Setting Up Ltd in Italy: Short Note
Significant changes include the ability of partners in a limited liability company (s.r.l.) to settle and to determine the powers in terms of ordinary and extraordinary matters. They also call for a decrease in the capital to be paid in prior to the incorporation from 30 to 25 percent and for the unlimited duration of the company. The reform also permits unrated distribution of the profits to the partners.

The lowered corporate capital necessary to establish a limited liability company in Italy is now fixed at Euro 10,000. Assets in kind and non-cash investments can be used to establish the company in lieu of ready money. Prior to the incorporation of the company, the necessary 25 percent of total capital must be made to a deposit account. The payment can be replaced by a bank warranty. According to article 2466 of the Italian Civil Code the remaining amount (75 percent) may be paid over a period of months. Today, it is no longer obligatory to indicate the expiring date of the company during registration; a company registering as a limited liability company may have an unlimited duration.

Splitting power between partners
The reform of the company-law has also introduced new governance rules. For instance, the law assigns to the deed of partnership the right to settle and to determine the powers in terms of ordinary and extraordinary company matters, in order to take any action to be deemed appropriate to carry out and to achieve the company’s corporate goals. In particular it allows for a Board of Directors to run the company, which is to be made up of two or more members who do not necessarily have to be shareholders.

The company may be run instead by two or more Managing Directors. They can be vested with separate powers in terms of ordinary and extraordinary company matters. In cases where the powers of individual Managing Directors are not fixed in the company by-laws, the rules provided for in the Civil Code for the partnership remain in effect.

The deed of partnership may provide different systems of corporate governance for ordinary and extraordinary matters. For instance, one Managing Director may be delegated separately to perform specific actions or categories of actions within the scope of the power conferred on him. And while each Managing Director is considered to be the legal representative of the company in dealings with third parties and in legal proceedings, the deed of partnership and the shareholders later may provide the legal representation exclusively for specific actions or categories of actions, giving one Managing Director sole right to represent the company legally within the range of said actions. In event of difference of opinion between Managing Directors with equal powers, one of them may block the operation. In this case the shareholders may pass the resolution.

Alternatively, incorporation as a partnership with limited liability (società in accomandita semplice, s.a.s.) might be considered. In this case the income is subject to local taxes (IRAP). The profits distributed to the partners are subject to personal taxation (IRPEF) to be paid by the partners.

Cost and timing
When registrating a company various costs will occur. Notarization fees come to Euro 2,500, the cost of the certified public accountant will amount to approximately Euro 1,200. Half the costs may be related to the expenses to be borne for the registration of the company, included stamps, chamber rights, postal transfers, payment of various taxes.

Currently, setting up a limited liability company usually requires approximately two to three days, and registration will take about one month. In the meantime the company may operate legally and the administrative bodies are allowed to represent the company in dealings with third parties.

The cost of the services of the commercialista
The costs of the certified public accountant (commercialista) in conjunction with ordinary bookkeeping are computed on the basis of association. In particular, the tariff guidelines provide for a remarkable discrepancy between the costs for occasional services and remuneration provided to regular clients. The amount provided for hereby are strictly related:

• to the profits of the company;
• to the numbers of the balance sheet.

A copy of the tariff guidelines may be requested. Normally the cost to be borne yearly as for the bookkeeping of a small-sized s.r.l. amounts nearly Euro 5,000. The activities included therein are:

• Drawing up the corporate balance sheet,
• calculating profits and losses in compliance with the law,
• completing the income tax return.

The cost for said services provided by a commercialista for a partnership with limited liability (s.a.s.) usually amounts to about Euro 1,000. Additional services such as international tax planning or quarter balance sheet will incur additional costs and should be agreed on beforehand.

One expression that can crop up during registration of a limited liability company in Italy is “data di aggiornamento”. It refers to the last update of the Certificate of Incorporation (visura cameral) including the date of the deposit of the last company deed, including the balance sheet.

Worth talking about
"How can my company benefit from these changes?"
"Should I think about expanding into the Italian market now?"
"Should I consider changing the legal status of my Italian branches?"