Starting a Business in Italy as a Foreigner: A Comprehensive Guide

Starting a Business in Italy as a Foreigner: A Comprehensive Guide

Italy offers a vibrant and diverse market for entrepreneurs and investors looking to start a business. With a strong economy and a rich cultural heritage, Italy is an attractive destination for businesses in various industries, including food and wine, hospitality, tourism, and technology. This comprehensive guide will provide you with essential information on starting a business in Italy as a foreigner, covering various topics such as legal requirements, visa procedures, types of companies, and support services available for international entrepreneurs.

1. Understanding the Italian Business Environment

1.1 The Italian Market

Despite challenges related to bureaucracy and taxation, Italy remains an appealing market for foreign investors. The country offers excellent opportunities in sectors such as life sciences, ICT, renewable energy, fashion, food, tourism, and luxury real estate. Additionally, the Italian government promotes foreign investments and supports innovative startups through various programs and initiatives, such as the Italian Startup Visa and Startup Hub.

1.2 The Legal Framework

Italy operates on the condition of reciprocity, meaning that any foreign entrepreneur wishing to set up a company and do business in Italy can only do so if an Italian citizen can set up a company in turn in that entrepreneur’s home country. This principle is governed by international agreements, and exceptions include EU and EEA citizens, as well as citizens of countries having international agreements with Italy.

2. Visa and Residence Permit Requirements for Foreign Entrepreneurs

2.1 Obtaining a Visa

Non-EU investors planning to move to Italy to manage their business personally will likely need a permit to stay. This can be obtained by applying for a full visa, preferably a self-employment visa, through the Italian consulate in the investor’s country of origin. The procedure for obtaining a self-employment visa can be time-consuming, taking several months to complete.

2.2 Residence Permit

Once in Italy, non-EU investors will need a long-term permit to stay, which can be requested by applying for a self-employed residence permit. This permit is valid for one year initially and can be renewed for a two-year period, provided that the application is submitted no later than 60 days before the expiry date of the current permit.

3. Types of Companies in Italy

Italy offers a wide range of legal structures for setting up businesses, depending on the objectives, model, amount of capital, extent of liability of founders, and tax implications. Some common legal structures for starting a business in Italy include:

3.1 Società Cooperativa (SC) or Cooperative Society

This type of company has no limit to the number of shareholders and no minimum capital. The partners may have limited or unlimited liability, which must be determined in advance. It has a mutualist purpose linked to the satisfaction of the partners’ interest in carrying out the activity.

3.2 Società in Nome Collettivo (SNC) or Partnership

This type of company has no limit to the number of shareholders or minimum capital. All partners are jointly and severally liable for the company’s obligations without any limitation.

3.3 Società per Azioni (SPA) or Joint Stock Company

This type of company provides for the limited liability of all shareholders and the division of capital into shares. There is no limit to the number of shareholders. At the time of incorporation, a minimum capital of EUR 50,000 is required, of which at least 25% must be paid into an Italian bank account and mentioned in the incorporation deed.

3.4 Società a Responsabilità Limitata (SRL) or Limited Liability Company

This type of company has a legal personality and is exclusively liable for its corporate obligations to the extent of the shares paid by the shareholders. There is no limit to the number of shareholders, and the minimum share capital is at least 1 euro. This company form is particularly suitable for the creation of small businesses and is the most common in Italy.

3.5 Società a Responsabilità Limitata Semplificata (SRLS)

This form of company was introduced in 2012 and differs from a traditional SRL by the ceiling it sets for the share capital, which cannot exceed 9,999.99 euros.

3.6 Individual Companies

If you wish to be the sole owner of a business, you can choose from the following structures:

• Società per Azioni Unipersonale (SA): You will be the sole shareholder of the company and will be solely responsible for its assets for any debts. A minimum capital of EUR 50,000 is required.
• Ditta Individuale (DI): With this type of company, you own a craft business, but specific requirements apply. There is no separation between the company and the entrepreneur, as the latter is liable via his personal assets for any debts incurred by the company.
• Società a Responsabilità Limitata Unipersonale (SRL Unipersonale): This type of company is formed by a single shareholder, and liability for the obligations contracted is limited to the company’s assets.

