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If you’re planning to start a company in Italy, you’re more likely to succeed in the current economic climate. The European Commission predicts that Italy’s yearly GDP growth will reach 3.8% by the end of 2022. Statistically, it implies that the country will remain one of the top ten economic centres of the world in the coming years.
Therefore, Italy remains a lucrative destination for international entrepreneurs planning to invest in the European Union (EU). Benefits include its prime location as the centre of the Mediterranean and accessibility to countries within the EU.
That said, entrepreneurs planning to launch a business there need to know two things. They must comply with international trade policies, open a corporate business account, and complete the mandatory paperwork before they start operations.
Read more about the benefits of establishing a branch or subsidiary in Italy
We simplify the process by sharing a step-by-step guide to help you start a company in Italy.
Step 1: Create a Business Plan
Business plans are a vital part of launching a company. Every owner needs to draft an official document that explains the business strategy. In addition, you need to outline key business goals and how you plan to achieve them.
As a foreign investor (or entrepreneur), you must conduct extensive research about your niche market, industry trends and target consumer base. The information will help you create an actionable plan to run a successful company in Italy.
What Are the Main Components of a Business Plan?
According to Indeed, every business plan should have seven to ten sections to create a comprehensive outline of how you plan to run a company.
Ensure your business plan answers the following questions:
- Why should someone invest in your company?
- How will your company contribute to the Italian economy?
- What are the current market statistics and your strategy to succeed in your niche?
- What marketing and sales strategy do you plan to implement to acquire clients?
- Who are your top competitors, and why is your company different from them?
- How do you plan to manage your organisational team?
- Management and organisation description
- What are your products and services?
- How will you run the business operations?
- What will be the cost of business operation, and how much revenue do you expect to generate annually?
Remember to list short-term and long-term objectives to create milestones that help track your company’s success. Using graphs, financial data and qualitative analysis to present the business plan help create a clear roadmap of how the organisation will progress over the years. An effective plan helps identify and address potential risks while highlighting your unique selling points to interested investors.
Step 2: Choose Your Company Status
Once you have a business plan, you’ll know what company you plan to establish in Italy. The choice depends on the overall budget, the organisational operations and the intended size.
Three types of corporate structures are as follows:
- Limited Liability Company (or Società a Responsabilità Limitata) – Società a Responsabilità Limitata (SrL) or Limited Liability Company refers to a flexible organisational structure well-suited for medium and small businesses with at least one or two company directors. SrL has no restrictions on international shareholders and only makes it compulsory to file a minimum €10,000 as the share capital. Aside from that, business owners need to audit corporate accounts annually and submit the relevant paperwork to the government.
- Joint Stock Company (Società per Azioni) – Società per Azioni (SpA) refers to an organisation where multiple investors own a specific share of the company stocks. Such businesses need at least €120,000 and must conduct an audit of corporate accounts annually to the local Registrar of Companies.
- Branches – If you are opening an Italy-based branch or registered office affiliated with your multinational firm, you must open a corporate account for local transactions. The requirements for annual audits or financial reports do not apply.
It’s best to understand the advantages and disadvantages of each business structure before selecting a company status. If you’d like to know more, we answer frequently asked questions about company incorporation in Italy here.
Step 3: Apply for a Permit to Start a Company in Italy
Foreigners planning to establish a company in Italy need a legal permit to work and stay in the country. The Italian government exempts EU residents from applying for visas/permits and specific business licences depending on international trade agreements set by the EU.
On the other hand, Non-EU entrepreneurs living in the UK and overseas must apply for a permanent visa with the Italian embassy before entering the Italian corporate world. If you fall in this category, you apply for a long-term visa and work permit depending on how long you plan to stay to set up your business.
In addition, have a visa policy in place for any non-EU staff you plan to recruit when you open your company.
Pro tip: Individuals planning to travel to Italy for work from the UK can receive more information from the official Gov.UK site.
Step 4: Complete Compulsory Paperwork for Registration
After qualifying for a legal work permit, business owners must submit the necessary paperwork to register the company. Understanding the legal technicalities and corporate rules associated with business operations in Italy is crucial before filing the paperwork.
Here are a few things to know:
- You need to draft a Memorandum (or Atto Costitutivo) and Articles of Association (Statuto) to register your company with a notary if you don’t use an agency
- You need to have your organisational bylaws, social contract and incorporation agreement notarised
- You must file the official documents at the local notary office, Chamber of Commerce, Register of Enterprises and tax office.
After completing the registration process, a newly licensed company receives an authenticated identification number, tax identification number and VAT number. According to Italian laws, businesses file corporate tax, VAT, and subsidiary taxes such as property tax for the company building and tax incurred on local and international transactions.
Terms and conditions for tax laws vary depending on industry-based regulations. It’s best to seek advice from local legal and financial advisors when you start a company in Italy to minimise risks.
Step 5: Setup a Corporate Bank Account
You can run a European business with an overseas account or use a personal account to handle corporate transactions.
Therefore, every company in Italy needs to have a separate corporate bank account to conduct business transactions. Local bank accounts can optimise the transactional process for companies, vendors, suppliers, and consumers. They also make it easier for you to create annual audits for the local registrar.
Banks need relevant documents to verify the legitimacy of the organisation. It can include a passport for a foreign director, current address, certificate of registration, tax identification number, and financial status of the shareholders.
In addition, some banks require new account holders to deposit a specific amount of money to qualify for a corporate bank account. It shows the bank that you have adequate funds to run an organisation.
As a foreign business owner, you must check what bank services you’re eligible for and ask for clarity if some rules are unfamiliar.
The Bottom Line
In the end, you can start a company in Italy in five steps. The process can take a few weeks to a couple of months, depending on your eligibility to qualify for a legal work permit in Italy.
However, before that, you should draft a business plan that tracks your progress from day one to the 5 to 10-year mark. A proper roadmap helps you identify the resources you need to run a successful company in Europe.
After that, you can determine the company status and apply for a work permit. The next phase requires business owners to register the company with the official authorities operating in Italy and create a corporate bank account. Tax and VAT laws play a crucial role in determining your eligibility to run a business in Europe.
The multi-step process requires extensive research and precision. It would be best to seek assistance from an experienced professional to maximise your chances of opening a licensed company in Italy.
How Can OpenAEuropeanCompany Help You?
OpenAEuropeanCompany simplifies the process by providing practical and personalised advice. Our agents bring years of industry experience and local knowledge to the consultation session, ensuring your paperwork complies with laws in Italy. We have experience handling various business structures and accommodating unique needs to meet desired goals when you open a company overseas.
Would you like to know more about setting up a branch or subsidiary in Italy or multi-country subsidiary formation? Please contact us to schedule a meeting or inquire about our services.