Types of Business

Main vehicles for doing business in Italy:

There are three different types of companies

  • Partnerships (Società di persone)
  • Corporations (Società di capitali)
  • Co-operative societies (Società cooperative) and Mutual insurance companies (Società di mutua assicurazione)

Partnerships are divided into:

Simple Partnership (S.s. Società semplice)

This partnership cannot be used to carry out gainful economic commercial activities, it is usually adopted by businesses that exercise a non commercial activity (i.e: agricultural activity under art. 2135 of the Italian Civil Code.).

There are no special formalities required to set up this kind of company.

Art. 2251 c.c. only provides that the contract must be put into writing when a contribution by a member of the company consists in the property or the ultranovennial enjoyment of a real estate or an other immovable property right.

Simple Partnerships do not have legal personality, and there is no minimum capitol required.

There is a joint and unlimited liability of the associates to satisfy social obligations, unless they agree otherwise (art. 2267 c.c.)

General Partnership (S.n.c. Società in nome collettivo)

This is designed for small-medium businesses, and can be established by two or more members, who have full, joint and unlimited liability fot its obligations and debts (art. 2291 c.c.).

The certificate of incorporation must be put into writing: it can be made through a written agreement authenticated by the signature of a Notary, or through public instrument (art. 2699 c.c.).

Limited Partnerhip (S.a.s. Società in accomandita semplice)

This partnership has two type pf partners: Managing partners (Accomandatari) and Silent partners (Accomandanti).
Only a Managing partner has full liability, this means that they have to guarantee any company’s debt with their personal assets.
The Silent partners instead, have a limited liability (limited to the value of their shares), but they cannot partecipate in the management of the company.
In order for such a partnership to exist there must be at least one managing partner.
This partnership does not require a minimum starting capitol.

Corporations are divided into:

Limited Liability Company (S.r.l. Società a responsabilità limitata)

This is one of the most common forms of corporate entities in Italy. The minimum required starting capital for an S.r.l. is 10.000 Euros. This is the amount that needs to be deposited in a bank account if there is just one partner, but if there are two or more partners, the required starting capital is only 2.500 Euros (in total, not for each partner).

The capital is divided into quotas not shares.

Every member is the holder of only one quota, that corrispondes to the fraction of the capitol that he undersigned.

A member is liable for the companies debts only to the extent of the value of the quotas.

S.r.l.s can be governed by a sole director or by a board of directors; a board of auditors can be required by the By-laws, or it is mandatory when the capitol stock is higher than 120.000 Euros.

An S.r.l. can be transformed into a S.p.A.

Joint Stock Company (S.p.A. Società per Azioni)

This is one of the most common forms of corporate entities in Italy, it is ideal for major investments. The minimum starting share capital required is 50.000 Euros. The capital is represented by shares, which are commonly embodied in share certificates and are assignable through endorsement.

Only S.p.A.s can be listed on a stock exchange and issue bonds and hybrid financial instruments.

There must be at least one shareholder, and he will benefit from a complete limited liability.

An S.p.A. can have one of the following management structures:

  • Traditional model: consisting of one Director or a board of Directors, and a supervising body called Board of Statutory Auditors (they control the actions of the director/s and the accounts of the company). They are both appointed by the shareholder’s meeting.
  • Dualistic model: the shareholders elect a supervisory commitee, that then appoints a management board.
  • Monistic model: consists of a board of directors appointed by the shareholders. The boards appoint an internal audit committee.


Partnership Limited by shares (S.a.p.a. Società in accomandita per azioni)

This is similar to a Limited Partnership since it involves two different type of shareholders: one or more with limited liability and the other/s with full liability.

Co-operative societies and Mutual insurance companies are run for the mutual benefit of their members.

FOREIGN COMPANIES usually operate in Italy through:

  • Branch (sede secondaria): if the company wants to perform any business activities. It is not a separate legal entity and does not have a separate legal personality. The taxation is the same as an Italian company.
  • Sussidiary (sussidiaria): this differs from a branch because its representatives are allowed to take actions and measures on their own, and the parent company is not liable for its debts and obligations.
  • Representative office (ufficio di rappresentanza): this is only aimed to promote business, it cannot conduct any commercial activities. It is not considered a permanent establishment, and so it is not subject to taxation.
  • Joint Venture (società mista): this is a cooperation between two or more companies for a common purpose. It usually lasts until the business objective is reached.

There is a contractual joint venture and an incorporated joint venture, only this second model requires the registration of a new legal entity.

Other vehicles used to create cooperation are:

a) Consortiums (consorzi)

b) Economic Interest Groups (gruppi europei di interesse economico)

A foreign company may decide to sign a Commercial Agreement, such as:

  • Agency Agreement (contratto di agenzia, art. 1742 c.c.)
  • Commission Agreement (contratto di commissione, art. 1731 c.c.)
  • Distribution Agreement ( Italian law does not have a specific provision for this type of contract, it is considered as falling under the provisions that regulate supply contracts art. 1559 c.c.)
  • Franchise

Setting up a company

The process to register a company (an S.p.A.) in Italy usually takes 6 days.

The steps are:

  • Drafting a notarised deed of incorporation. This must include the name of the company, information regarding the shareholders, purpose of the company, and all the information relative to the directors, By-laws, etc.
  • A Bank must certificate that the shareholders have deposited the share capital in an account opened in the name of the company.
  • Filing an application to the Italian Business Register belonging to the Chamber of Commerce. With the certificate of incorporation (certificato della camera di commercio) the company will also receive a tax identification number and a VAT number.
  • It is also necessary to register the company with the Social Security Administration, and the Accident Insurance Office.

Incorporation of companies whose buiness purposes fall within the scope of regulated markets will have to follow specific rules.

Foreign investment restrictions

Italy is bound by EU laws.

Exchange control

Italy has no exchange controls. There are no restrictions on currency transfers.

Anti money laundering (AML)

The legal frame of reference is set by national laws, EU laws (Directive 2015/849/EU) and international conventions.

Labour Law Framework

  • Regulations: Labour relations are governed by the Employees’ Statute (Statuto dei lavoratori l. n. 300/1970), national collective bargaining agreements (contratti collettivi nazionali), and national laws.

It is almost impossible to mention in just a few lines all the different sources that form the Italian labour laws (from art.1 of the Constitution, to the Civil Code, to EU laws, etc.)

  • Social security (previdenza sociale): Registration with Social Security is compulsory. The employer pays around two-thirds of pension contributions, while the remaining third is paid by the employee.
  • Hiring of non-EU citizen: a work visa is required.

Tax System

  • Corporate Income Tax (Imposta sul reddito delle società IRES): from 2017 it will be reduced to 24%
  • Regional tax on productive activities (Imposta regionale sulle attività produttive IRAP): this changes from Region to Region, it is usually around 3,9%. Each Region can increase or decrease this up to 0.92%
  • Value Added Tax VAT (Imposta sul valore aggiunto IVA): the standard rate is 22%
  • Financial Transaction Tax FTT (Tassa sulle transazioni finanziarie TTF): this is a levy (0,2%) placed on the transfer of the ownership of shares and participating financial instruments. If the transfers take place in regulated markets the rate is reduced to 0,1%.

Publisher: Poli Avvocati, Italy