INCORPORATING A “S.R.L.” IN ITALY – A PRACTICAL GUIDE

Italy offers several legal forms for doing business, each with different levels of liability, governance structure, and complexity. They can be grouped into partnerships, corporations, and other forms. Partnerships are simpler structures with unlimited or partially unlimited liability for partners. They are often used for small businesses or professional activities. They are the società semplice (“s.s.”, simple partnership), the società in nome collettivo (“s.n.c.”, general partnership) and the società in accomandita semplice (“s.a.s.”, limited partnership).

Corporations offer limited liability and are more structured, suitable for medium or large businesses. They are the “società a responsabilità limitata” (“S.r.l.”, limited liability company), a type of corporate entity with a more flexible structure and lower incorporation and maintenance costs compared to a “società per azioni” – (“s.p.a.”, joint-stock company). It is also possible to establish a “simplified” s.r.l., which allows to reduce the incorporation costs, has an even more flexible structure and requires a capital from € 1 to maximum € 9.999,00, but only individual can be shareholders of such corporate.

Foreign companies that want to start doing business in Italy usually choose to establish a corporation. Considering the types of corporation entities described above, unless the company has specific needs, the S.r.l. is the recommended corporate form for foreign companies wishing to start a business in Italy. Focusing on this kind of company, the Italian S.r.l.’s key features include:

• Limited liability: shareholders are liable only up to the amount of the capital they have subscribed, ensuring a clear separation of assets;
• Transferability of quotas: ownership interests are generally transferable, although the by-laws may introduce pre-emption rights, tag-along rights, approval clauses, or drag-along obligations;
• Flexible governance: an Italian S.r.l. may be managed by
• a sole director,
• multiple directors with joint and/or separate powers, or
• a board of directors.
• Shareholder oversight: the by-laws may require certain transactions to be approved by the shareholders’ meeting.
• Remote decision-making: both shareholders’ meetings and board meetings may be held via teleconference or videoconference, and—where permitted by the by-laws—certain resolutions may be adopted by written consent or correspondence.

The main steps to incorporate a S.r.l. in Italy are:

• drafting of the articles of association of the company;
• arranging a meeting with an Italian notary public who will draft the deed of incorporation of the company and register it with the Italian Companies Register (“Registro delle Imprese”);
• obtaining an Italian Tax ID for both the company and every administrator;
• opening a bank account, a registered and certified email address, a digital signature, and a VAT number.

Before the incorporation process can take place, the foreign company must prepare a corporate resolution authorizing the establishment of the Italian subsidiary and appointing an individual who will appear before the Italian notary to sign the incorporation deed. All foreign documents must be duly legalized or apostilled and translated into Italian to meet local formal requirements.

The appointment before the Italian notary can also be attended by an Italian representative with a power of attorney from the foreign company, duly legalized and apostilled by a national notary. Following the signing, the notary handles the formalities required to register the company with the Italian Business Register and to obtain the company’s VAT number. At this stage, the new S.r.l. must also activate its own certified email address (PEC) and register its “digital domicile,” which is mandatory for all companies operating in Italy.

Depending on the nature of the company’s activities, further registrations may be required, such as with social security (INPS) or workplace insurance authorities (INAIL), particularly if the Italian entity will employ staff or pay compensation to its directors. Additional sector-specific licenses or authorizations may also be necessary for regulated activities.

Finally, the company will need to appoint an accountant to manage its bookkeeping obligations, as all S.r.l. entities are required to maintain full statutory accounts under the ordinary accounting regime.