Expanding into Europe’s third-largest economy offers major opportunities, but understanding Italian regulations can feel complex for foreign companies. Whether you’re a startup, mid-market company, or global enterprise, understanding the local requirements early will make your expansion smoother and more cost-efficient. 

This guide breaks down the essential steps to start a business in Italy, from choosing the right legal structure to managing taxes, compliance, and banking. With the right preparation, Italy’s strategic location and skilled workforce can support long-term international growth for your business.

Key Highlights

  • Understand why Italy is an attractive destination for global founders seeking long-term growth and strategic European market access.
  • Learn the essential market, legal, and tax requirements to know before you begin exploring how to start a business in Italy.
  • Get clarity on hiring rules, employment considerations, and banking steps needed for smooth business setup and operations.
  • Discover how to stay compliant with ongoing obligations while positioning your company to scale internationally.

Why Foreign Entrepreneurs Choose Italy

Italy offers a strong innovation ecosystem supported by investor-friendly policies, streamlined processes, and access to European markets. The Ministry of Enterprise and Made in Italy highlights the country’s commitment to fostering high-growth companies through incentives and simplified procedures.

Benefits of incorporating in Italy include:

  • Start-ups benefit from tax deductions of up to 65%, subsidized loans, state-backed guarantees, equity crowdfunding, fee exemptions, and flexible hiring rules. 
  • SMEs have free and simplified access to the national Guarantee Fund, making it easier to secure financing without additional costs or complex procedures.
  • Businesses can offset VAT credits of up to €50,000 per year without requiring prior approval, improving cash flow and reducing administrative delays.

However, while setting up a business in Italy is attractive, managing ongoing compliance across jurisdictions can be challenging. For a smooth incorporation process, Commenda can handle entity formation, documentation, tax registration, and regulatory filings, ensuring your business remains compliant from day one and scales confidently across borders.

Understanding Market Entry Strategy in Italy

Before starting a business in Italy, you need to assess how your offerings align with the local market and customer preferences. Researching market size, demand trends, and sectors that actively welcome foreign investment helps you position your company effectively.

Localization also plays a major role. It’s important to study customer preferences, regional differences, and existing competitors. Adapting to Italian language norms, cultural expectations, and legal requirements can significantly improve market acceptance and brand credibility.

To guide your planning, use a simple market-entry checklist:

  • Identify high-opportunity sectors and confirm openness to foreign ownership
  • Evaluate competitors and pricing expectations
  • Assess customer behavior and regional buying patterns
  • Review regulatory, licensing, and industry-specific rules
  • Prepare a localization plan for language, contracts, and marketing
  • Validate demand through local partnerships, advisors, or pilot launches

A well-researched, localized approach will set the foundation for a confident and successful expansion into the Italian market.

Minimum Capital and Investment Options for Foreigners

When foreign investors consider a business set up in Italy, understanding the capital requirements and available funding pathways is essential. Below is a breakdown of the different factors you need to consider:

Share Capital Requirements

  • A Società a responsabilità limitata (SRL) can be formed with as little as €1, though €10,000 is common for credibility.
  • A Società per azioni (S.p.A.) requires a minimum share capital of €50,000, with at least 25% paid in at the time of incorporation.

Foreign Direct Investment & Funding Paths

  • You can fund your venture through venture capital or angel networks; Italy has a growing innovation ecosystem.
  • Tap into government-backed grants and subsidized loans, such as Italy’s Smart & Start program for innovative start-ups.
  • Use equity crowdfunding via authorized online platforms to raise capital from a broad base of investors.

Visa & Residency via Investment

  • The Italian Startup Visa requires at least €50,000 of liquid investment for new, innovative companies.
  • For investors, Italy also offers a long-term residency route through the Italian Golden Visa/Investor Visa if you invest in domestic companies under certain conditions.

This combination of low capital thresholds and multiple funding pathways makes Italy an appealing destination for international founders.

Choosing the Right Business Structure

Selecting the right legal structure is one of the first major decisions when you start a business in Italy, as it impacts ownership control, liability protection, and tax obligations. Italy offers several options depending on the size, capital needs, and risk appetite of your business.

Company Structures:

  • S.r.l. (Società a Responsabilità Limitata)
    A popular choice for small to mid-sized businesses. It provides limited liability, flexible governance, and a clear separation between owners and management.
  • S.p.A. (Società per Azioni)
    Best for larger enterprises or companies planning to raise significant capital. Shares can be publicly traded, and shareholders enjoy limited liability.

