Italy has more than 5 milion business, making it a vibrant economy with immense entrepreneurial opportunities. It’s also one of the largest countries in Europe, famous for its vast network of small enterprises and for being one of the biggest exporters in the world. With its strategic location at the heart of Europe, a market of over 60 million consumers, and government initiatives to support startups, opening a company in Italy can be rewarding.
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However, navigating the legal, financial, and administrative processes requires careful planning and understanding. In this blog post, we will learn the process of opening a company in Italy and the key considerations for success.
🏛️ The main legal forms of companies
The foreign investor wishing to establish a subsidiary in Italy normally creates a new company by choosing one of the main legal forms provided for in the Civil Code:
- Public Limited Company (SocietĂ per Azioni or S.p.A.) – Its incorporation requires a minimum capital of € 50,000 (art. 2327 of the Civil Code)
- Limited Liability Company (SocietĂ a responsabilitĂ limitata or S.r.l.) – The S.R.L. is the most popular business structure for small to medium-sized enterprises. It offers limited liability protection to shareholders, meaning personal assets are separate from business debts. The minimum share capital required is €10,000, making it a flexible option for many entrepreneurs.
In this article we will focus on the SRL. There are several reasons behind this choice: it is the most well-known business form in Italy, it’s widely used and it’s relatively easy to register.
🏢 Limited Liability Company: SRL-SRLS
It is a Limited Liability Entity which benefits from a complete limitation of liability of the quota holders for company obligations. It is a “smaller-scale” company where the owners are usually a few individuals or entities (i.e. “quota holders”) holding “quotas” in the company rather than shares (like in a Spa, stock liability company).
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The incorporation of Limited Liability companies requires a minimum capital of € 10,000. Limited Liability companies can also be incorporated with a contribution below € 10,000 (with a minimum value of € 1). In this case, called SRLS (Simplify Limited Liability Company), the company is obliged to set aside an amount equal to at least one-fifth of the net profit of the balance sheet, which will remain until the reserve and the capital reach the amount of € 10,000. The reserve may only be used for capital allocation and to cover any losses, with the obligation to replenish it if it is reduced (article 2463 of the Civil Code).
As you can see, there are many benefits linked to this type of business form. The first one, the most evident, is that SRL requires a lower capital (10.000€ vs 50.000€), in the case of SRLS, the capital could even be as low as 1 euro! Moreover, it allows to have a full presence in Italy and an Italian VAT number, but at the same time being less burdensome than a Joint stock company in Italian S.p.A. (Società per Azioni). In the future, if needed, the limited company SRL can be “upgraded” to a joint stock company (“S.p.A”). Last but not least, quota holders have more freedom in setting up the rules for its functioning, management and organization.
🪜 What are the main steps to register an SRL?
The process of establishing a new company can be entirely handled by a trusted consultant, with no need for the prospective quota holders to travel to Italy.
1. Execute a power of attorney granting a trusted consultant powers to attend Notary’s meeting in Italy and to incorporate newco (notarization and legalization by Italian Consulate/ Apostille is required); No need for a power of attorney for officers of the parent company or quota holders of the new company to attend in person to the Notary’s meeting in Italy;
2. Provide all info/docs required by your consultant;
3. Apply for newco’s quota holders and officers Italian tax codes
4. Transfer funds for registered capital to Italian Notary’s trust bank account (funds must be available on Notary’s account the day of incorporation deed execution);
5. Incorporation of the new company: quota holders do not need to attend in person but can give a power of attorney (to be legalized) to a third party
6. Within 1–3 weeks from the date of execution of incorporation deed and bylaws, the new company is registered by the Notary with the Companies House and the company is provided with a VAT number and is officially registered (a new company’s PEC email must be provided to the Companies House);
7. Once the company is officially registered, the appointed director can open the company’s bank account and registered capital initially paid in is transferred to the company’s account. At this stage, registered capital can be used for the company’s operations.
🗓️ Timeline and Costs
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| Step | Timeline | Costs Involved |
|---|---|---|
| Choosing a unique company name | 1–2 days | Free |
| Drafting the articles of association | 2–3 days | €500–€1,000 (legal and consulting fees) |
| Notarization of documents | 1 day | €500–€800 (notary fees) |
| Registering with the Business Register | 3–5 days | €200–€300 (administrative fees) |
| Obtaining a VAT number (Partita IVA) | 1–3 days | Included (administrative fees) |
| Opening a corporate bank account | 2–5 days | €50–€150 (account setup fees, depending on the bank) |
| Depositing the share capital | Same day as account opening | €10,000 (minimum for S.R.L. structure, varies by business) |
| Licenses and permits | 7–30 days (depending on activity) | €100–€1,000+ (depends on industry and type of business) |
Obviously, these are not all the steps and also the costs could be different. For example, you should also take into account employment–related aspects such as hiring procedures, the payroll and the social security. You should also take a closer look to the financial and tax obligations, some insurance obligations based on your business. Lastly, you should check for any additional administrative requirements.
Our firm has experience in this type of operations and we would be delighted to assist you.
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FAQ
1. Can a foreigner start a company in Italy?
Yes, foreigners can start a company in Italy. Non-EU citizens need a visa and residence permit, while EU citizens can proceed without these. All foreign entrepreneurs must obtain a tax identification number (Codice Fiscale) for legal operations.
2. How much does it cost to set up a company in Italy?
The cost varies based on the business structure. For a limited liability company (S.R.L.), costs include a €10,000 minimum share capital, notary fees, VAT registration, and administrative charges, typically between €2,000 and €4,000 for initial setup.
3. How to open a small company in Italy?
To open a small company in Italy, choose a legal structure like sole proprietorship or simplified limited liability company (S.R.L.S.), register with the Business Register, obtain a tax identification number, and secure any required permits for your business activity.
4. Which option is used to open a company created in Italy?
The most common options are establishing a limited liability company (S.R.L.) or a simplified version (S.R.L.S.) for startups. These structures provide flexibility limited liability, and are widely used by entrepreneurs to create companies in Italy.
5. What business is best in Italy?
Italy thrives in sectors like fashion, food, tourism, and manufacturing. Businesses that align with these industries, such as restaurants, boutique shops, or artisanal manufacturing, have strong potential. Technology and renewable energy sectors are also growing rapidly.
6. Is Italy open to foreign investment?
Yes, Italy is highly open to foreign investment. Government initiatives and incentives support foreign entrepreneurs, especially in innovative industries. Italy’s strategic location and access to the EU market make it an attractive destination for global investors.
