Open a Branch in Italy: Setup, Tax & Compliance for Foreign Companies

Strategic overview

What is a branch in Italy, and when does it make sense?

A branch is a secondary establishment with permanent representation of a foreign company in Italy. It is not a new legal entity: it is the same company, operating locally through a stable organisation and an appointed representative with powers to act in Italy.

This distinguishes the branch from a representative office, which may only carry out preparatory and auxiliary activities such as market research or promotion, and from an Italian S.r.l., which is a separate entity with its own capital and limited liability.

The branch is usually the right answer when the foreign group wants to trade in Italy under its own name and balance sheet, keep management centralised, and avoid the governance and capital architecture of a local company — while accepting that the parent carries the liability and the tax exposure of the Italian activity.

How we approach it: the choice between branch, subsidiary and representative office is a commercial decision with legal, tax, employment and banking consequences. We map those consequences before any filing is made, so the structure is not corrected after launch.

Decision support

Branch, subsidiary or representative office?

Three structures, three very different risk and tax profiles. The comparison below is a preliminary structuring tool; the final choice should follow a review of the intended activity, contracts, staff and revenue model.

Issue	Italian branch	Italian subsidiary (S.r.l. / S.p.A.)	Representative office
Legal nature	Secondary establishment of the foreign company; no separate legal personality.	New Italian company with its own legal personality.	Local presence without operational capacity.
Liability	The foreign parent answers directly and without limit for the branch's obligations.	Liability is generally ring-fenced at the level of the Italian company.	Limited exposure, because no business is transacted.
Permitted activity	Full commercial activity: sales, contracts, staff, premises, invoicing.	Full commercial activity, as an autonomous Italian business.	Only preparatory and auxiliary activity — no revenue-generating operations.
Capital	No statutory minimum capital; the parent funds the branch as needed.	Statutory capital applies (ordinarily EUR 10,000 for an S.r.l.; EUR 50,000 for an S.p.A.).	No capital requirement.
Setup formalities	Parent's corporate resolution, notarial deed, Companies Register filing.	Deed of incorporation and bylaws before an Italian notary, Companies Register filing.	Lighter administrative registration.
Taxation	Permanent establishment: taxed in Italy on the income attributable to it.	Italian resident company taxed on its own results.	Generally no taxable business income, provided the activity stays genuinely auxiliary.
Accounting visibility	The parent's own accounts must generally be filed in Italy, becoming publicly accessible.	Only the Italian company's accounts are filed.	Minimal.
Best suited to	Groups trading under one brand and one balance sheet, project-driven or contract-driven entries.	Local operating businesses, risk segregation, partnerships, future investment or sale.	Testing the market before committing to an operational structure.

Discuss branch vs subsidiary Compare Italian company types

Documentation

What the foreign parent company must provide

Most delays in branch registrations are documentary, not legal. Preparing the corporate paperwork correctly — and legalising it in the right country, in the right order — is the single biggest driver of timing.

The corporate resolution

The competent body of the parent company — shareholders' meeting, board of directors or sole director, according to its constitutional documents — must pass a specific resolution to open the Italian branch. It should state:

The decision to establish a branch in Italy.
The registered address of the Italian branch.
The appointment of one or more representatives and the scope of their powers.
The activity the branch will carry out in Italy.
The financial resources allocated to the branch (optional, but often useful for banking and credit purposes).

Supporting documents and formalities

Alongside the resolution, the parent company generally has to produce:

A copy of its articles of association or equivalent constitutional documents.
A certificate of good standing or company register extract.
Identification documents of the appointed representative and, where required, of the beneficial owners.
Notarisation in the country of execution, plus apostille or consular legalisation depending on the jurisdiction.
Sworn Italian translation of the foreign documents.

Practical point: apostille requirements differ by country, and some registries issue extracts that Italian notaries will not accept without additional certification. We review the parent's document set before it is legalised abroad, so the package is not rejected at the notary stage and re-issued at the client's cost.

