Starting a business in Italy: A guide for Indian residents with requirements, fees, and opening Italy business account

Italy is world-renowned for high quality products and design, with many popular companies originating from the European country. Setting up a company in Italy can be an interesting proposition, but there are drawbacks. Indian entrepreneurs may find it difficult without an existing European citizenship or residence, professional work is done in Italian not English, and there can be bureaucratic challenges. Learn more about what it takes to open a company in Italy as an Indian passport holder and what to expect from the process.

Can you register a company in Italy from India?

Yes. Indians can register a company, work and carry on business activities in Italy. However, they must comply with the appropriate regulations. Like all European countries, Italy has different rules for European Union (EU)/European Free Trade Agreement (EFTA) and non-EU/EFTA nations. Non-EU/EFTA citizens who want to set up a new company in Italy must have a valid residence and work permit for Italy or another European Union nation.

Indian businesses who want to set up a legal entity in Italy will need to meet the requirements. The eligibility criteria for businesses from non-EU/EFTA citizens to register a company in Italy include the following.

• The company must have at least one shareholder.
• It should meet the capital requirements.
• It should have at least one director.
• It should complete the necessary documentation.

Indian businesses who don’t want to set up a legal entity instead can have a representative office or branch in Italy. A representative office will require a certificate of good standing from a local Italian notary or the Italian Embassy in India.

To set up a branch office in Italy, an Indian business will need to register in the Business Register in Italy where the branch is to be located. They will also need to provide the deed of appointment, the certificate of incorporation or the articles of association at the time of registration.

Businesses can hire the services of authorised agencies who offer professional advice and expert guidance on how to set up a company in Italy.¹

Different types of companies in Italy

Italy allows the registration of the following types of company structures.²

• Representative office in Italy - Foreign companies can open representative offices in Italy to promote their products and conduct non-business activities. They must be registered with the REA (Economic and Administrative Register) at the Chamber of Commerce.
• Branch office of a foreign company - An Italian branch office doesn’t have a separate Italian legal identity, rather the parent company is held responsible. A branch office, however, is subject to taxes in Italy.
• Independent company or a subsidiary of a foreign company - Business entrepreneurs who want to set up their own companies can choose one of the following:

1. Limited Liability Company (Societa a responsabilita limitata S.r.l) - The minimum share capital is €50,000 EUR.
2. Joint Stock Company (Societa per Azioni S.p.A) - The minimum capital is €1 EUR, and there are no restrictions on the maximum capital. But there are rules to comply with if the company has capital over €10,000 EUR.
3. Simplified limited liability company (Societa a Responsabilita Limitata Semplificata S.r.l.s) - This business entity is a simplified company where the shareholders have to be individuals, not companies or organizations. The capital requirements is from €1 to €9999.99 EUR. This company is ideally suited for young entrepreneurs and start-ups.

• Limited Liability Partnerships (Societa in accomandita per azioni S.a.p.A) - A partnership in Italy is considered a business or corporate entity, but does not have a separate legal identity from the partners. There are three types of partnerships that exist in Italy.

1. Simple partnership (Societa semplice S.S) - This unit is confined mostly to agriculture, and there is no minimum share capital.
2. General or unlimited partnership (Societa in nome collettivo) S.n.c) - The members have unlimited liability for the partnership obligations, which means the partners can be held responsible for debts and obligations. The business name must contain the name of at least one partner.
3. Limited partnership (Societa in accomandita semplice S.a.s) - This business entity can have general partners or limited liability partners, which can determine the level of contribution and liability to the company.

In addition, Italy has introduced a new kind of company, Innovative Startup, for tech companies which have scalable growth. It can be in the form of one of the joint stock companies described above.

Requirements to start an Italian company from India

The type of company you are looking to start in Italy will dictate the requirements needed. Generally, here are some steps business owners will need to follow in the company registration process:³

• Find a notary - A local notary can be helpful in navigating the process, notarizing documents and identifying the right business entity for you.
• Register directors and shareholders with Italian tax authorities - Indian business entities must procure an Italian tax identification code for their directors and shareholders. The inland revenue agency or Agenzia delle Entrate issues the tax ID.
• Register on the Companies Register - the business must register on the Italian Chamber of Commerce Companies Register.
• Execute the AoA - The company must get its Articles of Association notarized after executing it.
• Issuance of VAT number (Partita Iva) - Companies must apply to the appropriate authorities (Agenzia delle Entrate) online to obtain VAT numbers.
• Issuance of Certificate of Incorporation (Visura) - Companies must apply to the chamber of commerce for issuing the Certificate of Incorporation. They must submit documents like AoA, bylaws, VAT, and the codice fiscale with their application.
• Open a bank account - On receiving the Visura, the company can open a business bank account.

Not all the steps may be necessary for your business; consult your notary or local lawyers to determine what you will need to complete to open your company.

