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