Procedure

How to open a branch in Italy: step by step

The registration should be run as a legal implementation project, particularly where the branch needs a bank account, employees, premises or licences immediately after it is set up.

Preliminary structuring and scope

We assess the intended activity in Italy, the contracts to be signed, the staff and premises required, the revenue flows and the regulatory perimeter, and confirm whether a branch is genuinely preferable to a subsidiary or a representative office.

Corporate resolution of the parent company

The parent's competent body resolves to open the branch, designates its address, appoints the representative and defines their powers. The resolution is then signed, notarised and apostilled or legalised in the country of execution.

Italian tax code for the representative

Before the notarial deed, the appointed representative must obtain an Italian personal tax code (codice fiscale) from the Italian Revenue Agency. Non-resident individuals normally apply through a consulate or a local representative.

Translation, legalisation and notarial review

The foreign documents are sworn-translated into Italian. The Italian notary verifies the regularity and completeness of the whole package before the deed is scheduled, which is why the review should happen well before the signing date.

Notarial deed establishing the branch

The deed is executed before an Italian notary. The appointed representative may attend in person or grant a power of attorney to a trusted professional who signs on their behalf, allowing the parent's officers to stay abroad.

Companies Register filing and REA registration

The notary files the deed with the competent Companies Register at the Chamber of Commerce. The branch is entered in the register with its own registration details, its representative and the extent of their powers, which is what makes those powers enforceable against third parties.

VAT number, PEC and digital signature

The branch obtains its Italian VAT number, a certified electronic mail address (PEC) and, for the representative, a digital signature. These are prerequisites for e-invoicing, filings and most dealings with Italian public authorities.

Operational launch

Bank account opening, accounting and payroll onboarding, employment contracts, commercial and supply agreements, lease of premises, insurance, and any sector-specific licences or notifications required for the activity.

Timing note: the overall timetable depends on document readiness, foreign notarisation and apostille, tax-code issuance, sworn translation, notary availability and Chamber of Commerce processing. A realistic date should be confirmed case by case once the parent's documents have been reviewed.

For international clients

Opening an Italian branch remotely

In most cases the parent's officers never need to travel to Italy. A properly drafted power of attorney lets a designated representative complete the process locally.

01

Drafting the power of attorney

The POA must be specific enough to cover the notarial deed, the registration filings and the dealings with tax and administrative authorities, and it must be valid under both the law of execution and Italian requirements.

02

Notarisation and apostille abroad

Depending on the country of signature, the POA will need notarisation and either an apostille under the Hague Convention or consular legalisation, followed by sworn translation into Italian.

03

Execution in Italy

The attorney appears before the notary, signs the deed, and handles the subsequent registration steps. The parent's directors remain in control through the terms of the mandate they granted.

Caution: a generic corporate power of attorney is frequently refused. The mandate should be drafted against the specific acts to be performed in Italy, and confirmed with the notary in advance.

Tax and accounting

How an Italian branch is taxed

A branch that meets the conditions of a permanent establishment is taxed in Italy on the income attributable to it. The practical work lies in how that income is determined and documented.

Corporate and regional tax

Income attributable to the Italian permanent establishment is generally subject to Italian corporate income tax (IRES) and regional production tax (IRAP), with returns filed in Italy for the branch.

Attribution of profits

The branch must determine its result as if it were a distinct enterprise, with a dedicated set of accounts and documentation supporting the functions, assets and risks attributed to it, and the dealings with the head office.

VAT and e-invoicing

The branch is registered for Italian VAT and operates within the Italian electronic invoicing and reporting system, which affects billing set-up, ERP configuration and supplier onboarding from day one.

Withholding and treaty relief

Payments made by and to the branch may attract withholding obligations. Double tax treaties and EU directives may reduce or eliminate them, subject to substance, documentation and beneficial-ownership requirements.

