How to Set Up a Subsidiary Company in Italy?

What Does a Subsidiary Mean in Business?

A subsidiary is a company controlled by a parent through majority ownership of its share capital or voting rights. It is a separate legal entity with its own assets, liabilities, and contracts, so the parent’s exposure is limited to its capital investment. A wholly-owned subsidiary is one where the parent owns 100%, giving full control, full profit entitlement, and full liability ring-fencing.

A subsidiary differs from a sister company. Sister companies share a common parent but neither owns the other, so they are peers rather than parent and child. For that structure, read Commenda’s guide on subsidiary vs sister company.

What Are the Types of Subsidiaries in Italy?

Foreign parents choose between a wholly-owned subsidiary and a joint-venture subsidiary. A wholly-owned subsidiary means 100% parent ownership and full control, and the single-member S.r.l. unipersonale is the standard vehicle. A joint-venture subsidiary is a co-owned S.r.l. or S.p.A. (Società per azioni, Italy’s joint-stock company) shared with an Italian partner. A shareholders’ agreement is not legally mandatory, but it is critical for joint ventures.

Which Legal Entity Should You Choose: S.r.l., S.p.A., or S.r.l.s.?

The standard S.r.l. is the default for a corporate parent. The S.p.A. suits large-scale or capital-markets operations. The €1 S.r.l.s. (Società a responsabilità limitata semplificata, the simplified limited liability company) is generally unavailable to corporate parents. A representative office is the lightest footprint, but it handles liaison only and cannot generate revenue.

Here is the restriction that trips up most foreign parents. Under Article 2463-bis of the Italian Civil Code, S.r.l.s. shareholders must be natural persons. A corporate parent cannot incorporate its subsidiary as an S.r.l.s., and a notary will refuse the deed. The €1 route exists for individual founders, not for holding structures. That is why the old “€1 minimum” framing is wrong for a company setting up a subsidiary.

Italy Subsidiary vs Branch Office: Which Should You Choose?

Choose a subsidiary for long-term operations and liability containment. A branch (sede secondaria) is not a separate legal entity, so the parent is directly liable for its debts. A branch is not meaningfully “simpler” either, because it still registers with the Registro delle Imprese (the Italian Business Register), obtains a Codice Fiscale and VAT number, and files accounts.

A subsidiary’s intercompany dealings with the parent, meaning goods, services, royalties, and loans, must be priced at arm’s length under Italian transfer-pricing rules, with documentation supporting the pricing. A branch instead faces attribution of profits to a permanent establishment. Commenda’s transfer pricing team handles the documentation that keeps those intercompany prices defensible.

How to Set Up a Subsidiary Company in Italy: Step-by-Step

Incorporation runs through an Italian notary and the Registro delle Imprese. For a foreign parent, the sequence below adds the Codice Fiscale, apostille, and translation steps that domestic guides skip.

Step 1: Which entity type do you choose?

Choose the entity first. A corporate parent almost always picks the standard S.r.l., single-member for a wholly-owned subsidiary, and reserves the S.p.A. for scale or capital-markets plans.

Step 2: How do you get a Codice Fiscale for the parent?

Obtain an Italian Codice Fiscale (tax identification number) for the foreign parent company itself and for non-resident directors and shareholders. They need it before they can appear in Italian corporate acts.

Step 3: What does the parent board resolution cover?

Pass a parent-company board resolution authorizing the formation, naming the capital commitment and the appointed representative. Have it apostilled and sworn-translated into Italian.

Step 4: Who drafts the founding documents?

Draft the Atto Costitutivo (deed of incorporation) and the Statuto (bylaws). These set the company’s purpose, capital, and governance.

Step 5: How much capital do you deposit?

Deposit the share capital: 25% of cash contributions for a multi-member S.r.l., or 100% for a single-member S.r.l. under Article 2464 of the Civil Code.

Step 6: Must you sign before an Italian notary?

Yes. Execute the notarial deed before an Italian notaio, in person or via an apostilled power of attorney (POA). Remote POA execution is standard for foreign parents, since Italy has no online incorporation.

Step 7: Who files with the Registro delle Imprese?

The notary files the deed with the Registro delle Imprese at the Camera di Commercio (Chamber of Commerce). The company legally exists upon registration.

Step 8: How do you get the VAT number?

Obtain the Partita IVA (the Italian VAT number) from the Agenzia delle Entrate (Italy’s Revenue Agency), often alongside registration.

Step 9: When do you register with INPS and INAIL?

If you hire, register with INPS (the national social security institute) and INAIL (the national workplace injury insurance institute) before employees start.

Step 10: How do you activate the bank account?

Activate the operating bank account once the Chamber of Commerce certificate is issued, then move the capital into the company’s own account.

Check your intended name first with Commenda’s company name checker before the notary drafts the deed.

What Documents Do You Need to Register a Subsidiary in Italy?

You need corporate, identification, banking, and registration documents, plus proof of a registered office. Foreign documents must be apostilled and sworn-translated into Italian.

