Opening a Representative Office in Italy

Apr 06, 2022

The simplest business structure available to a foreign company to establish a presence in Italy is the “Representative Office” (in Italian: “Ufficio di Rappresentanza”). Foreign companies often use a Representative Office to conduct market research before making a decision to establish a branch or a subsidiary.

A Rep Office cannot execute commercial or financial transactions of any kind; nor can it act as an agent or distributor of a foreign company. The keyword is “promotion” not “trading” and Representative Office cannot send invoices, cannot accept payments by customers, and cannot pay providers. Failure to comply with such regulations may result in the transformation of the Representative Office into a permanent corporate entity, subject to all forms of taxation. Thus, Rep Office acts primarily as a marketing vehicle with no tax implications, as long as its structure is kept within strict limits. Before starting any activities, it is advisable to seek legal advice.

What is a Representative Office?

A Representative Office is an entity with no legal autonomy which carries out auxiliary and preparatory activities on behalf of a foreign company; typically in Italy. Such activities are those of marketing, sales promotion, collection of information, and scientific or market research, being excluded from actual sales and production operations.

A Representative Office shall be qualified by the absence of:

1. a permanent endowment of means dedicated to carrying out the foreign company’s activity (or part of it);
2. the power to act in the name and on behalf of the foreign company, binding the latter vis-à-vis third parties.

The presence of the elements listed above would imply the existence of a Branch Office, which falls within the legal and fiscal requirements of a permanent establishment.

What are the advantages of establishing a Rep office?

• the Rep Office does not need to approve and file the yearly financials;
• the Rep Office does not need to have a corporate structure (such as directors and statutory auditors:
• there will not be additional operating costs except for a yearly tax payable to the Companies House.
• There is no share capital needed
• The Italian Rep Office will not be a separate legal entity from the Parent Company

Giuditta De Ricco

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

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