Options for Establishing a Presence in Italy Depending on the type of investment and operations a company wishes to carry out in Italy, the following options should be taken into consideration: The opening of a representative office. The setting up of a branch office. It should be noted, though, that a Branch does not have a separate legal personality from the foreign company, i.e. the foreign company will be directly liable for all debts and liabilities incurred by the Italian Branch. The setting up of a new Italian company, the most common types being: - the limited liability company, Societą a Responsabilitą Limitata (S.r.l.), commonly used to incorporate smaller companies, but not formally limited as to the size; - the joint-stock company, Societą per Azioni (S.p.A.), used for companies of larger size, including those to be listed on the Stock Market. Following the recent reform, the articles regulating S.r.l. companies have been heavily modified. After January 1st, 2004 an S.r.l. can easily have a single quota-holder (so can an S.p.a.) and can be incorporated by drafting a single document, the Deed of Incorporation, the Articles being no longer expressly required. The S.r.l. is also more flexible now than it was allowed to be in the past and its Deed of Incorporation can include a number of possible provisions which are left at the discretion of the founding members and which can be adapted in order to better suit the company’s purposes. A minimum capital of €10.000 must be subscribed. The corporate capital must be immediately paid-in in an amount equal to 25% of each quota-holder’s contributions (fully paid-in in companies with one quota-holder only) and said amount, which can also be substituted by a bank guarantee/insurance policy, must be deposited in a bank account at the time of incorporation of the company. It is also possible to contribute -in lieu of money- any asset, such as credits, know-how, work carried out for the company (a guarantee is needed for this), provided this is authorized in the Deed of Incorporation and subject to an appraisal. For an S.p.a. the minimum share capital is now €120.000. Both an S.p.a. and an S.r.l. may be managed by either a Sole Director or by a Board of Directors. A third organ known as a Board of Auditors (in addition to the General Meeting and the Sole Director or Board of Directors), must be appointed for S.p.A. companies and also for those S.r.l. companies whose capital stock and turnover exceed certain amounts specified by the law. After the company law reform, S.p.a. companies have now three options, as far their corporate governance system: the traditional “ordinary” system (outlined above), the Anglo-American one-tier/“monistic” system whereby a Management Control Committee is elected by the Board of Directors, and the Franco-German two-tier/“dualistic” system presenting a Surveillance Board elected by the General Meeting and a Managing Board elected by the Surveillance Board. Taxation Income taxation is generally regulated through bi-lateral treaties for avoidance of double taxation and companies are subject to the payment of Italian tax on profits produced in Italy. The relevant Italian taxes consist of: - a new (Jan. ’04) national corporate income tax (IRES, Imposta sul reddito delle societą) which amounts to a fixed 33% and substitutes the ‘old’ IRPEG; - a regional tax (IRAP, Imposta Regionale Attivitą Produttive), proportioned on the value of production, which amounts to 3,25-5,25%.
