How to start a business in Italy as a foreigner

The first thing to do as an entrepreneur who wants to open a company in a foreign country is verifying the existence of reciprocity agreements between their country and the one where they choose to start a new company. Italy is an attractive market for international trade for a variety of reasons connected to import export activities. For this reason, over the course of many years it has stipulated reciprocity agreements with several countries in the world.

To start a business in Italy as a foreigner you need to find out if your country has a Reciprocity Agreement

The The conditions for Starting a business in Italy are favorable for a foreigner, but as a country, Italy pays a lot of attention to the fact whether its citizens can enjoy in foreign countries the same conditions that it guarantees to foreigners who want to set up economic activities. Hence why the Ministry of Foreign Affairs published the online Archive of International Treaties, where it is possible to search Reciprocity Agreements by country and subject between Italy and the foreign country of residence of the entrepreneur who wants to do business in Italy.

Foreigners set up economic activities in Italy under the same conditions as Italians in their country of residence

The principle underlying the reciprocal pact between countries is that a contract stipulated in Italy must also be valid in the foreign country of residence of the foreign party.  For example, a Chinese citizen can buy a property in Italy only provided that an Italian citizen can buy a property in China under the same conditions. This is a condition of validity of the purchase contract for the property purchased in China by an Italian citizen and vice versa.

What foreigners can do with companies based in Italy

Some of the most common investments that a foreigner can make in Italy are:

  • purchase of real estate;
  • credit brokerage;
  • holding shares of Italy-based companies;
  • opening a branch in Italy;
  • establishing a new company in Italy;
  • claiming industrial property rights in Italy;;
  • obtaining concessions;
  • shipping brokerage.

Main requirements to start a business in Italy as a foreigner

The first thing to do is seeing and requesting the assistance of a law firm specialized in international commercial law, in order to:

  • verify the existence and functioning of any reciprocity agreements in place with Italy;
  • check the conditions to obtain an entry visa for work reasons in Italy;
  • choose the best way of establishing the company in Italy;
  • fulfill all the requirements to register the company;
  • fulfill all the requirements to open a bank account;
  • write shareholders’ agreements between members.

The best time to open a secondary office or company branch. Double taxation

There is still no worldwide shared tax system. Taxes on profits produced in Italy must be paid in Italy, but this depends on the type of business and the type of company to be opened: limited company, joint stock company, etc. Another factor connected to the payment of taxes and in general the financial structure of the company concerns the shareholders. To prevent problems, you could choose an Italian citizen as a partner, or otherwise only open a representative office or a separate branch. These aspects are very important for what concerns the tax structure of the company and profits division among the shareholders. In this case, the residence of the shareholders, which can be different from that of the company, also plays a role.

In general, the first rule to divide the profits of the company and pay taxes regularly in Italy and in their country of residence, is that taxes on the profits of the company based abroad must be paid in the company’s country of residence. However, having been produced in Italy, the earnings must also be taxed in the country in which the company carried out the activity that produced those profits. Another problem concerns the taxes on the earnings of shareholders residing in and outside Italy, if one of the shareholders is a resident in the country of origin of the company. However, the issue of double taxation is very complex and cannot be easily addressed here. One more reason to seek the assistance of an international law firm capable of dealing with all matters related to international commercial law.

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