Partnership Structures

  • S.n.c. (Società in Nome Collettivo)
    A fully transparent structure where all partners hold unlimited joint and several liability. Suitable for closely held businesses.
  • S.a.s. (Società in Accomandita Semplice)
    A hybrid model with general partners (unlimited liability) and limited partners (liable only up to their investment), offering both flexibility and risk-sharing.

Choosing the right entity ensures smoother operations, compliance, and long-term growth.

Legal, Residency, and Immigration Requirements

When starting a company in Italy, you have flexibility in governance and ownership. As there’s no requirement to appoint a local director or agent, foreigners can own 100% of an Italian company.

When it comes to residency and visas:

  • The Investor Visa offers a two-year residence permit (renewable for three more years) for those who invest at least €500,000 in a company or €250,000 in an innovative start-up.
  • Alternatively, the Startup Visa is tailored for non-EU entrepreneurs launching innovative firms, with a streamlined process via the Ministry’s “Nulla Osta.”
  • For self-employed founders, Italy also provides a self-employment visa, though there’s a quota system.

These residency routes allow you to manage your business directly, while maintaining ownership and upholding compliance with Italian law.

Foreign Investment Restrictions and Business Incentives

FDI is a key driver of the Italian economy, but oversight varies by industry. While some sectors face regulatory controls for national security, others offer strong incentives that actively encourage international investment.

Let’s take a closer look at how this works:

Restricted or Screened Sectors

The Italian government can apply special “Golden Power” controls, established under the 2012 Law Decree of March 15, to review or restrict foreign investments in sensitive sectors. These include:

  • Defence and national security
  • Telecommunications (including 5G and cloud)
  • Critical infrastructure, transport, high-tech (e.g., artificial intelligence, semiconductors)
  • Energy and financial services also fall under government scrutiny for foreign investors.

Incentivized Sectors & Benefits

Businesses investing in Italy can benefit from the strong, adaptable incentive structures that offer significant competitive advantages.

  • Italy offers a comprehensive mix of financial incentives and tax benefits designed to support industrial investment, boost R&D activity, and accelerate the growth of innovative businesses.
  • Through the National Recovery and Resilience Plan (NRRP), more than €126 billion, around 65% of total program funding, has been committed to strengthening strategic industries and driving the country’s green and digital transformation.
  • Long-term funding initiatives support bespoke incentive schemes across priority sectors such as automotive, renewable energy, aerospace, digital technologies, etc.

These frameworks ensure that foreign investors understand where protections apply and where meaningful opportunities await for growth and expansion.

Opening a Bank Account and Managing Cross-Border Payments

When you start a business in Italy, opening the right bank account is a foundational step. To register, non-resident founders typically need to submit:

  • Passport or national ID
  • Italian tax identification number (Codice Fiscale)
  • Company incorporation documents, such as Articles of Association or Chamber of Commerce registration (“visura camerale”)
  • Proof of registered address, either in Italy or abroad
  • VAT registration

Once set up, you can use multi-currency accounts to hold and move funds in EUR, USD, GBP, or others, helping you avoid constant FX conversions. Integrating with local payment gateways makes regular cross-border payments smoother, but traditional banks may impose higher fees or stricter onboarding.

If you are unsure about the banking setup in Italy, expert guidance can help you along. Commenda can help you choose the right provider based on your currency needs and compliance obligations. We help your entity get set up with ease, so you’re ready to pay suppliers, staff, and partners globally from day one.

Taxation and Compliance for Foreign-Owned Businesses

When expanding into Italy, foreign-owned companies must comply with a structured tax system that includes both national and regional obligations. Key tax responsibilities include:

  • Corporate Income Tax (IRES): The standard rate is 24%, levied on your global net income if your company is tax-resident in Italy.
  • Regional Production Tax (IRAP): An additional tax of about 3.9%, based on the company’s regional “value produced.”
  • VAT (IVA): The normal rate is 22%, with reduced rates (10%, 5%, 4%) for certain goods and services.
  • Withholding Taxes: Payments out of Italy (like dividends, interest) may be subject to withholding.
  • Import Duties: As part of the EU customs union, import duties apply depending on the goods’ origin and classification.

