Establishment in Italy of foreign companies allows them to better face a modern and wide market in a peninsula rich in opportunities, in fact Italy is a founder and one of the most important countries in the European Union. But it has also a great geographical position so it can give to investors from abroad easy access to southern, central and northern Europe markets as well as to northern Africa and Middle East countries.
Setting up a representative office, establishing a permanent organization (branch) or incorporating a subsidiary company is not difficult. Consider that the time of formation and registration of a limited liability company (SRL) in Italy are unexpectedly among the shortest in Europe.
Let's briefly analyse the most common ways of settlement:
THE REPRESENTATIVE OFFICE
This is a "light" presence, with only promotional or research purposes of the Italian market, without any economic activity (trading, production or services). It can be managed through the opening of a simple Local Unit, without any notarial deed. A representative office is not subject to specific or general Italian tax obligations, also considering that by not doing any economic activity it will not even generate incomes and will not be subject to VAT (Value added tax).
In practice, settlement of a representative office is not so widespread and, when it happens, the duration is often very limited; in fact, settlements are preferred which have the possibility to realize real economic-commercial activity.
THE STABLE ORGANIZATION (BRANCH) OF THE FOREIGN COMPANY
In addition to tasks of simple representation or study, the stable organization (or permanent establishment) in Italy of a foreign company, allows it to tighten business relationships and do a real economic activity, production, trading or service provision, in the interest and in the name of the foreign parent company.
The establishment in Italy is a procedure that takes place with the help not only of the accountant but also of a notary, it needs also registration in the local Register of Companies, the allocation of a tax identification number and a VAT ID.
One or more local representatives (institors) of the foreign company, who must be individuals, must be appointed to manage the permanent establishment.
The Italian branch, however, does not have an independent legal status and therefore not even a perfect patrimonial autonomy, limiting the responsibilities to the permanent Italian branch, but all the responsibilities rise up to the foreign parent company.
From an accounting and tax point of view, a permanent establishment in Italy (Branch) is subject to all the typical obligations of an Italian company. It will, therefore, be subject to bookkeeping, financial reports, VAT obligations, incomes taxation and all the mandatory returns and communications as Italian subjects.
International treaties will characterize the taxation of incomes produced in Italy, their further taxation in the country of the parent company and the recognition of any tax credit for taxes definitively paid in Italy.
THE CONTROLLED OR PARTICIPATED COMPANY
A more structured presence, generally characterized by autonomous decision-making powers and with full limitation of responsibilities to the Italian subject, is achieved through the incorporation of a company in Italy, controlled or participated by the foreign parent company, maybe in a joint venture with Italian business partners.
In this case, there is a well-defined corporate regulatory body that, not only guides the formation of companies in our country but also regulates their existence.
The company type is normally that of a joint-stock company. Limited liability company (S.R.L.) or a Public limited company (S.P.A.), according to the cases and the goals to be achieved, are the most frequently used legal entities. These legal forms are characterized by the limitation of the liability to the capital paid in by the foreign parent company, by the presence of a real management body (sole director or board of directors) with decision-making powers and, over some dimensional limits, by a board of statutory auditors.
These type of companies are subject to income taxes, VAT, social security obligations according to Italian internal rules. Earned net profits can be paid to shareholders (parent company) as dividends and may be subject to additional taxation, according to specific rules coming from the international treaties against double taxation, but also according to the rules established by European legislation (when applicable) that may even reduce to zero withholding taxes on payments of these profits to foreign shareholders.
Our chartered accountants firm has been assisting the establishment in Italy of foreign companies for years, giving all the necessary advice in collaboration with our wide professional network. A full and tailored support offered to foreign investors targeted not only to frame all the issues to be addressed but also to relieve them from a coordination activity of various consultants that would be very difficult, in a market that is unknown to them. We have a network of well-known professionals and collaborators of other sectors (notaries, lawyers, payroll consultants, banks etc.) that allow us to face the demands of foreign Clients with a "360 degrees" advisory.
Contact us with confidence to set up an appointment and to deepen the opportunities for settlement of your business in Como, Lombardy or everywhere in Italy.
We can assist You for Italian company formation, company registration, company set up, incorporation of a company, company establishment, representative offices in Italy and permanent branch registration.