Published on and written by Cyril Jarnias
Italy, with its diversified economy and strategic position at the heart of Europe, offers numerous opportunities for foreign entrepreneurs looking to establish their business there. This article will guide you through the key steps of setting up a company in Italy, covering essential legal, tax, and practical aspects you need to know.
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Italy: A Land of Opportunities for Entrepreneurs
Setting up a company in Italy offers numerous advantages for foreign investors. Here are the main reasons that make Italy an attractive destination for entrepreneurship:
A vast and diverse market: With nearly 60 million inhabitants and one of Europe’s largest economies, Italy offers a substantial domestic market and opportunities across many sectors.
A strategic geographical position: Located at the heart of the Mediterranean, Italy enjoys an ideal position for accessing European, African, and Middle Eastern markets.
World-renowned expertise: Italy is famous for its excellence in fields such as fashion, design, food processing, and mechanical engineering.
Investment incentives: The Italian government has implemented various measures to attract foreign investors, including tax relief and innovation support.
An enviable quality of life: Italy offers an exceptional living environment, combining cultural richness, renowned cuisine, and varied landscapes.
Good to know:
Italy regularly ranks among the most attractive destinations for foreign investors in Europe, particularly thanks to its sectors of excellence and strategic geographical position.
Italian Legal Structures: Choosing the Right Form for Your Project
Choosing the legal structure is a crucial step when setting up a company in Italy. Here are the main available legal forms:
Società a Responsabilità Limitata (SRL): Equivalent to the French SARL, this is the most common form for SMEs. It offers great flexibility and limits partners’ liability to their contributions.
Società per Azioni (SpA): Similar to the French SA, this structure is suitable for large companies and allows for public offerings.
Società in Nome Collettivo (SNC): Comparable to the French SNC, this form involves unlimited and joint liability of partners.
Società in Accomandita Semplice (SAS): Equivalent to the limited partnership, it distinguishes between general partners (unlimited liability) and limited partners (limited liability).
Società Semplice (SS): Reserved for non-commercial activities, particularly agricultural or professional ones.
Italian branch: An option for foreign companies looking to establish themselves in Italy without creating a separate legal entity.
Good to know:
The SRL is generally recommended for foreign entrepreneurs due to its flexibility and simplified incorporation procedures compared to the SpA.
Italian Taxation: A Favorable Framework for Businesses
The Italian tax system offers several advantages for businesses while remaining competitive at the European level. Here are the main elements to know:
Corporate income tax (IRES): The standard rate is 24%, one of the lowest in Western Europe.
Regional tax on productive activities (IRAP): Its rate varies between 3.9% and 4.82% depending on the region and business sector.
VAT: The standard rate is 22%, with reduced rates for certain goods and services.
Tax treaties: Italy has signed numerous double taxation agreements, facilitating international exchanges.
Tax incentives: Tax reductions are available for investments in R&D, innovation, and job creation in certain regions.
Patent Box regime: It allows for a tax reduction on income from the exploitation of patents and other intangible assets.
- R&D tax credit: Up to 50% of eligible expenses
- Tax deduction for investments in equipment: Up to 270% of the investment value
- Partial exemption of capital gains on qualified share sales
Good to know:
Italy has implemented attractive tax measures to stimulate innovation and investment, particularly in high-tech and R&D sectors.
Setting Up Your Company in Italy: A 7-Step Process
Setting up a company in Italy follows a well-defined process. Here are the main steps to follow:
1. Choose the legal form: Select the structure best suited to your project (SRL, SpA, etc.).
2. Draft the articles of association: Define your company’s operating rules with the help of an Italian notary.
3. Obtain a tax number: Request a codice fiscale from the Agenzia delle Entrate (equivalent to the tax authority).
4. Open a bank account: Deposit the share capital into an Italian bank account.
5. Register the company: Register your business with the Registro delle Imprese (business register) through the local Chamber of Commerce.
6. Obtain a VAT number: Request a partita IVA from the Agenzia delle Entrate.
7. Register for social security: Register with INPS (National Social Security Institute) for social security contributions.
Estimated timelines and costs: – Total process duration: 4 to 6 weeks – Incorporation costs (excluding share capital): between €3,000 and €5,000 for an SRL
Good to know:
It is highly recommended to engage a local lawyer or accountant to assist you with these procedures, particularly to navigate Italian administrative specifics.
Italy vs. Offshore Jurisdictions: A Strategic Choice
Although Italy is not considered a classic offshore jurisdiction, it offers several advantages compared to these destinations:
Credibility and reputation: An Italian company benefits from a better image than those based in tax havens.