What does it cost to run an Italy company

The costs of setting up a company in Italy can vary depending on the type of industry, size and location of your business. Modern digital, online-only companies may have less starting costs than a manufacturing or raw materials business. That being said, here are some general costs to think about when running a company in Italy:⁴

• Employee salaries: The total expense for employee salaries may be low when you are starting and will continue to grow as you expand. Depending on the type of work, the cost of freelancers can be considered in this total. You may also find extra administrative costs if you hire foreign workers.
• Social Security contributions: For employers, social security contributions can be a large expense when compared to India. Make sure you are providing the appropriate benefits and are complying with labour laws.
• Office and maintenance: The cost of an office in Milan or Rome will be much higher than in smaller cities or rural areas. You may also be required to pay a few months' deposit if you are renting an office. If you are having a more dispersed team, a coworking membership can be a good idea.
• Taxes: Ensure you pay the required local, regional and national taxes including VAT (Value Added Tax). A local tax accountant can help you navigate the tax system in Italy, which can be tricky.
• Professional services: Local professionals can help you in understanding of the business, government and regulatory environment in Italy. A lawyer, notary and accountant can be useful additions to your team and can save you from headaches later.
• Licenses and Permits: Depending on your type of business, you may need licenses and permits to operate locally.

Starting costs for setting up the company

The starting costs for setting up an Italian company vary based on the type of business, the industry and scale. Here is an example of starting costs, but there may be others: ⁵

• Minimum share capital costs: ranging from €1 - 50,000 EUR.
• Incorporation fee: approximately €2,300 EUR.
• Trade Register fee (if required): €520 EUR.
• Accounting fee: approximately €1,560 annually to start.

There may be additional costs to setting up the company, so consult your accountant and tax lawyer and ensure you keep all expense receipts for your records.

Fees for compliances, annual filings

Companies must maintain their registration by renewing their license trademarks and filing audited annual tax returns. The cost for this will vary by the type and size of the company.

Taxes and Government Fees

Companies registered in Italy must comply with tax regulations. Here are some taxes and rates you may face: ⁶

1. Corporate income tax (IRES) - The current CIT rate is 24%. Additionally, banks and financial entities may have a surcharge of 3.5%.
2. Regional tax on production activities (IRAP) - is collected by the specific region where the production activities are carried out. The general rate is 3.9%.
3. Value Added Tax (VAT - Imposta sul Valore Aggiunto) - The ordinary VAT rate is 22%. In addition, there are reduced rates - 10%, 5%, 4%, and Zero-rate which applies for non-taxable operations.
4. Excise Duty- is applied to the amount of goods produced, imported, or consumed. The rates vary according to the products.
5. Municipal tax on property (IMU - Imposta Municipale Unica) applies if the business owns property in Italy.

Stay up to date on the local taxes and government fees you will have to pay to start and as your company grows.

Starting a business account for an Italian company

Companies registered in Italy must open a business bank account in Italy to make and receive payments locally, as well as to have access to bank loans or funding. Opening a business bank account requires the submission of the necessary documents, like a certificate of incorporation, a business plan and the names of directors, if applicable.⁷

Need to open a personal bank account in Italy? Check out our full guide to opening a bank account in Italy.

Some banks that offer business bank accounts include UniCredit, Deutsche Bank Italia, BNP Paribas and Intesa Sanpaolo.

Challenges in opening and managing account from India

Online banking has made managing a bank account much easier than in the past. So whether you’re in India or elsewhere, you can typically log into your overseas bank account and stay updated. However, banks still continue to charge transfer fees and expensive exchange rates on international transactions. Want to save money when sending money overseas? Try Wise Business.

Make global payments with the Wise Business Account

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The Wise Business Account is one account that lets you deposit funds directly into local bank accounts in different countries. And you can send bank details in multiple global currencies so clients can make payments in the currency that is easiest for them.

It is the business account with all the best features of Wise- including low transfer fees and the mid-market exchange rate. So no hidden fees or marked-up exchange rates. And it can work with your accounting software like Quickbooks to keep track of transactions seamlessly. Join Wise Business and get everything you need to go global.

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Moving to Italy from India

Indians looking to move to Italy for work have limited options. There is a long-term employment visa option which requires sponsorship by an Italian company to work full time in the country. This visa allows for residing and working in the country, but Indian passport holders may face a quota when applying for the visa.

There is a self-employment visa (Lavoro Autonomo) which is a long term stay visa which allows someone to work in Italy for their own company. While this can be an option for some Indian passport holders, there are strict requirements to be met:⁸

• The company must be established for at least 3 years.
• Required to have a “Nulla Osta” (authorization for self-employed work) issued by a Questura in Italy.
• A statement that you will be working for yourself from the Ispettorato territoriale del Lavoro.
• Copy of the applicant’s income tax return showing evidence of sufficient revenue.

Startup / Entrepreneur Visa Program

Italy does not offer a special start-up or entrepreneur visa program for Indians.