Consider opening a company in Italy. But how will you import your goods, or do you even know the Italian tax code? What is the Italian work culture like? If these are your inquiries, you may discover the solutions below! It’s intriguing to launch a business in Italy. Italy has the eighth-largest economy in the world and the third-largest in Europe. Italy is a beautiful site to establish or build an international business because of its strategic location, which enables trade between Northern Europe, Southern Europe, North Africa, and the Middle East. Despite having a bad image of bureaucracy, paperwork, corruption, and a tight labor market, Italy has plenty to offer entrepreneurs looking to launch their own companies.

Can Foreigners Start A Business In Italy

You should be aware that there aren’t any particular restrictions on most foreign nations when starting a business in Italy. It is sufficient to present an ID or a valid passport for the director or shareholder; they are not required to be residents of Italy.

Self-Employed Vs. Freelancing In Italy

Consider that you want to become a solopreneur and launch your firm. In such a scenario, you must decide whether you will work for yourself as a tradesperson or as a freelancer. You must choose the category for your firm from the start because the standards for the two categories are different.

 If your proposed business does not fall under a liberal vocation, you are a tradesperson. As a result, to obtain a trade license, you must register with the trade office in your city. You must register your internet business as a trade business if you operate one, whether it be an Etsy, Shopify, or revenue-generating blog.

 Freelancers serve the liberal professions. Typically, those are people in art, education, medicine, engineering, science, software development, design, law, tax advice, and others.

Requirements For A Visa For Self-Employment In Italy

An Italian long-stay visa is the Itay Self-Employment visa. You must apply for this visa to establish a new business in Italy or operate as a freelancer.

The Italian self-employment visa, however, is only an entry visa. This implies that while it enables you to enter the nation, you still require further authorization to remain and carry out the employment.

Before requesting a visa, you must own the necessary credentials depending on the sort of job you want to conduct. These authorizations must be obtained in Italy while you are still a resident. As a result, you will need to engage a local Italian to help you obtain these authorizations.

If you’re a self-employed or business owner who wants to work in Italy, you’ll need to apply for a self-employment visa. Different requirements apply depending on the sort of task you’ll be conducting. Once more, the documents you require depend on where you currently reside.
The following criteria must be met to qualify for a self-employment visa:

• Application for a long-stay visa for Italy.
• Two passport-sized photos
• You must have a current passport with at least two empty visa pages. It must be in force for at least three months longer than the visa’s validity period.
• The Nulla Osta authorization (original and photocopy).
• Proof of enough funding
• A lease or purchase agreement is one example of evidence of adequate housing.
• Evidence of income from the previous year is higher than the minimum amount required by law to qualify for a health care payment exemption (€8,400).
• A local Chamber of Commerce certificate attests that you have the resources necessary for the self-employed activity you intend to engage in less than the minimum yearly income (€4,962.36) must be provided.
• civic status certificates

Other prerequisites (for a corporate position in a corporation) include:

• Evidence that the business is registered with the Chamber of Commerce.
• The registration number of the company.
• Your position inside the company.
• A copy of an official letter of responsibility confirming your commitment to operating independently. It has to be issued by the local County Labor Office (Direzione Territoriale del Lavoro).
• Evidence showing your salary will be higher than the €8,400 threshold needed to qualify for health care payment exemption.

Additionally, keep in mind that this is not an exhaustive list. You can be asked to provide records about your home nation or current circumstance. Always get in touch with the correct visa application facility for further information.

Types Of Businesses In Italy

Let’s examine the many legal forms and their definitions as there are several variations in trade business forms. The following three groups broadly classify company types:

COMPANIES:

• Limited liability company
• The public limited company by shares
• Partnerships
• Sole proprietorships

The issue of company formation in Italy is broad since there are many different legal forms for forming businesses based on the business’s organizational structure, goals, the amount of money to be invested, the founders’ level of accountability, and the tax and accounting ramifications.
The main distinction made by Italian corporate law is between partnerships and limited liability firms.

SOLE PROPRIETORSHIP

This is a popular choice among those beginning their enterprises. You can run your firm as a small business and take advantage of reduced red tape if your first and second years’ earnings are less than 22,000 euros and 50.000 euros, respectively. Limited is solely responsible for all business decisions and debts as a lone owner.

