Establish Foreign Company in Italy

If you are a foreign company and wondering how to establish your own office in Italy, you are in the right place.

Your company can be established in Italy because your country guarantees the possibility of doing the same for an Italian company.

Law 218/95, which regulates private international law, provides for the establishment of a foreign company in Italy.

Operation of established foreign company.

First of all, a distinction must be made between:

A) Foreign company that operates mainly abroad and has its effective headquarters in the country of origin

B) Foreign company which has its effective headquarters and operates mainly in Italy

C) Foreign company with a permanent establishment in Italy

D) Foreign company not recognized by Italian law

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A) Foreign company that operates mainly abroad and has its effective headquarters in its country of origin.

These companies that have relations with Italy but do not have an actual seat and do not operate mainly are governed by the state’s law in which they were established and are automatically recognized in Italy.

Bilateral agreements between the foreign state and Italy may recognize particular benefits to these companies.

The law of the home state will govern the life and relationships of these companies.

B) Foreign companies with effective headquarters and businesses mainly in Italy.

These companies that decide to establish themselves or have their principal business centre in Italy are subject to Italian law on companies.

Their deed of incorporation must, therefore, be compared to the Italian one.

C) Foreign company with a secondary office / permanent establishment in Italy.

A company incorporated abroad may decide to open one or more secondary offices in Italy with permanent representation. That is, with a person with the powers of representation who manages the company’s affairs daily.

The secondary office is only a branch of the foreign company and therefore cannot act personally. However, it is partly subject to Italian law.

The representative in Italy of the foreign company must carry out a series of electronic obligations to register the secondary office / permanent establishment in Italy:

– Register the secondary office in the Business Register;

– Send the Start of Activity Report (SCIA) to the REA;

– Report the start of the business to the Revenue Agency with a request for assignment of a VAT number or tax code;

– Notify the authorities of the hiring of any employees.

Documents to be produced.

The established legal representative must produce the translated and certified documents of the articles of association, the by-laws of the foreign company, and any power of attorney for the performance of the representation activities.

D) Foreign company not recognized by Italian law.

If a foreign company is not provided for by Italian law, the rules on S.p.a. (Joint-stock companies PLC) must be referred to.

Right of the establishment of European Union companies.

Companies established within the European Union benefit from the special treatment recognized according to art. 49 of the Treaty on the Functioning of the EU.

Each company has the right to settle freely in any country of the Union. It can open its branches in compliance with the rules laid down by the member country.

Which option should you choose to establish a foreign company in Italy?

In conclusion, the company wishing to establish its presence in Italy can opt for:

– Obtaining a simple VAT position in Italy to be able to operate fiscally if not physically present;

– Opening of a branch of a foreign company. It needs to establish its own secondary and operational headquarters in Italy;

– Creating a new Italian subsidiary of the foreign company.

Another essential difference between establishing a secondary office and the incorporation of a subsidiary company lies in the fact that all active and passive relationships will be with the foreign company in the first case.

In contrast, in the second, the responsibility will fall on the Italian company.