How Much Does It Cost to Set Up a Subsidiary in Italy?

Professional fees for a standard S.r.l. land around €2,700 to €4,500 all-in, separate from the €10,000 of share capital, which is the company’s own money. The simplified S.r.l.s. carries no notary fee because it uses a fixed ministerial model deed, but corporate parents cannot use it.

How Long Does It Take to Incorporate a Company in Italy?

End to end, a foreign parent should plan for roughly two to three weeks once funds and documents are ready, longer if the bank account stalls. The registration step itself is fast. The notary must file the deed within 10 days of signing, and often does so within two to three days.

The bank account is the common long pole. Document preparation, apostille, translation, and Codice Fiscale issuance all run before the notary appointment, so start them early.

How Do You Open an Italian Business Bank Account as a Non-Resident?

Italian banks run heavy know-your-customer (KYC) checks on the foreign parent and its ultimate beneficial owners (UBOs). Most require an in-person meeting or a local representative, and the capital-deposit account comes before the operating account. The operating account can only open once the Chamber of Commerce certificate is issued, which is why it often sets the overall timeline.

Prepare the certificate of incorporation, VAT registration, bylaws and articles, Codice Fiscale of shareholders and directors, representatives’ identification, proof of a business address, and the Chamber of Commerce registration extract. Confirm current requirements directly with your chosen bank, since documentation and in-person rules vary by branch.

How Do You Register a Subsidiary in Italy from the US?

A United States (US) parent forms an Italian S.r.l. without traveling. It executes an apostilled POA, obtains a Codice Fiscale for the parent and its directors, and has its board resolution apostilled under the Hague Apostille Convention and sworn-translated into Italian. Italy places no nationality-based restrictions on ownership.

The S.r.l., not the S.r.l.s. and not a branch, is the standard answer for a US corporate parent. The S.r.l.s. excludes corporate shareholders, and a branch leaves the parent directly liable. The US-Italy tax treaty also reduces withholding on dividends flowing back to the US parent, which direct branch taxation does not match.

What Are the Ongoing Tax and VAT Compliance Obligations for an Italian Subsidiary?

An Italian subsidiary pays IRES (corporate income tax) at 24% and IRAP (regional production tax) at an ordinary 3.90%, charges VAT (value-added tax) at the 22% standard rate, and files annual financial statements with the Registro delle Imprese. VAT returns are periodic, monthly or quarterly, with an annual return.

You also file UBO information with the national register and hold at least one annual general meeting while keeping the corporate books.

Does an Italian subsidiary need a statutory auditor?

Only above the thresholds in Article 2477 of the Civil Code. An S.r.l. must appoint a statutory auditor or control body if it exceeds any one of these limits for two consecutive financial years, or if it controls a company subject to mandatory audit.

Stay on top of these filing dates with Commenda’s compliance calendar.

How Does a Holding Company Structure Work With an Italian Subsidiary?

Dividends an Italian subsidiary pays to a qualifying European Union parent can flow free of Italian withholding under the EU Parent-Subsidiary Directive. Italy’s participation exemption (PEX) regime then exempts 95% of qualifying dividends and capital gains at the Italian corporate level under Article 87 of the TUIR (Testo Unico delle Imposte sui Redditi, Italy’s Consolidated Income Tax Act).

The headline PEX conditions on gains are an uninterrupted holding of at least 12 months, classification of the shareholding as a financial fixed asset from the first holding period, and the subsidiary carrying on an active business and not being resident in a privileged-tax jurisdiction, all under Article 87 of the TUIR. A US parent sometimes interposes an EU holding company to capture Directive relief. Direct US ownership plus the US-Italy treaty rate is simpler when the group has no other EU presence. For the structuring logic, see Commenda’s guide to a tax-efficient subsidiary.

Do You Need a Registered Office and a Resident Director in Italy?

A registered office (sede legale) in Italy is mandatory, and virtual or coworking addresses are acceptable if they meet legal requirements. Italy does not legally require a resident director. Director residency still matters for tax, because Italy treats a company as tax-resident where its place of effective management sits.

A subsidiary run entirely by non-resident directors from abroad risks tax-residency and permanent-establishment challenges under Article 73 of the TUIR, and non-resident directors’ Italian-source compensation faces Italian withholding. Authorities may also verify that the registered office genuinely exists, especially for VAT purposes.

How We Help You Set Up a Subsidiary in Italy

Commenda handles your Italian incorporation end to end, from entity selection and notary coordination to the Codice Fiscale, apostille, and Registro delle Imprese filing. After formation, entity management tracks every filing, deadline, and corporate record, so country 12 behaves like country 1. For intercompany pricing with the parent, Commenda’s transfer pricing team keeps your documentation arm’s-length and defensible.

If you are weighing an entity against hiring through an employer of record first, run the numbers with the entity vs EOR calculator. When you are ready to move, book a demo to get a step-by-step Italy incorporation plan with real costs and timelines.