Relief from double taxation

Home-country rules determine how the Italian result interacts with the parent's own taxation, typically through a foreign tax credit or an exemption for foreign permanent establishments where such a regime exists.

Payroll and social security

Staff employed in Italy trigger registration with the social security and accident insurance bodies, application of the relevant national collective agreement, payroll records and monthly contribution filings.

Outbound mirror image: where an Italian company operates abroad, Italy taxes worldwide income but grants relief either through a foreign tax credit or, on election, through the branch exemption regime introduced in 2016, under which the profits and losses of foreign permanent establishments are excluded from the Italian tax base. That option is irrevocable and applies to all foreign branches, so it should be modelled before it is exercised.

After registration

Running an Italian branch properly

Registration is the beginning, not the end. A branch carries recurring obligations that sit partly with the Italian establishment and partly with the foreign parent.

Recurring obligations

Accounting records and corporate books kept in Italy for the branch.
Filing of the parent company's financial statements with the Italian Companies Register.
Annual tax returns for the permanent establishment and periodic VAT obligations.
Electronic invoicing and, where applicable, cross-border transaction reporting.
Payroll filings, contributions and mandatory workplace safety compliance.
Updating the register whenever the representative, powers or address change.

Governance of the Italian operation

Clear internal limits on the representative's authority, mirrored in the registered powers.
Signature and approval matrix for contracts binding the parent company.
Written policies on data protection, since the branch processes personal data in the EU.
Contract templates aligned to Italian mandatory rules on payment terms and termination.
Intercompany documentation for services, financing and cost allocations.
Insurance and liability review, given that exposure reaches the parent directly.

Risk management

Common pitfalls we are asked to fix

Most problems are avoidable and originate in the first sixty days.

A representative office that became a branch

An office registered as auxiliary starts negotiating and concluding contracts. The activity is then recharacterised as a permanent establishment, with retrospective tax consequences.

Underestimating the parent's exposure

Because there is no separate entity, an Italian dispute, employment claim or supply-chain failure reaches the parent's balance sheet directly, and often in a foreign forum.

Powers that do not match reality

The representative's registered powers are too narrow for what they actually sign, or too broad for what the group intended, creating enforceability and internal control problems.

Publicity of the parent's accounts

Groups are sometimes surprised that the foreign parent's financial statements must be filed and become publicly accessible in Italy. Where that matters commercially, a subsidiary may be the better answer.

Banking friction

Opening an Italian account for a branch involves KYC on the whole foreign structure. Starting the process late is one of the most frequent causes of delayed operational launch.

Staff hired before the framework exists

Employment starts before payroll registration, collective agreement selection and safety compliance are in place, producing avoidable exposure from the first month.

B

Italian Branch Setup Checklist for Foreign Companies

Corporate documents, legalisation sequence, representative's powers, tax and VAT steps and post-registration actions — collected in one checklist to prepare before requesting a fixed-fee proposal.

Request the Checklist

Our legal service

Italian branch setup service

We handle the legal implementation from structuring through to operational launch, coordinating the notary, the register, the tax steps and the client's advisers abroad.

Structuring memo

Written assessment of branch versus subsidiary versus representative office, with the liability, tax, employment and banking consequences of each for the specific project.

Document engineering

Drafting of the parent's resolution and the power of attorney, review of the corporate documents, and instructions on the legalisation sequence in the country of execution.

Tax code and KYC coordination

Support with the representative's Italian tax code, identification of beneficial owners and preparation of the AML documentation the notary and banks will require.

Notary and register

Coordination of the notarial deed, the Companies Register filing and the registration of the representative's powers, with follow-up until the branch is fully registered.

Operational legal launch

Bank-account pathway, commercial and supply contracts, leases, employment documentation, data protection and any licences required for the activity.

Ongoing support

Coordination with accountants and payroll providers, changes to powers or address, conversion of the branch into a subsidiary where the business case evolves, and closure if needed.

