• setup a company in Italy registering a Branch or a Subsidiary in Italy

    setup a company in Italy registering a Branch or a Subsidiary in Italy

    A foreign company may perform any business activity in Italy through a subsidiary (company) or a branch (permanent establishment).
    To set up a corporation or a branch in Italy it is necessary to go before a Notary Public. The taxation of an Italian branch is the same as the taxation of an Italian corporation.
    In the case of a branch, the parent company is directly responsible for all the debts of the Italian branch. However, in the case of a subsidiary, the company is only answerable with its assets for the obligations of the company.
    The liability of the Stockholders is limited to the amount of the participation subscribed by each of them.
    The procedure for the setting up of a subsidiary is simpler than the one necessary for the setting up of a branch, and both from an administrative and fiscal perspective, managing an Italian branch is as difficult as managing an Italian subsidiary.

    The Italian branch must file its parent company balance sheet with the Registrar of Companies. Of course, the balance sheet of the parent company must be translated into Italian. This is not true for an Italian subsidiary.

    Key things to consider are that a branch office is not a separate legal entity from the parent company. The foreign parent carries full liability for the branches operations and there can be lengthy and complicated dealings with the tax authorities to fulfil the branches obligations.

    The disadvantages of a branch office are:
    The parent company is fully liable for the liabilities of the branch
    The branches representatives may be held jointly and severally liable for tax debts
    The financial statements of the parent must be lodged at the Companies Registry
    The branches obligations are the same as the parent, including filing VAT returns, employees returns and corporation tax returns, so there are few savings in administering a branch
    Banks and clients may prefer dealing with a Italy company rather than a foreign branch
    A branch is rarely ideal for substantial projects because the parent company runs the entire risk
    Upon registration of a branch, evidence has to be provided of the legal existence of the parent
    Any public act by the branch, is likely to need ratification by the board of the foreign parent. A company that signs contracts in front of a notary on a regular basis, should incorporate for administrative ease
    The advantages are:
    Less obligations to present accounts than with corporation
    Opening a Italy Branch of a Foreign Company
    In order to open a branch office in Italy you need to register with the Chamber of Commerce within 30 days of your company being created.

    Upon initial registration, you must provide various documents to the Italian authorities. These documents deal with issues from the Register of Enterprises in Italy and contain company information and information about legal representatives assigned to the company. These must be translated into Italian and certified by an official.

    Various documents will need to be translated, the documents include:

    your parent's registration certificate
    your company's articles of association
    the names of the company's directors and secretary
    Differences between Branches and Companies
    A branch has no capital base, so the foreign parent will be liable for Italian debts.

    In specific situations the formation of a branch is compulsory, such as when the foreign company has to participate to Italian public contract tenders.

    After your branch is registered
    All stationery, order forms and similar documents used by your branch are required to show:

    The place of registration of the parent
    The number with which it is registered
    The legal classification of the company
    The address of its registered office
    The place of registration of the branch, and its registration number
    Also the following particulars must be shown at the branch office:

    The company name
    The name of the country in which the company is incorporated
    The parent of the branch has limited liability
    Features of a branch office in Italy
    A branch is usually an adequate vehicle for low cost projects. However, it is not the ideal choice for substantial projects because the parent company and branch offices activities are not differentiated, the parent company is fully liable for the branches liabilities.

    The branch must have the same name as the parent company.

    A branch of a non-resident company must appoint a resident individual or a company to represent it in its dealings with the tax authorities. The representatives may be held jointly and severally liable for the tax debts of the permanent establishments of non-resident entities, which they represent.