COMPANY FORMATION IN ITALY
Italy has recently taken new steps to position itself as a welcoming home for foreign investment. The result is that Italy is slowly emerging
as a land of opportunity, although you will need specialist local advice to help navigate your way through the bureaucracy.
Italian company key features
VAT registration service available. Normally registration takes 40 days.
Minimum share capital is: 10 000 eur
Minimum number of directors is one.
No restrictions on foreign shareholders.
Annual tax return and VAT filed quarterly plus annual audit.
Codice Fiscale required for each foreign director and shareholder.
Personal visit to Milan is required to open Bank account in Italy.
Shelf Companies with VAT available.
Popular applications with Italian companies
LIMITED LIABILITY COMPANY (S.r.L.) FOR TRADING
Most popular format for businesses in Italy is S.r.L., Limited Liability Company. The standard rate of Italy corporate tax (IRES) is 27.5%%.
In addition, local tax (IRAP) is imposed at a rate of generally 3.9%, bringing the effective tax rate to 31.4%.
Government duty €310 and Chamber of Commerce duty €200 must be paid annually.
REPRESENTATIVE OFFICE OF A FOREIGN COMPANY & BRANCH OFFICE
“Light Branch” is a type of Representative Office registered at the Labour Office and authorized to employ and to use an Italian bank account.
A Light Branch cannot trade, issue invoices or to have VAT. However, it is a very cost effective tool for promoting services in Italy.
As soon as the entity needs to start trading activities, the Light Branch should be upgraded to a Branch.
An Italian branch can be used as a trading partner to import / export or buy / sell within the EU and beyond its borders.
The Italian branch can have a VAT number obtain a tax residency certificate.
Italian company taxation
CORPORATE INCOME TAX (CIT): The standard rate of Italy corporate tax (IRES) is 27.5%%. In addition, local tax (IRAP) is imposed at a rate of generally 3.9%, bringing the effective tax rate to 31.4%. Non-operating companies pay 38% CIT on “estimated income”.
INCOMING DIVIDENDS: 95% of dividend income is tax exempt with no minimum holding period. Participation exemption does not apply with offshore jurisdictions.
CAPITAL GAINS TAX (CGT) - from sales of shares are generally taxed at 27.5% rate. Under specific conditions 95% participation exemption can apply.
ROYALTIES: 22.5%, which can be reduced under tax treaty or EU Directive on Royalties.
DIVIDENDS: 20%, which can be reduced under tax treaty or EU Parent Subsidiary Directive.
INTERESTS: 20%, which can be reduced under tax treaty or EU Directive.
VALUE ADDED TAX (VAT). EU VAT regime. Standard rate for inland sales is 23%.
How to register a company in Italy?
- Choose a structure, what is appropriate for your business. Need help? Contact us.
- To find out more, please contact us.