Compliance & Filing Duties

  • Corporate tax returns are generally due within nine months of the fiscal year-end.
  • Advance corporate tax payments are required (typically in two installments).
  • VAT returns must be filed quarterly, and VAT payments must be made monthly or quarterly, depending on turnover.

Cross-Border Obligations

Companies tax-resident in Italy pay on worldwide income, while non-residents are taxed only on Italian-source income. Additionally, Italy has double taxation treaties with multiple countries that help mitigate withholding, dividend, and interest tax exposure.

Keeping track of these responsibilities can be complex, especially if your business is operating across jurisdictions. However, with some expert assistance, you can get a helping hand.

Manage your U.S. Sales Tax, EU VAT, and global tax registrations in one dashboard, powered by Commenda.

Hiring Employees and Payroll Compliance

Hiring in Italy requires careful adherence to local labor laws, especially for foreign companies entering the market. Employment contracts must be in writing and outline job duties, salary, working hours, probation terms, and termination conditions.

While Italy does not have a statutory minimum wage, most industries follow collective bargaining agreements (CCNLs) that set mandatory wage floors and benefits. Employers must budget for significant social contributions, covering pensions, unemployment insurance, maternity, and workplace injury protection, which can total 30–40% of an employee’s gross salary.

If you don’t yet have a local Italian entity for full payroll registration, you can still hire talent through a remote solution. Using an Employer of Record (EOR) allows you to onboard employees compliantly without incorporating in Italy, while it handles contracts, payroll, taxes, and social contributions on your behalf.

Setting Up Operations and Staying Compliant

After completing the steps to start a business as a foreigner in Italy, you’ll need to adhere to certain practices to remain compliant. Here’s what you need to set up:

  • Maintain a registered office address for all legal correspondence.
  • Set up a compliant accounting system to manage bookkeeping and financial reporting.
  • Register for VAT if your business engages in taxable activities.
  • Obtain mandatory insurance, such as workplace liability or sector-specific coverage.
  • Enroll for social security and tax accounts if you plan to hire employees.
  • File annual financial statements and corporate tax returns.
  • Submit periodic VAT filings based on your activity and turnover.
  • Keep accurate records to meet audit or regulatory requirements.

This is where Commenda adds real value. Our platform automates recurring filings, sends compliance alerts, and centralizes your reporting obligations, making it easier for foreign founders to stay fully compliant in a new business environment.

Maintaining Your Business in Good Standing

Once you start a business in Italy, maintaining good standing is an ongoing responsibility. Follow the checklist below to ensure you have the important aspects covered:

  • File annual returns and financial statements with the Companies Register.
  • Renew sector-specific licenses or permits before expiry.
  • Submit periodic tax filings, including VAT, corporate tax, and payroll reports.
  • Be prepared for statutory audits if your company meets certain size thresholds.

It’s important to remember that late filings can lead to fines, administrative blocks, or temporary suspension of business activities. To avoid unnecessary compliance issues, maintain organized records, use automated compliance tools, and schedule internal reviews to avoid missed deadlines.

Finding Local Partners, Accelerators, and Support Networks

Building strong connections is essential for long-term success in Italy’s business ecosystem. Foreign founders can accelerate growth by tapping into local networks, investment communities, and industry-specific support programs.

Key avenues to explore include:

  • The Italian Chambers of Commerce, which offers guidance, events, and networking opportunities for foreign entrepreneurs.
  • Investment and trade agencies, such as Invitalia, ICE–Italian Trade Agency, and various regional development bodies, which provide funding programs, soft-landing support, and market entry assistance.
  • Leading startup accelerators, including:
    • LUISS EnLabs
    • Polihub
    • H-Farm

Connecting with these networks early helps build local credibility, find collaborators, and access opportunities across Italy’s growing innovation scene, allowing you to enter the market with confidence.

How to Close or Sell Your Business in Italy

Closing or selling a business in Italy involves a structured legal process to ensure all tax, creditor, and employee obligations are settled. Companies can be deregistered even with a non-zero balance sheet, provided valid grounds exist. This can be the expiry of the company term, prolonged inactivity, capital falling below legal minimums, or a board decision to wind up.

Key steps include:

  1. Move the company into S.r.l. in liquidazione (pending dissolution).
  2. Maintain a registered office and a retained accountant throughout the process.
  3. Hold a notary-led shareholder meeting to declare winding up and appoint a liquidator.
  4. The company is frozen and remains in dissolution for 12 months to allow creditor and tax claims.
  5. After settling obligations, proceed to formal dissolution

To support smooth closures and M&A transitions, Commenda manages compliance records, statutory reporting, and required filings, so you can focus on strategic decisions while we ensure every step remains fully compliant.

