Establishment of a Limited Liability Company (S.r.l.) in Italy for a Non-Resident Person

Article published in the magazine We Wealth of May 2, 2023

Here is a short guide on how to establish a limited liability company in Italy as a non-resident

There are several reasons why a non-resident might consider establishing a limited liability company (Società a Responsabilità Limitata) in Italy. Some potential explanations include:

  • Access to the European market; • Skilled workforce, particularly in areas such as design, engineering, and manufacturing;
  • Rich cultural heritage, establishing a company in Italy provides a strong brand association with these sectors;
  • Limited liability protection, shareholders are only liable for the company’s debts and obligations up to the amount of their invested capital.

But what are the steps to have your own limited liability company in Italy?

A non-resident person must request a tax identification number (“codice fiscale”); the waiting time is a maximum of 30 days. Choose a company name, identify a legal address, determine the share capital (minimum €1.00 for a simplified S.r.l. with a standard statute, or €10,000.00 for an ordinary S.r.l.), and draft the articles of the constitutive act (atto costitutivo, the company’s structure, rules, and regulations). It must be prepared by a notary public in Italy.

After the notary signs the company’s constitutive act, you can obtain the company’s tax code (VAT number) and the registration number at the Business Register (Registro Imprese), which establishes the company’s birth. With this information, it is possible to open a bank account. Compliance for opening an account for a company with a non-resident shareholder can be slow, so it’s good to estimate 15 days.

If the company will have employees, it is necessary to register with the National Social Security Institute (INPS) and the National Institute for Insurance against Accidents at Work (INAIL) for employee insurance and social security contributions. Obtain necessary permits and licenses: depending on the nature of your business, you may need additional permits or licenses to operate in Italy. For service activities such as consulting, a license is not necessary.

Directors and Board of Directors: An S.r.l. must have one or more directors responsible for managing the company. The directors’ appointment, powers, and term of office are usually defined in the Articles of Association. Directors don’t need to be Italian residents.

Statutory auditors: Depending on the size and structure of the S.r.l., it may be required to appoint a board of statutory auditors (Collegio Sindacale) to supervise the company’s administration and compliance with the law.

Financial statements: S.r.l. must prepare annual financial statements, which include a balance sheet, an income statement, and a statement of changes in equity. These statements must be prepared according to Italian accounting standards and filed with the Italian Business Register.

Tax compliance: S.r.l. is subject to Italian corporate income tax (IRES 24%) and regional production tax (IRAP 3.9%). Companies must file annual tax returns, make advance tax payments, and comply with other tax obligations, such as withholding taxes on dividends, interest, and royalties paid to non-residents. The first-year costs for a simplified S.r.l. are €1,750 (€700.00 from the second year), while for an ordinary S.r.l. it is about €3,600 (€700 from the second year). The share capital of the ordinary S.r.l. is €10,000.00, but only 25% of it must be deposited in the bank at the time of incorporation.

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