The second edition of CBA Doing Business in Italy booklet acknowledges (i) the main changes occurred in the last two years in the Italian domestic law (both from a tax and corporate standpoint) and (ii) the new specific tax rules introduced by the Decree n. 147 dated September 14th, 2015 ("Decreto Internazionalizzazione") in order to boost growth and internationalization of the Italian ente prises ("Internationalization Decree").


With a population of over 60 million people, Italy is the third largest economy in the Eurozone and the eighth largest in the world. Situated in Europe, it has a surface area of 301,230 square kilometres (116,306 sq. mi) and its capital city is Rome. Italy is a Republic and has a system, where:

  • Parliament is the legislative branch;
  • Government is the executive branch;
  • The Supreme Court and a number of other lower courts and judges act as the judicial branch.

Italy has a codified Constitution as its own fundamental law. Primary legislation - i.e. laws, law decrees, legislative decrees and regional laws - must comply with it. The main sources of primary legislation are systematic collections of laws, designed to deal with the core areas of legislation. Examples of these are the Civil Code, the Code of Civil Procedure, the Criminal Code, the Criminal Procedure Code, the Insolvency Law, the Law on Banking and Credit regulations, the law on Financial Institutions and Markets, the Navigation Code, the Income Tax Code, etc. EU regulations, Directives, Decisions and Recommendations shall also be regarded (or taken into account) as relevant sources of law.

The Italian economy is broad-based, encompassing almost every type of sector, from industry (particularly food, electronics, fashion, engineering, automotive, etc.), to agriculture (wine, olive oil, wheat, milk, fruit and vegetables) and services (mainly tourism, retail, banking and financial). Italy is the world's sixth largest manufacturing country and is characterised by a smaller number of multinational corporations than other economies of comparable size, and a large number of dynamic small and medium-sized enterprises, clustered in several industrial districts.

Italy is a member of the European Union and the European Monetary System. The country has adopted the Euro as its currency since 2002. Italy is also a member of the WTO.

Italy has always been regarded as the main door to the European market and, in general, to the countries of the EMEA (Europe, Middle East and Africa) area. Besides its privileged location, i.e. in the centre of the Mediterranean, it also has a large network of tax treaties and provisions (participation exemption rules, tax rulings, etc.) that make it an excellent regional or main headquarters location for carrying on investment worldwide.


This guide aims at providing general insight into the main instruments and opportunities available to investors for doing business in Italy; in particular, this work is intended as an introductory guide for foreign investors to the main legal and tax issues they will most likely encounter upon deciding to enter, invest and exit the Italian market.

More in detail, the guide provides an overview on the most common forms of investment in Italy, the most relevant regulatory and tax matters, besides a general review on the most relevant labour law topics.


1. Methods For FDI In Italy

The decision to enter the Italian market should always be taken after careful consideration of the business reasons underlying it. According to the degree of commitment the investor is willing to undertake, there are mainly three methods for foreign direct investment ("FDI") in Italy:

  • Investment in a subsidiary company. This type of investment is viable for investors who intend to undertake a strong level of commitment to the Italian market and, thus, decide to (i) establish a wholly-owned subsidiary or (ii) acquire full stakes in an already existing company.
  • Participating in an equity joint venture with another investor or enterprise. This generally implies setting up a company or a partnership with another (generally local) investor for a specific purpose or project, on the basis of a specific contractual agreement according to which each party may contribute capital, products and/or expertise, depending on their resources, skills and on their share in the returns and the risks of the investment.
  • Establishment of a branch, office, factory, etc. These forms of investment generally require a lower level of commitment for the investor, since they imply having the foreign parent company operate in Italy directly by either:

    1. performing activities limited to representative functions, i.e. marketing and sales assistance (representative office) with no taxable presence in the country or
    2. carrying out actual business activities, having established a fixed place of business in the country (permanent establishment).

2. Structure Of Work

This booklet is divided into three Parts.

The first two Parts address the main issues for FDI with specific reference to the following investment schemes:

  1. ownership of a subsidiary or of stakes in a company ("Part I – Investment in a company");
  2. ownership of a branch, office, factory, etc. ("Part II – Permanent Establishments and Representative Offices").

Each of these parts considers the following main issues:

  • regulatory background and applicable taxes, providing a general overview on the main legal, regulatory and tax consequences of owning a company, a permanent establishment or a representative office in Italy;
  • entry phase, addressing the main investment opportunities available for investors and the decisions related to its funding upon entering the investment;
  • investment period, regarding, mainly, taxation of returns paid to foreign investors, like dividends, interest, branch profits, etc.;
  • exit phase, considering the opportunities for investors to either divest or change the degree of physical presence in the country (e.g., change from a representative office to a branch or to a company for a stronger commitment, or, otherwise, downgrading to a permanent establishment or to a representative office, etc.).

The last Part of this work aims at providing a general overview on Italian labour law provisions and regulations that apply to Italian resident companies, permanent establishment or representative offices and the main issues regarding the relationships between employees, employers, trade unions and the government. A brief outlook on the topic of "employee secondment agreements" shall also be provided ("Part III – An introduction to Italian labour law").

To read this booklet in full, please click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.