Related services

Workstreams usually connected to an Italian branch

A branch registration is rarely a standalone filing. These areas should be assessed in parallel.

FAQ

Opening a branch in Italy: frequently asked questions

Preliminary answers for foreign companies assessing an Italian establishment.

What is a branch in Italy?

A branch, or sede secondaria, is a permanently organised secondary establishment of a foreign company in Italy. It has no legal personality of its own: it is the foreign company itself operating locally, through premises and an appointed representative empowered to act in Italy.

How do I open a branch in Italy?

The competent body of the foreign parent passes a resolution to open the branch, designating its address and appointing one or more representatives. That resolution, together with the articles of association and a certificate of good standing, is notarised and apostilled or legalised abroad, translated into Italian, and used for a notarial deed in Italy. The notary then files the branch with the competent Companies Register.

Is there a minimum capital requirement for a branch?

No. Unlike an S.r.l. or an S.p.A., a branch is not capitalised as a separate entity. The parent may nevertheless allocate financial resources to it in the resolution, which is often helpful for banking, credit and tender purposes.

Can the branch be opened without travelling to Italy?

In most cases, yes. The appointed representative can grant a power of attorney to a trusted professional in Italy, who appears before the notary and completes the registration. The POA must be drafted for the specific acts, notarised and apostilled or legalised in the country of signature, and translated into Italian.

What is the difference between a branch and a subsidiary?

A subsidiary is a separate Italian company with its own capital and, in principle, its own limited liability. A branch is the foreign company itself: all liability for what the branch does in Italy falls directly on the parent. Choosing between them is primarily a business decision about risk, control, cost and how the group wants to appear in the Italian market.

Is a branch treated as a permanent establishment for tax purposes?

Generally yes. A branch that carries on business through a fixed place of business in Italy is normally a permanent establishment, taxed in Italy on the income attributable to it, with Italian corporate and regional tax obligations and its own accounting records. The precise position depends on the activity and on the applicable double tax treaty.

Does the foreign parent's financial information become public in Italy?

A foreign company with a secondary establishment in Italy is generally required to file its own accounts with the Italian Companies Register, where they become publicly accessible. Groups that consider this commercially sensitive often prefer a subsidiary.

Can the branch hire employees in Italy?

Yes. The branch can employ staff locally, which requires registration with the social security and accident insurance bodies, selection and application of the relevant national collective agreement, payroll administration and compliance with workplace safety rules. These steps should be prepared before the first hire, not after.

What is the difference between a branch and a representative office?

A representative office may only carry out preparatory and auxiliary activities, such as market research, promotion and liaison. It cannot conclude business or generate revenue. A branch is permanently organised for actual commercial operations. Where a representative office starts doing business in practice, it risks being recharacterised as a permanent establishment.

Can a branch later be converted into an Italian company?

Groups frequently start with a branch and move to an S.r.l. once the Italian activity is established. The transition involves transferring the business, contracts, assets and staff to the new entity and closing the branch, with tax, employment and contractual consequences that should be planned in advance rather than improvised.

What should be prepared before requesting a quote?

The parent's jurisdiction and corporate chart, the intended activity in Italy, the proposed address, the identity of the representative, expected staff and premises, the revenue model, any licences required, and whether tax, accounting and banking support is needed.

Establish your presence in Italy with the right structure.

Before issuing a quote we review the activity, the parent's documents, the representative's powers, the tax and VAT position, the banking path and any licences required, so the workstream is scoped properly and execution risk is reduced.

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Send us the parent company's details and the activity planned in Italy, and we will come back with the structure we recommend, the documents required and a fixed-fee proposal.

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This page provides general information on establishing a branch in Italy and does not constitute legal or tax advice. Requirements, formalities and tax treatment depend on the specific circumstances, the jurisdiction of the parent company and the applicable double tax treaty, and should be confirmed case by case.