Italy was ranked in 15th place in the 2021 edition of our annual Global Business Complexity Index, rising from 36th place in 2020. We take a look at what's driving this increase in complexity in Bel Paese, the 'beautiful country'.
Italy is among the most attractive countries for foreign investors. It is a member of the European Union and the Eurozone, and it has a favourable business climate with a sophisticated infrastructure.
The Italian economy was the eighth largest in the world by nominal GDP in 2020 and tenth largest by purchasing power parity, according to the World Bank.
Business disruptions and delays
As in many other jurisdictions, the Covid pandemic has had a significant impact on business in Italy. As non-essential movement was banned during the country's multiple lockdowns, many government services and companies' operations were disrupted, meaning that delays have become commonplace.
As an additional layer of complication, Italy has been slower than many other countries to fully embrace digitalisation. This means that many business incorporation and reporting activities must still be conducted by submitting paper forms to governmental agencies and banks, often in person.
Setting up a limited liability company
To set up a limited liability company (S.r.l. "Societa` a Responsabilita` Limitata") in Italy, it is necessary to go before a notary public, who will finalise the incorporation deed. The incorporation deed consists of two parts: the first (deed of incorporation drawn up by the notary) records the main information belonging to the company to be incorporated in Italy; the second comprises the articles of association (bylaws drafted in accordance with the company's needs and attached to the deed of incorporation) and indicates the rules concerning the operation, organisation and winding-up of the company.
The minimum share capital to incorporate a regular limited liability company is €10,000. In the case of a company founded by a single quotaholder, 100% of the capital must be paid in at that time to either the trusted bank account of the notary or to a specific locked bank account opened in the name of the new company.
Companies and their directors should be aware of other complexities they may encounter when incorporating and managing an entity in Italy.
The incorporation procedures can take several months, may require multiple documents to be finalised before the notary (located in the same country of the Italian entity parent company), and each document must be translated into Italian by a translator who is approved by the Chamber of Commerce and Industry or sworn before an Italian notary public.
To be appointed as director of an Italian company and to register an office in the trade register, the director must apply with an Italian tax code, if he or she does not already have one.
Additionally, the VAT and tax system in Italy is complex, and opening a business bank account can also present several challenges.
With the ongoing pandemic, Italian public offices may be operating with reduced staff numbers; therefore, again, expect significant delays in processing a new business and ensure significant lead time for business management activities.
Navigating these complexities - particularly in the Italian language - can be challenging, and many foreign companies may require local advisors and directors.
Prior to initiating the incorporation process, TMF Group will provide a detailed questionnaire to obtain the necessary information for incorporation, and customised information will be provided during the process of applying for incorporation.
Talk to us
As well as supporting businesses incorporating in this country, TMF Italy provides a variety of high value services specifically addressed to local financial intermediaries in respect of the following areas:
- Compliance and internal audit
- Know Your Client and Anti Money Laundering (KYC and AML)
To find out more about how TMF Italy can help to establish your business here, or support your existing operations, contact our experts today.
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.