Accountancy in Italy

>> Choice of Legal Form in Italy

Types of legal entities

The legislation in Italy has created a range of legal entities.  Each entity is established to meet the needs of different types of owners and is subject to specific financial and legal regulations.

S.r.l. and S.r.A. companies

S.r.l. and S.r.A. companies are the most common form of legal entity used by entrepreneurs for undertaking business activities in Italy. They are the only legal entities that give their members limited liability, which is restricted to the level of their capital contribution. A foreign parent company can establish a subsidiary as a public corporation or a limited liability company. There are no limitations on the number or nationality of Directors.

Limited liability company  (Società a responsabilità limitata)

A limited liability company (normally indicated by “S.r.l.”) is very similar to a private limited company, but the capital stock is held in quotas instead of in shares. The company must register the names of the owners of the quotas in a quota holders’ book and its articles of association can limit the transfer of quotas. The minimum capital requirement could be less than Euros 10.000, if specific conditions are met.

Public (or joint stock) corporation (Società per azioni)

A public corporation is like a public limited company (normally shown by “S.p.A.’). The minimum capital is 50.000,00 Euros, represented by shares. Different classes of shares can be issued by the corporation so that different groups of shareholders have different rights (e.g. on voting at shareholder meetings). Italian law places specific restrictions on the issuing of shares with limited voting rights. All shares must be issued to clearly identified shareholders and the owners of the shares must be recorded in the shareholders book.

Unlimited (or general) partnership  (Società in nome collettivo)

In this, partners have joint and several unlimited liability for all the actions and liabilities of the partnership. Any number of partners can be appointed as administrators of the partnership. Creditors cannot claim payments from the members until after all remedies against the company have been exhausted.

Limited partnership  (Società in accomandita semplice)

This comprises general partners  (“soci accomandatari”) who have unlimited liability and other partners (“soci accomandanti”) whose liability is limited to their capital contribution to the partnership. Capital is assessed on a quota basis. The business name of the partnership must include the name of at least one general partner. Only general partners can be appointed as administrators of the partnership.

Partnership limited by shares  (Società in accomandita per azioni)

This form has the same two types of partner as a Limited Partnership. Partners participate in the business by virtue of the number of shares they hold. Legally, general partners are directors who have the same responsibilities as the directors of a public corporation, and there are regulations governing Shareholder Meetings and the Board of Statutory Auditors of Public Corporations with which they must comply. General partners are not liable for payments to creditors until all options for gaining payment from the partnership have been explored.

Representative office

This is the simplest form business structure for a foreign company to establish. It is a popular structure when foreign companies want to explore markets before deciding whether to set  up a formal legal entity. The representative office cannot deal with business or financial transactions of any kind, or act  as a foreign company’s agent or distributor. A representative office must obtain its own tax code number (codice fiscale) and register with the local Chamber of Commerce. The establishment of a representative office must be notified  in writing.


If a foreign investor does not want to incorporate an Italian subsidiary, it may undertake its business in Italy using a registered branch. A specific loan agreement with the parent company  can be used to finance the branch.

There can be tax advantages to establishing a branch, particularly if the foreign company is likely to incur first year losses that can be offset against profits earned from other activities. A branch is also a useful legal entity if a double taxation treaty has not been implemented between Italy and the country where the foreign investor is resident.

The documents that must be provided to establish a branch of a foreign company (deed of incorporation and approval of establishment) must also be translated into Italian.

Latest version updated 31st October 2017

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