Access to the European market: Italy offers direct access to the single European market, unlike many offshore jurisdictions.
Legal and economic stability: The Italian legal framework, aligned with European standards, offers greater legal security.
Tax treaty network: Italy has signed numerous tax treaties, facilitating international operations.
Innovation incentives: Tax benefits for R&D and innovation are often more attractive than in offshore locations.
Quality of life: Italy offers a living and working environment significantly superior to most offshore destinations.
Good to know:
Although tax rates may be higher than in offshore locations, the benefits in terms of reputation, market access, and quality of life often tip the balance in favor of Italy for many entrepreneurs.
Social Obligations in Italy: Protecting Your Employees
The Italian social system offers extensive protection to employees. Here are the main obligations to know:
Social security contributions: The employer must pay approximately 30% of the gross salary to cover various social insurances.
Work accident insurance: Mandatory, it is managed by INAIL (National Institute for Insurance against Accidents at Work).
Paid leave: Minimum legal requirement of 4 weeks per year, often increased by collective agreements.
Working hours: 40 hours per week on average, with strict rules on overtime.
Protection against dismissal: Specific procedures must be followed, particularly for economic layoffs.
Professional training: Companies must contribute to the continuous training of their employees.
Good to know:
Italian labor law is known for its strong protection of employees. It is crucial to understand these obligations well to avoid any social disputes.
Opening a Business Bank Account in Italy: Key Steps
Opening a bank account is an essential step for your Italian company. Here’s how to proceed:
1. Choose a bank: Select an institution suited to your needs (international presence, online services, etc.).
2. Prepare documents: Gather the company’s articles of association, tax number, identification documents of directors, etc.
3. Schedule an appointment: Contact the bank to arrange a meeting with an advisor.
4. Present your project: Explain your business and banking needs during the appointment.
5. Sign documents: After approval, sign the account opening contract and general terms and conditions.
6. Make initial deposit: Deposit the share capital or a minimum amount to activate the account.
7. Obtain online access: Request codes for online management of your account.
Good to know:
Some Italian banks offer services dedicated to foreign entrepreneurs, with multilingual staff and simplified procedures.
Future Sectors in Italy: Where to Invest?
Italy offers opportunities in many sectors. Here are particularly promising areas:
Green technologies and renewable energy: Italy is heavily investing in the ecological transition.
Industry 4.0: The modernization of Italian industry offers numerous opportunities in automation and IoT.
Biotechnology and healthcare: The Italian medical sector is expanding rapidly, particularly in research.
Luxury and experiential tourism: Italy aims to develop high-value-added tourism.
Quality food processing: High-end Italian products remain in high demand internationally.
Design and fashion: These traditional Italian sectors continue to innovate and reinvent themselves.
Digital services: The growing digitalization of the Italian economy creates numerous opportunities.
Good to know:
Italy offers specific incentives for investments in some of these strategic sectors, particularly in the form of tax credits or grants.
Recruiting in Italy: How to Attract the Best Talent?
To succeed in Italy, it is crucial to build a competent team. Here are some tips for effective recruitment:
Understand the local job market: Familiarize yourself with average salaries and expected social benefits in your sector.
Use the right recruitment channels: Specialized job sites, LinkedIn, local recruitment agencies.
Enhance your employer brand: Highlight the advantages of working for an international company.
Offer appropriate contracts: The permanent contract (contratto a tempo indeterminato) is the norm, but more flexible contracts exist for certain positions.
Respect collective agreements: Each sector has its own agreements that define minimum working conditions.
Invest in training: Italians value professional development opportunities.
Cultivate a positive work environment: Workplace atmosphere and work-life balance are important to Italian employees.
Good to know:
Italy has a significant pool of talented young graduates, often multilingual and open to international opportunities, which can be a major asset for foreign companies.
Conclusion: Italy, A Strategic Choice for Your Business
Setting up a company in Italy represents a unique opportunity to combine the advantages of a mature and diversified market with the dynamism of an economy in full transformation. Although the process may seem complex at first, the long-term benefits are numerous: access to the European market, excellence in many sectors, exceptional quality of life, and an increasingly attractive tax framework for innovative businesses.
To maximize your chances of success, it is crucial to prepare well, surround yourself with local experts (lawyers, accountants, business creation advisors), and take the time to understand the specifics of the Italian market. With the right strategy and long-term commitment, your company in Italy can prosper and grow well beyond the country’s borders.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
