Thinking of expanding your business to Italy? Here’s what you need to know about setting up a local branch.

This memorandum provides a short overview of the most important legal and procedural requirements for establishing an Italian branch of a foreign company.

The establishment of a branch in Italy is governed by the Italian Civil Code, which outlines specific requirements and rules for foreign companies intending to expand their business operations into the Italian market. The branch is an option for both setting up an economic presence in Italy and employing resident staff there.

The associated set-up costs are generally slightly lower than those required for setting up an Italian subsidiary of the foreign company. However, unlike a subsidiary, a branch does not possess a separate legal personality from its parent company. Therefore, the foreign company remains fully liable for the branch’s activities and must provide the necessary assets and financial support.

The branch can issue invoices, employ personnel, and maintain a registered office within the country.

It is subject to Italian corporate and tax regulations, including the obligation to file annual corporate tax returns. Additionally, if the branch employs staff in Italy, payroll must be managed in compliance with Italian labour and tax laws, ensuring that all required contributions and withholdings are properly calculated and paid to the relevant authorities.

Key Requirements for establishing a Branch in Italy.

The following formalities are requested in order to establish a branch in Italy:

• Verification of the company’s corporate purpose: it is necessary to verify whether the foreign company’s corporate purpose allows for the setting up of the branch; if this is not the case, such purpose should be amended to allow for the activity that the foreign company wishes to perform in Italy.
• Corporate resolution: the competent corporate bodyof the foreign company (board of directors/shareholders depending on the rules applicable to the company) must adopt a resolution which shall provide, inter alia, for (i) setting up of the branch, (ii) appointment of branch manager/s to represent the branch in Italy with indication of the related powers, (iii) designation of a legal address in Italy and (iv) granting of powers to a person authorised to appear before an Italian Civil Law Notary for the deposit of the resolution (such power of attorney may also be granted separately).
• Deposit of the resolution in a deed of an Italian Civil Law Notary: the resolution
  must be authenticated, translated into Italian with a sworn translation and deposited
  in a deed of an Italian Civil Law Notary.
• Registration of the branch with the Companies Register (Registro delle Imprese): the branch must be registered with the Italian Companies Register. Usually, such registration is performed by the same Italian Civil Law Notary. A certified copy of the foreign company’s Articles of Association accompanied by a sworn Italian translation must also be filed with the Companies Register.
• PEC: a PEC (Certified Email Address) is a legally recognized email system in Italy that provides proof of delivery, equivalent to a registered letter with return receipt. It ensures the authenticity of the sender, the content, and the time of sending and receiving and it guarantees secure and traceable communication with, inter alia, public authorities and other businesses. In Italy, all companies – including branches – are legally required to have a PEC address registered with the Companies Register.
• Tax Registration: the branch must be registered with the Italian tax authorities to pay corporate income tax and VAT, as applicable. This includes obtaining a tax code and VAT number from the Italian Revenue Agency and completing registrations with INPS (the National Social Security Institute) and INAIL (the National Institute for Insurance against accidents at work).
• Bank Account: a business bank account should be opened, either with an Italian bank or a foreign bank operating in Italy. Opening an Italian bank account is recommended, as it facilitates tax payments via digital F24 forms, which are not supported by foreign bank accounts.
• Employment of personnel: if the branch intends to employ foreign staff, all applicable immigration formalities must be reviewed and complied with in advance.

The establishment procedure takes about two weeks to one month, depending on the velocity with which the above-mentioned documents are assembled and provided to the Italian Civil law Notary.

If you’d like to explore this further, we’d be glad to hear from you. Have you faced similar challenges when expanding internationally? Let us know — we welcome the conversation.

Romina Protto and Andrea Russo