4. Innovative Startups in Italy

4.1 The Italian Startup Act

The Italian Startup Act sets forth favorable conditions for innovative startups, aiming to boost economic growth and employment in the country. Under Law 221/2012, businesses need to comply with specific requirements regarding company longevity, headquarters, turnover, profits, and activity to qualify for the program.

4.2 The Italian Startup Visa

Non-EU entrepreneurs can obtain a visa for a startup in Italy, either by applying directly or through a certified incubator in the country. The Italian Startup Visa is a valuable pathway for international innovators seeking to establish businesses in Italy.

5. Setting Up and Registering Your Business in Italy

Although the process of setting up a business in Italy has been simplified, it is still advisable to seek legal and tax advice. You may need to consult a notary, a lawyer, and a chartered accountant (Commercialista) to guide you through the incorporation process.

5.1 Creating the Incorporation Documents

The first step is creating the Articles of Association (Statuto) and the Memorandum of Association (Atto Costitutivo) of the company. These documents contain data on the shareholders and the company, as well as regulations for the functioning of the company.

5.2 Payment of Capital

The partners must pay the share capital, which varies depending on the type of company being established.

5.3 Incorporation at the Notary’s Office

The next step is to go to the notary to incorporate the company. Since 2021, it has been possible to set up a company online with the notary using a webcam. All shareholders and directors of the company must be present or connected via video conference and have an active digital signature.

5.4 Initial Tax Obligations

The company must have its own tax code and VAT number, assigned by the Italian tax agency (Agenzia delle Entrate). These tax obligations are often carried out by the accountant (Commercialista), who handles the company’s accounting.

5.5 Registration in the Business Register

Once the tax code and VAT number have been obtained, the company must be registered by the notary in the Register of Companies (Registro Imprese) held by the Chamber of Commerce of the municipality where the company is incorporated.

5.6 Commencement of Business Communication

It is necessary to communicate the beginning of the activity by sending certain telematic declarations to the competent bodies, which vary depending on the activity of your company.

6. Business Plan and Market Research in Italy

Before starting the process of registering a company in Italy, it is advisable to have a thorough understanding of the Italian market, a clear idea of your business objectives, and knowledge of the feasibility of your proposal. Conducting market research and developing a business plan are crucial steps in this process. The Italian Ministry of the Interior provides an Aziende section on its website, offering information on incentives, the market, patents, competitions, and call offers.

7. Support Services for Foreign Investors in Italy

Gisaf Consulting is proud to welcome international clients who wish to settle and prosper in the heart of Langhe, Roero, and Monferrato. This fascinating region, renowned worldwide for its winegrowing landscapes and rich cultural heritage, attracts entrepreneurs and investors from all over the world, interested in setting up businesses in the food and wine, hospitality, and wine sectors.

8. Challenges and Opportunities for Foreign Entrepreneurs in Italy

Starting a business in Italy as a foreigner can be both challenging and rewarding. The bureaucratic procedures and taxation system might be complex, but the opportunities and advantages offered by the Italian market make it worthwhile. Additionally, the Italian government’s support for startups and foreign investments further encourages international entrepreneurs to explore Italy as a business destination.

9. Taxation and Accounting in Italy

Understanding the Italian taxation system is crucial for foreign entrepreneurs starting a business in the country. Corporate tax rates, VAT, and other taxes will apply to your business activities. It is essential to seek advice from a professional accountant to ensure compliance with Italian tax regulations.

10. Tips for Success in the Italian Market

To conclude, here are some tips for success when starting a business in Italy as a foreigner:

• Understand the Italian market and conduct thorough market research before starting your business.
• Seek professional advice from lawyers, accountants, and notaries to ensure compliance with Italian regulations.
• Choose the appropriate legal structure for your business based on your goals and objectives.
• Apply for the necessary visas and permits to live and work in Italy.
• Network and collaborate with local businesses and organizations to establish strong connections within the Italian market.

By following these tips and the comprehensive information provided in this guide, you will be well-prepared for a successful journey as a foreign entrepreneur in Italy.