Entering the Italian Market
The Italian Market
Foreign companies who wish to expand into Italy will be met with an attractive business hub that includes a highly educated workforce, attractive tax rates and incentives, as well as low labor and administration costs.
However, setting up shop in an unfamiliar place comes with its own challenges. Foreign businesses must comply with employment, tax, payroll, and corporate legislation whilst ensuring that their employees are working productively and efficiently.
Starting a Business in Italy
Italy’s geographical position benefits from access to diverse marketplaces in Europe, North Africa, and the Middle East. With strong retail services, communications, and manufacturing sectors, as well as high-quality logistics and infrastructure, this creates an attractive environment for any business owner who seeks to expand their business.
To start a business in Italy you must go through a company registration procedure, which is straightforward and designed to be executed easily. These steps can be done in person or online through the Trade Register website.
The necessary steps to start a business in Italy include needing to:
- Decide on the company type that suits the nature of your business, your business goals and matches your own capabilities to meet establishment requirements.
- Obtain a local business address in Italy.
- Decide on a company name and check on its availability.
- Prepare the appropriate registration documents.
- Open a local business bank account in Italy and deposit the appropriate share capital.
- Notarize registration documents at a notary’s office and acquire an Apostille Certificate for them.
- Register your company at the Trade Register and the Register of Enterprises.
- Register with the Tax Revenue Authority.
- Register with the National Social Security Institute.
- Register for a VAT Number
- Receive a Certificate of Incorporation and a Company Registration Number.
Expanding into Italy
Foreign entities wishing to expand into Italy will be met with a successful economy that benefits from attractive corporate tax rates and tax reliefs, a highly-qualified talent pool and attractive labor and administrative costs – which is provided to all entities that enter the market.
Italy’s location benefits from its proximity to all of Europe’s leading markets, which can be reached in a matter of hours or days, according to the type of transport taken.
The country’s position also offers easy trade between continents, with the help of its strong infrastructure. Expanding one’s business into Italy creates a lot of opportunity for expansion both nationally – particularly to popular district capitals such as Rome, Florence, Venice, Milan, Naples, and Bologna, which are popular tourist and commercial destinations – and internationally.
Italian Business Facts
- Capital City – Rome
- Population – 60.32 million
- Cities – Milan, Naples, Turin, Palermo, Genoa, Bologna, Florence, Bari, Catania, Venice, Messina, Padua, Trieste, Brescia, Parma, Taranto, Prato, Modena, Perugia, Ravenna, Livorno, Cagliari
- Official language(s) – Italian
- Economy/GDP (2021 estimate) – 2.6 trillion
- World Ranking (Ease of Doing Business) – 58th
- Leading sectors – tourism, machinery, robots, aircrafts, electronics, defense systems, iron and steel chemicals, food processing, pharmaceuticals, textiles, motor vehicles, clothing, footwear, ceramics, electric power
- Main exports – Engineering products, textiles and clothing, production machinery, motor vehicles, transport equipment, chemicals, minerals, foodstuffs, beverages, tobacco, and nonferrous metals
- Main imports – Engineering products, chemicals, transport equipment, energy products, minerals and nonferrous metals, textiles and clothing, food, beverages, and tobacco
- Main trading partners – Germany, France, United States, United Kingdom, Switzerland, Spain, Belgium, Poland, China, Netherlands, and Russia
- Government – Unitary parliamentary constitutional republic
- Currency – EUR, Euro
Advantages and Challenges of the Italian Market
- Italy ranks as 58th out of 190 countries in the World Bank’s report on the Ease of Doing Business Report, which means that it is relatively easy to incorporate companies.
- Italy-based companies are in easier geographical reach of 500 million potential customers in the EU, as well as countless more in nearby regions of North Africa and the Middle East.
- Italy’s skilled workforce offers a better overall-cost performance than its European partners – it is lower than the Eurozone average.
- Italian companies also benefit from the one-stop-shop model of the Trade Agency, that provides support and assistance in new projects and expansion.
- The Italian government offers numerous tax credits and incentives for subsidiaries and other foreign investments, especially in research and development.
- Starting a business in Italy may take less time, but costs more than the EU average.
- Regional regulatory disparities – local regulations and procedures for the same business activities vary according to the municipality, and the local authorities determine the implementation of national laws and regulations.
- Fines and penalties for failing to comply with employment, taxation, and immigration regulations.
- Business practices and cultural barriers.
- Managing payroll and HR obligations of international employees remotely.
The 100 per cent solution is to consider the alternative to setting up a subsidiary by working with Bradford Jacobs. Our Professional Employer Organization (PEO) international recruitment specialists will find the perfect fit for the roles you need to fill.
Limited Company / Subsidiary or Branch in Italy?
In Italy, a subsidiary entity is considered a legally separate entity from the parent company, with independent administration and management, which provides freedom to explore the local market and create international credibility.
A branch, however, does not have any independence from the parent company – but it is taxed and reported similarly to resident entities, and is limited in its commercial activities.