Challenges Foreigners Commonly Face

Foreign entrepreneurs often encounter several hurdles when expanding into Italy. Below are some key challenges and how to avoid them:

  • Handling complex regulations: Multiple agencies and region-specific rules can slow progress.
    Pro Tip: Use a dedicated compliance partner to track requirements from day one.
  • Bank account setup delays: Non-resident verification and KYC checks take time.
    Pro Tip: Prepare all documents early and work with providers who streamline banking introductions.
  • Tax and VAT registration complexity: Italy’s filing rules differ from many other jurisdictions.
    Pro Tip: Centralize global tax management to avoid missed deadlines.
  • Understanding local labor laws: Hiring rules, contracts, and contributions can feel overwhelming.
    Pro Tip: Use localized HR guidance or an EOR to stay compliant.
  • Language and documentation barriers: Legal and tax filings are often in Italian.
    Pro Tip: Work with bilingual compliance experts to avoid errors.

Commenda helps eliminate these barriers with end-to-end incorporation, compliance, and tax support.

Why Choose a Cross-Border Platform Instead of Local Agents

Relying on multiple local advisors often leads to fragmented communication, inconsistent timelines, and duplicated costs. A cross-border platform eliminates this friction, especially when managing incorporation, tax, and compliance across several countries.

Instead of coordinating lawyers, accountants, and agents in every country, Commenda brings all those moving parts under one unified platform. You get streamlined entity setup, global tax registrations, ongoing filings, and real-time compliance monitoring, all coordinated seamlessly across 30+ countries.

This unified approach gives foreign businesses a consolidated view of all jurisdictions, faster execution, transparent pricing, and seamless scalability as they expand into new markets.

How Commenda Helps You Start and Scale Globally

Commenda simplifies international expansion by giving you every tool you need in one unified platform. From incorporation to global tax management, everything is structured for speed, clarity, and long-term compliance.

With Commenda, you get access to:

  • One-click incorporation across multiple jurisdictions
  • Centralized EU VAT and U.S. Sales Tax management
  • Automated compliance tracking and deadline alerts
  • Dedicated support teams for cross-border entities

Start your business in Italy and scale globally with Commenda, your single platform for incorporation, tax, and compliance. Talk to our experts and get started today!

FAQs

Q. Can foreigners own 100% of a company in Italy?

Yes. Italy allows full foreign ownership of companies, and there is no requirement to appoint a local director or resident shareholder.

Q. What are the visa or residency requirements to start a business?

Non-EU founders may need an Investor Visa, Startup Visa, or self-employment visa, depending on investment level and business activity. EU/EEA citizens can operate freely without special permits.

Q. What’s the minimum capital needed to start a business in Italy?

For an S.r.l., the standard minimum share capital is €10,000, though a simplified S.r.l. can be formed with as little as €1. An S.p.A. requires at least €50,000.

Q. How are foreign-owned companies taxed in Italy?

Resident companies are taxed on worldwide income, while non-resident companies pay tax only on Italian-source income. Key taxes include corporate income tax (IRES), regional tax (IRAP), and VAT. Filing frequencies typically range from monthly to annually, depending on activity.

Q. What incentives are available for foreign investors?

Italy offers R&D tax credits, innovation grants, reduced corporate tax for specific investments, subsidized loans, and incentives under the National Recovery and Resilience Plan (NRRP), which prioritizes green, digital, and high-tech sectors.

Q. How can I open a bank account as a non-resident?

You’ll need company registration documents, director/shareholder identification, proof of address, and tax numbers. Some banks may require an in-person visit, while others allow remote verification depending on your business activity and risk profile.

Q. What are the ongoing compliance obligations for foreign businesses?

Companies must maintain proper bookkeeping, file annual financial statements, submit periodic VAT returns, renew licenses where applicable, and meet payroll and corporate tax deadlines. Failure to comply can result in penalties and operational delays.

Q. How does Commenda simplify cross-border incorporation and global tax compliance?

Commenda centralizes everything, including entity formation, EU VAT and U.S. Sales Tax management, ongoing filings, and compliance tracking, into one platform. Instead of coordinating multiple advisors, you get a unified dashboard, predictable timelines, and dedicated support for all markets you operate in.