The idea of starting a business in Italy has been fascinating for foreigners for years. There are several options available to start a new business in Italy. In the last years, several normative reforms have contributed to reduce the burdens and remove the obstacles for new business such as the reduction of the minimum capital requirement or the streamlining of registration procedures.
New business opportunities in Italy are available both for European and non- European citizens, provided the residence conditions for the second ones. The following aspects aim to outline a few aspects that any entrepreneur shall take into consideration during the business planning and incorporation when setting up a company in Italy. In this sense, VGS professionals suggest their clients assess.
Setting Up A Business In Italy
Establishing A Representative Office
Representative offices are not legal entities of the foreign companies and are featured by two elements:
- A local presence to promote the company within the Italian territory
- It does not represent the foreign company
These local offices must be registered at the Chamber of Commerce enclosing the EU certificate of incorporation or, in case of a non-EU country, a statement of the existence of the company.
Establishing An Italian Branch
According to Italian Law, Italian branches are not separate entities from the parent company that is responsible for their initiatives. Taxation only applies where economic activity is carried out.
The registration of a branch office is regulated by the Italian Civil Code. In order to set up a branch you will generally need:
- The drafting of shareholders’ minute of the foreign mother company resolving the establishment of the branch, the appointment of a legal representative;
- Open an Italian Fiscal Code;
- Draft the act of incorporation before Italian notary;
- Submit the incorporation deed to the Chamber of Commerce;
- Submit the declaration of the start of business to the Italian Revenue Agency
In case of failure of the registration procedure, directors and anybody acting on behalf of the company will have unlimited liability.
Accounting And Audit Requirements
Companies are required to keep books and records of accounts for no less than ten years. The records may be kept by the business entity or by third parties. Depending on the size and of the activity performed, the following books may be compulsory:
- The Journal;
- The VAT Register;
- General Ledger;
- The inventory register;
- The Board of Auditors meeting book (if applicable);
- The shareholder meeting books.
Companies with share capital are also required to prepare their annual Financial Statement and file it with the Companies Register after the approval of the shareholders.
An audit is also required in the following cases:
- Joint-stock companies;
- Limited Liability Company exceeding profit limits in relation to total assets, sales, and services revenues, the average number of employees;
- Companies required to draft Financial Statement;
- Listed Companies;
- Banks, Fund companies, financial institutions.
The audit shall take place according to the Italian auditing standards. The statutory audit can also be carried out by the Board of Statutory Auditors.
Employment, Hiring, And Contracts
Basic rules regulating rights and obligations of employer-employees relationship can be found in the Italian Civil Code, Worker’s Statute, and National Labour contract.
While establishing the new company, new employment relationships must be notified to the competent employment service. Such notification also fulfills the notification to relevant social security institutions.
There is no statutory minimum wage in Italy. Minimum wages are usually set out by the different national labor agreements. In the specific business sectors, non-competition clauses for employees are allowed provided that
Adequate compensation is granted;
Duration of the agreement not exceeding 3-5 years.
The new business in Italy might be based on the commercial exploitation of what in Civil Laws countries are named industrial properties. Copyright, trademarks, patents can represent valuable financial assets, and Italian Law grants entitled subjects with the faculty to obtain specific protection.
Trademarks protect the origin of the asset while increasing commercial reputation and trustworthiness by consumers. Shape trademarks, collective trademarks are suitable instruments to achieve previous objectives.
A patent protects the exploitation of the invention. Patents are symbols of research and development phases and protect intangible asset’s value.
Design protects the appearance of the whole product and it has fundamental importance for industrial and fashion manufacturing.
These are only a few of the main aspects that VGS professionals discuss and negotiate with clients. Dealing with a crucial aspect of your company in Italy means having a competitive advantage that you can use with your competitors. In this sense, VGS lawyers always opt for a guided incorporation process so that the legal professional will follow the whole process.