LIMITED LIABILITY COMPANIES

There are primarily two types of limited liability businesses in Italy:

• Private Limited Companies by Quotas (società a responsabilità limitata or S.r.l.) including “Traditional S.r.l. or “S.r.l.” and “Simplified S.r.l.” or “S.r.l.s.”);
• Public Limited Companies by Shares (società per azioni or S.p.A.).

Generally speaking, limited liability firms are distinguished by:

• Limited liability for business owners, meaning that each owner’s liability is only for the money or assets they have given to the business;
• the distinction between the company’s ownership and management; as a result, the company’s directors are not always also the company’s owners, and vice versa;
• freely movable shares 
• must have a minimum of one director and one shareholder.

PARTNERSHIPS

There are primarily two types of partnerships in Italy:

• società in nome collettivo or S.n.c.;
• società in accomandita semplice or S.a.s.

Partnerships (società in nome collettivo or S.n.c. and società in accomandita Semplice or S.a.s.) are typically distinguished. Partners’ers’ joint and multiple culpabilities for the business’s debts are infinite.

• Each partner serves as a managing director of the business.
• Partner status is not transferable, either during a person’s lifetime or after death, unless agreed to by the other partners.
• Must have a minimum of two partners.
• tax transparency

OTHER ENTITIES:

• Branch
• Representative office

WHAT IS A BRANCH OF A FOREIGN COMPANY?

A branch, as opposed to the founding of an Italian firm, is a foreign “unit” of the mother company rather than a distinct legal entity. Branches are liable to taxation in Italy since they are considered permanent establishments for taxation reasons. They must thus manage their finances, file yearly VAT and income tax reports with the Revenue Agency or Agenzia Delle Entrate, and submit the foreign company’s annual report to the Italian Registrar of Companies.

WHAT IS A REPRESENTATIVE OFFICE OF A FOREIGN COMPANY?

A representative office is a registered office of a foreign corporation that only does information gathering, market or scientific research, and promotional and advertising operations in Italy. The representative office simply serves a supporting or auxiliary role in helping the foreign business enter the Italian market. In Italy, a representative office may open a bank account.
In conclusion, a representative office may only engage in promotional activities, not in manufacturing, selling, or providing goods or services, and its management has no authority to bind the foreign firm.

How To Register A Business In Italy

Register Your Address

As soon as you land in Italy, you must register your residence.

Get A Residence Permit For Self-Employment

to schedule an appointment with your foreign office to convert your visa into a residence permit that enables you to launch a company, schedule an appointment with your foreign office.

Get Your Trade License

It’Registeringur business with the trade office to obtain your trade license once you have obtained registration and residency authorization in Italy. Your trade license permits you to engage in commercial endeavors.

You must complete an application to register with the trade office. After filling out the form, you must sign it and mail it via regular mail. You can locate the location of your accountable authority.
In other trades, you also need to obtain a separate license; they include insurance brokers, driving schools, taxi services, skilled craft firms, and cuisine.

Register With The Tax Authorities

The next step is to register your company with the appropriate tax authorities. You must complete a complicated questionnaire for this very tedious activity.

Every invoice or commercial document issued or received during business must bear the 11-digit VAT number, which must be obtained as part of registration.

How to register for VAT

A Declaration of Commencement, Change of Data, or Cessation of Activity (the “Declaration of Commencement of Activity”) must be completed and submitted to the VAT identification number. After that, a VAT number will be provided by the Italian Revenue Agency (Agenzia Delle Entrate).

The information that must be included in the declaration is as follows:

• identification details
• the code of the intended activity, which must be selected from the list of economic activity codes: Economic Activities Classification by Ateco in 2007
• the place(s) of business.

Different forms must be utilized, and submission processes must be followed depending on the kind of entity.

Open Your Business Bank Account

We strongly advise you to open a separate business bank account in addition to your bank account in Italy, which is not a must. There are principally two causes. First, Most terms and conditions for private bank accounts offered by most banks often forbid use for commercial purposes. You risk closing your account if you use your standard bank account for such purposes. Second, it’s crucial to have your company’s accounts in order in Italy is crucial. Consequently, it’s essential to have a clear picture of your revenue and spending.

Numerous banks are addressing the expanding need for contemporary banking for small and medium-sized enterprises. Most institutions also permit link specifications accounting software to reduce administrative effort.

