Foreign investors who want to enter the Italian market can open two types of business forms: a subsidiary or a branch. These two legal entities have important differences regarding the parent company’s liability towards them. While the branch is completely dependent on the foreign company, the Italian subsidiary is a separate legal entity. The choice to establish a subsidiary can be more advantageous in some cases for foreign investors. The main benefits derived from the fact that a subsidiary is regarded as a separate legal entity, with a majority of capital owned by a foreign company and having the power to make its own management decisions.
|Applicable legislation (home country/foreign country)||
Italian Company Law
Best used for
Minimum share capital
|Time frame for the incorporation (approx.)||
Around 1 week
|Legal representative required||
|Local bank account||
|Independence from the parent company||Yes|
|Liability of the parent company||No, the subsidiary is fully liable|
|Corporate tax rate||24%|
|Possibility of hiring local staff||Yes|
Our Italian company formation agents can help foreign companies in establishing subsidiaries.
Table of Contents
The particularities of an Italian subsidiary
A majority of subsidiaries are organized in the form of private or public limited liability companies. A private limited liability company opened in Italy requires a minimum share capital of EUR 10,000 EUR and the liability of the shareholders is only as large as their contribution to the company’s capital. In some cases, the minimum capital for this type of company can be 1 EUR, for a simplified form of private limited liability company. The management structure for this type of company consists of a management board appointed by the general meeting of the shareholders; the individuals who run the business must be members of the company. There are no restrictions as per the nationality of residence of the company directors. This type of company cannot publicly transfer its shares.
Foreign investors may also choose to establish a subsidiary in Italy in 2023 shaped in the form of a public limited liability company. The shares of a public limited liability company may be transferred to the public and can be registered at the Stock Market. For opening a public limited liability company in Italy, a minimum share capital of EUR 50,000 is needed and there are no limitations on the number of company shareholders or their nationality. This type of company has a more complex management structure compared to the private limited liability company. Also, it has to observe more stringent auditing and reporting requirements. Companies listed on the Stock Exchange must observe International Accounting Standards. A certain flat fee applies for the registration of a new stock company.
All Italian companies are subject to taxation on their income derived from Italy. The corporate income tax rate is 27.5% and other taxes include the stamp duty, the transfer and property tax and the value added tax. The subsidiary will also be subject to VAT registration in Italy.
When incorporating a subsidiary in Italy, at least 1 shareholder is sufficient and there are no restrictions regarding the nationality of such a person. This represents a major business advantage for international entrepreneurs who want to develop their operations in a country like Italy.
Subsidiary registration in Italy in 2023
The procedure for establishing a subsidiary in Italy in 2023 does not last longer than 6 days when all the requirements are observed, and the documents are properly submitted. The founders must pay attention to the fact that, within 30 days of the decision of incorporation, the company must register the company with the Italian Company Register. Here are the steps for registering a subsidiary in Italy in 2023:
- The first step that has to be taken for opening a company in Italy is depositing at least 25% of the capital in a bank account and requesting the certificate of deposit.
- The Italian law also provides that the articles of association, the foundation deeds, and the decision to establish a subsidiary in Italy must be notarized. Moreover, a registration tax must be paid.
- The founder must also buy the corporate and accounting books and pay the government grant tax.
- The subsidiary must be registered with the Registro delle Imprese (Register of Enterprises).
- Our company registration experts in Italy can help you during this phase. The Labor Office in Italy must also be informed when the company hires employees.
The Register of Enterprises must be announced no later than 30 days of any relevant changes in the company such as those regarding the number of members, the company’s decision to issue bonds or any increases or decreases in the capital.
Those who want to set up a business in Italy can benefit from the assistance of our agents with experience in this matter. They can help you with the preparation of the necessary documents for establishing the company, opening a bank account, obtaining a business license as well as registering for the payment of taxes. We mention that such a process can last around 7 days if all the formalities are respected.
A public company under which the subsidiary will activate requires a minimum share capital of EUR 50,000 from which at least 25% must be deposited in a local bank account before the Deed of Incorporation is issued.
Documents related to opening a subsidiary in Italy
Apart from the subsidiary’s incorporation documents, the foreign company must also prepare other paperwork which must be submitted to the Trade Register. This paperwork refers to:
- – information about the parent company, among which its legal address in a foreign country;
- – a lease contract for the registered address of the Italian subsidiary (a virtual office is also a good option);
- – information about the representative of the foreign company in the Italian subsidiary;
- – information about the share capital of the subsidiary (a bank receipt showing the deposit).
If a branch must file the annual report, a subsidiary does not have this kind of requirement. However, a subsidiary must keep its own books, and balance sheets, and submit income tax returns and VAT. These matters can be entirely explained by one of our specialists.
Our local consultants can advise on all the documents required to open an Italian subsidiary. We also invite you to watch our video on the subsidiary set up in Italy:
Why open a subsidiary in Italy?
The subsidiary company is a suitable option for foreign companies that want to:
- offer full independence to the newly established company in Italy;
- benefit from the tax advantages the Italian tax authorities provide, as the subsidiary will be treated like an Italian tax resident;
- the subsidiary to offer other services or complete other activities than the parent company;
- the parent company is a holding company and wants to benefit from the Parent-Subsidiary EU Directive.
Interested in payroll services in Italy? Our specialists can take care of the procedures related to the calculation and delivery of salaries, as well as the administration of a company’s personnel database. Also, the payroll specialist communicates with the relevant institutions in the labor field for the transmission of various documents and information regarding employees. You can outsource this type of service, by choosing our team of specialists in the field.
If there are further details you need to know about establishing a subsidiary in Italy, please contact our company incorporation agents in Italy. If you are interested in obtaining a golden visa in Italy we can help you with the legal procedure.