Starting a business in Italy

As part of the European Union (EU), Italy provides access to one of the world’s largest and most integrated single markets. This effectively removes common trade barriers and allows you to do business freely across 27 member states like the Netherlands, Germany, Ireland, and France.

With access to over 450 million consumers, this also means more opportunities for your business, making Italy an attractive location for company formation. In this case, Italy’s use of the euro can further streamline your business operations within the Eurozone. 

Italy is also a member of the Group of 7 (G7), an intergovernmental political forum formed in 1975 for discussion and cooperation across key global issues. The country remains aligned with other G7 nations, including the United States (US), Japan, Canada, and the United Kingdom (UK). Actions taken to improve the economy may contribute to a more supportive environment for Italian companies to operate in. 

When growing your business here, Italy’s strategic position in both Europe and the Mediterranean can support your entry into neighbouring countries. Whether you aim to access Southern Europe or further, this geographical benefit makes Italy a great starting point for regional growth and cross-border trade.

Italy’s integration in the Trans-European Transport Network (TEN-T) also strengthens its connectivity to other markets. Part of Europe’s key transport infrastructure, four of the nine corridors run through Italy. This provides your business with a reliable infrastructure to efficiently move goods and services throughout Europe whenever the need arises. 

Italy continues to be the second-largest manufacturing country in Europe, with strength across various industries such as automotive, fashion, and machinery. This means potential access to infrastructure, skilled labour, and specialised suppliers, which can support your operational efficiency and product quality when you’re doing business here.

Ongoing government efforts are also focused on supporting the growth of advanced manufacturing technologies and their adoption. Besides manufacturing, Italy is strong and competitive in other areas like tourism and agriculture. 

From 1 January 2024, top talent who become residents of Italy can benefit from 50% tax relief on their income, with the relief applying to earning up to €600,000. While this was reduced from the initial 70%, it remains an enticing feature to highly qualified or specialised individuals who may be considering relocation to Italy.

To be eligible for this tax regime, incoming employees must have been non-residents of Italy for at least three years prior to their relocation and must commit to staying in Italy for a minimum of four years. This ensures a long-term commitment from professionals, providing stability and continuity for your business.

Additionally, the regime also applies to non-residents who move to Italy for the same employer, whether it's the same company or a group of companies. In such cases, the individual must have been non-resident in Italy for at least six or seven years, depending on whether they have worked in Italy previously. 

In Italy, the limited liability company (Società a responsabilità limitata or S.r.l.) is one of the most popular business structures. This is largely due to its flexible structure and the limited liability it offers shareholders. This entity type ensures that shareholders are not personally responsible for the company's debts, which can limit their risk and exposure.

One of the key features of the S.r.l. is its minimum share capital requirement of €10,000. This relatively low threshold makes the structure accessible for growing businesses. This, alongside the ease of access to bank funding due to its credibility, makes the S.r.l. structure a particularly advantageous choice if you are looking to open a business in Italy.

For entrepreneurships and small businesses, you may also consider the simplified limited liability company (Società a responsabilità limitata semplificata) for lower incorporation costs in Italy, which also can set up with a minimum share capital as low as €1. 

The public limited company (Società per Azioni or S.p.A.) is an entity type suited for businesses operating on a larger scale. Also referred to as a joint stock company, the S.p.A. has a minimum share capital requirement of €50,000. Shareholders enjoy limited liability, meaning they are only accountable for the amount they have invested in the company.

This structure also allows you to raise capital through the public issuance of shares, providing a way to engage with a broader range of investors and enhancing your visibility in the market. 

You may also consider opening a branch office, which allows you to conduct business in Italy while being linked to your main company. This enables you to maintain control over operations while leveraging the market in Italy.

However, bear in mind that the branch will not have a separate legal personality. This means your parent company will be fully responsible for any obligations or debts incurred by the branch.

For companies looking to collaborate, partnerships offer a flexible and straightforward structure for registration. There are two main types of partnerships in Italy:

• General partnership (Società semplice): All partners are involved in the management of the business and share equal responsibility for the company’s debts and liabilities
• Limited partnership (Società in accomandita semplice): Offers a different dynamic by having general partners and limited partners, whose liability is restricted to their capital investment

Whether through shared responsibility in a general partnership or limited liability in a limited partnership, this company formation can suit various business needs and collaborative arrangements. To establish a partnership in Italy, an agreement will need to be drafted, specifying the responsibilities and profit distribution among partners.

If your goal is to simply perform non-business tasks such as marketing, a representative office will be appropriate to match these needs. This entity setup is ideal if you want to establish a foothold in Italy without engaging in direct sales or business transactions. Since a representative office cannot generate revenue, it also faces fewer regulatory requirements.