Is It Difficult To Start A Business In Italy?

Italian business formation is now easier than ever, thanks to recent laws. Although the time it takes to incorporate is still longer (7 working days) than in some European countries, foreign-owned businesses may open a bank account and receive a VAT number more rapidly in Italy than in most other European nations. The formalities for incorporating a company are shown b the following.

• arrange articles of association and memorandum of association
• execute articles of association before a public notary
• obtain an Italian tax code
• open a local bank account
• register for VAT
• file with the Registrar of Companies

 

How Much Does It Cost To Start A Business In Italy?

Italian company formation costs are €5,650 in the first year and €1,850 in the second and subsequent years. The average overall cost of an engagement in Italy is €14,150, which includes the costs of forming a business, hiring a secretary, opening a corporate bank account, and establishing a physical address.

An Overview Of Business Tax In Italy

The Italian tax system is mainly based on the following taxes: 

• Corporate Income Tax (IRES); 

• Regional Tax on Productive Activities (IRAP); 

• Value Added Tax (IVA); 

• Personal Income Tax (IRPEF); 

• Inheritance and Gift Tax; 

• Local taxes: National Tax on Real Estate (e.g. ,IMU, etc.); 

• Registration tax and other indirect taxes on property transfers. 

Corporate income tax

Corporation entities creating a profitable economic activity in Italy are subject to corporate tax. The tax is assessed whether a firm grows its business just in Italy or if it enters new international markets. The same is true for international businesses in Italy; they are subject to corporation tax on the money they make from operations here.

According to the Italian Revenue Agency, most of the legal entities specified by national law are required to pay the corporation tax rate in Italy. Therefore, businesses acting in the following capacities must register and pay this tax: European corporations, limited liability companies, partnerships with a share capital, joint stock companies, or cooperatives.

Entities that are non-profit organizations, as well as trusts that are Italian tax residents or foreign tax residents, are required to pay the corporation tax rate in Italy. Entities registered as undertakings for collective investments are likewise subject to corporate tax—however, an exemption from paying this tax for trusts.

Income tax for the self-employed in Italy

In Italy, independent professionals pay a withholding tax of 20%. If the self-employed person is not an Italian resident, the withholding tax is 30% and is “for tax reasons,” which means it is final and should not be disclosed on the tax return.

Accounting For Small Business Owners In Italy

Accounting is perhaps the least favorite aspect of owning a business, second only to taxes. However, keeping your books neat and organized from the start is crucial, particularly in Italy. We strongly advise you to create a business bank account for several reasons.

For ten years, business owners in Italy must save and preserve all incoming and departing invoices, receipts, bank statements, and other asset movements.
Use one of the accounting programs for Italy that are available in English, such as S2 Italy – Software House, Aggity, and even Consys.it. Most software you can also connect to your business bank account to link invoices to payments, etc., to assist you with that and save time.

Insurances For Business Owners In  Italy

You gain more benefits from having the correct corporate insurance in Italy than just a restful night’s sleep. It is essential to manage and protect your company. It’s challenging to strike the correct balance since some people may attempt to avoid purchasing any insurance, while others will buy excessive amounts of insurance they don’t most need. Speaking with an expert is the most straightforward approach to avoid this.

They will advise you on the best kind of insurance for your business.
Although paying insurance rates in Italy will always seem one, can you afford not to have enough coverage? What’s more, can your business afford it? This is remarkably accurate when starting a business in Italy.

You are vulnerable to violations, mishaps, and even tragedies as a foreign company. To show how many people in the East and West have been affected by natural catastrophes, you simply need to look over the last few years.

You should look for a professional insurance broker in Italy who can identify the precise insurance requirements for your business, compare offers, and negotiate affordable packages. Additionally, they will be able to tell you of any laws in Italy that you may not be aware of.

There are four primary categories of insurance:

• Vehicle Insurance
• Personnel Insurance
• Public Liability Insurance
• Building and content insurance

Conclusion

You gained a lot of knowledge from this guide on the administrative and immigration requirements for establishing a business in Italy. Now it’s up to you to do further research and create a business plan that appeals to the Italian market. Beyond the advice included in this article, we cannot offer specialized tax and insurance services. We firmly advise you to consult a qualified tax counselor for tax guidance.