000 Euro for immigration purposes).

Are the Company Registry and any relevant company documentation publicly available?

Yes. Anyone can access the Companies Registry and have a copy of the documents filed there. All corporate documentation (deed of incorporation, bylaws with appointed directors, balance sheet, profit and loss account, etc.) is subject to the same disclosure.

Can I keep the company inactive?

Not advisable. Tax Authorities expect a newly established company to start showing some activities after an initial period of 2 years or they will most likely make an assessment and request the payment of some taxes.

Advice: if you intend to sponsor an immigration application through the newco, you must provide documented evidence of economic activity and compliancy with social security/labour obligations.

Do I need to hire a firm of accountants?

This is highly advisable. A firm of accountants shall be hired from the beginning in order to accomplish all tax and social security obligations (please ask for contact information of trusted firms)

My company does few operations in a year, do fixed costs apply?

Yes. Even if operations are limited, some yearly recurring costs for corporate accomplishments (drafting yearly financials, VAT filings, etc.) do apply.

What are the main steps to register an SRL?

The process of establishing a can be entirely handled by a trusted consultant, with no need for the prospective quota holders to travel to Italy.

1. Execute PoA granting powers to incorporate newco:
   Execute power of attorney granting a trusted consultant (can be Mazzeschi) powers to attend Notary’s meeting in Italy and to incorporate newco (notarization and legalization by Italian Consulate/ Apostille is required); No need of power of attorney in case officer of parent company or quota holders of new company attend in person Notary’s meeting in Italy;
2. Provide all info and docs:
   Provide all info/docs required by your consultant;
3. Apply for Italian Tax Code:
   Apply for newco’s quota holders and officers Italian tax codes (Mazzeschi can apply);
4. Transfer funds for registered capital:
   Transfer funds for registered capital to Italian Notary’s trust bank account (funds must be available on Notary’s account the day of incorporation deed execution);
5. Incorporation of the new company:
   unless new quota holders/officer of parent company attend in person, Mazzeschi attend meeting with Notary Public to execute the deed of incorporation and bylaws (The Notary keeps in the deposit on behalf of Newco’s appointed officer the registered capital, that is not yet available for company’s operations);
6. The new company is registered with Companies’ House:
   Within twenty days from the date of execution of incorporation deed and bylaws, the new company is registered by the Notary with the Companies House and the company is provided with a VAT number and is officially registered (a new company’s PEC email must be provided to the Companies House);
7. Open company’s bank account:
   Once the company is officially registered, appointed director opens company’s bank account (documents showing the “final beneficiary”, i.e. individuals who own the parent company are required) and registered capital initially paid is released by the Notary’s bank and transferred to company’s account. At this stage, registered capital can be used for the company’s operations.

Giuditta De Ricco

Attorney at law since 2006, specialized in real estate law, inheritance, citizenship and corporate law.