EXCLUSIVE Analysis: All you need to know if you want to open a business in Italy

How can you open a business in Italy? How is the country’s fiscal system? Is the bureaucracy burdening? How does legislation apply for EU citizens? Business Review has prepared a special article that will answer all these questions for those who are interested in doing business in Italy.

According to the latest data, there are around 46,000 companies in the Peninsula that have Romanian owners. Also, according to The Italian Statistics Institute, there were 1.16 million Romanian citizens living in Italy at the beginning of 2017. Most of them were living in regions like Lombardia, Piemonte, Lazio, Emilia-Romagna or Toscana.

Italy’s economy has not been at its best in the past few years, being one of the worst performers of the countries in the eurozone. It has started to expand again, according to the BBC, but at a weak pace compared to other European countries.

The country’s debt is the second highest in Europe after Greece, having reached 132 percent of GDP. There is a significant contrast between the northern and southern parts of the country when it comes to wealth.

Interestingly, Italy is the country with the highest number of companies in the EU: it has 3.8 million SMEs, almost double the number of SMEs registered in Germany.

Opening a business in Italy

There are several types of companies that can be registered in Italy, depending on whether it has limited or unlimited liability, the number of associates/shareholders, the company’s activity or the starting capital amount.

The most popular type of company is the limited liability company (SRL), which requires a minimum social capital of EUR 10,000. Associates have a limited liability for their contribution to the social capital, and it cannot be divided into shares and the company cannot be listed on the stock market.

For any type of company you want to open, you should know that the procedure can be done online or at the local Commerce Registry office. The Commerce Registry in Italy supervises the operation of all companies in Italy and checks whether they follow the law.

Founders have to prepare and submit the following: a request for the company’s registration, the constitutive act, a list of the members and shareholders’ addresses and phone numbers.

If you choose online registration, all documents need to be attached electronically, together with the form you’ll find on the Chamber of Commerce’s platform, known as InfoCamere.

The registration procedure usually takes a week if all documents and information are provided correctly. All changes that are made within the company need to be made known to the Commerce Registry via e-mail or in the Registry’s local offices.

Taxes

The most important tax that applies to companies in Italy is the revenue tax (“imposta sul reddito delle società” or IRES), which applies both to the revenues obtained in Italy and those obtained abroad. The IRES tax level is 24 percent.

A company with Italian fiscal residence is one that has its headquarters, administrative offices and main activity in Italy for most of the year. Unless it can prove otherwise, a foreign entity controlling an Italian company is considered to have its fiscal residence in Italy if it meets one of the following conditions: the foreign entity is directly or indirectly controlled by other entities/persons resident in Italy OR most members of its administrative board are Italian residents.

Companies that don’t have their fiscal residence in Italy will only be taxed on the revenues made inside Italy.

Local taxes

Besides the IRES, companies also have to pay an additional tax for productive activities, on revenues obtained in Italy (Imposta Regionale sulle Attività Produttive). The IRAP has a standard value of 3.9 percent and is applied to the net value of production.

There are a few types of activities that have different values for the IRAP: corporations and entities that have public services or state goods in concession (4.2 percent), banks and other financial institutions (4.65 percent), insurance companies (5.9 percent), public administration institutions that develop commercial activities (8.5 percent).

Each of the 20 Italian regions are allowed to change the value of IRAP by a maximum of 0.91 percent. Companies with revenues obtained in more than one region are required to separate the tax basis between those regions. The tax basis is the net value of production, which is calculated by eliminating operational costs from the total revenues.

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