Company Formation in Italy

You set up a company in Italy by signing a notarial deed for an SRL (limited liability company) or SpA (joint-stock company) and registering it with the Registro delle Imprese. Italy suits groups selling into its large consumer and industrial market and wealthy families relocating under its new-resident regimes. It is rarely the place for a low-tax holding company.

Key points

• Most foreign-owned businesses use an SRL, with €10,000 standard capital (or as little as €1 for a simplified SRL); an SpA needs €50,000 and suits larger or investor-backed companies.

• Companies pay IRES at 24% plus regional IRAP, generally 3.9%, on a broader base, so the combined burden is usually above 27%.

• Individuals who move to Italy from 2026 can elect a €300,000 annual flat tax on foreign income (€50,000 per family member), and qualifying workers can exempt 50% to 60% of Italian earnings under the reformed impatriati regime.

• The India–Italy treaty (1993) caps dividend withholding at 15% for 10% corporate holdings, and Italy has not yet ratified the MLI, so its treaties carry no MLI principal purpose test.

• Notary-led formation, an Italian tax code for every owner and director, and digital filing (PEC, e-invoicing) make local professional support essential.

Why do founders and groups set up a company in Italy?

Founders and groups set up in Italy mainly to sell into one of Europe's largest markets, with around 59 million consumers and deep manufacturing supply chains. A local company lets them hire, hold stock, contract with Italian buyers and bid for public work.

Italy appears in our guide to 24 jurisdictions, Go Global with Greenwolf, for two reasons: market entry and the relocation of wealthy individuals. A typical client is an Indian engineering or textiles group opening an Italian sales subsidiary, or a founder moving to Milan.

It is a poor fit if you want low corporate tax, light compliance or a company run entirely from abroad. Foreign owners can hold 100% of an Italian company, subject for non-EU individuals to a reciprocity test.

Which company types can you register in Italy?

The SRL is the standard vehicle for foreign-owned subsidiaries and start-ups; the SpA is used by larger companies, investor-backed businesses and those planning a listing. A branch (sede secondaria) is an option for a foreign company testing the market.

An SRL meeting the innovation tests can register as an innovative start-up, which unlocks the visa routes below.

What is the Italy corporate tax rate in 2026?

Italian companies pay IRES (corporate income tax) at 24% and IRAP (regional tax on productive activities) at a standard 3.9%, which regions can move up or down by up to 0.92 percentage points. PwC's Italy summary (reviewed July 2026) confirms both rates for 2026, and notes that the temporary 20% reduced IRES rate for reinvested profits applied to 2025 only.

IRES vs IRAP. IRES is charged on profit; IRAP on the value of production, a base that disallows some costs such as certain interest.

Withholding taxes. Italy withholds 26% on dividends and interest paid to non-residents and 30% on royalties (generally applied to 75% of the payment, an effective 22.5%), per PwC's withholding tax table. EU and EEA parents pay 1.2% or nothing under the Parent-Subsidiary Directive, and treaties reduce the rates with paperwork before payment.

Participation exemption. 95% of dividends from non-tax-haven subsidiaries, and 95% of gains on active subsidiaries held 12 months, are exempt. That makes an Italian holding company workable for a European sub-group, as discussed in holding vs operating companies.

Other rules. Net interest is deductible up to 30% of gross operating margin, domestic consolidation is available above 50% control, and Italy's CFC rules target subsidiaries taxed below 15% with mostly passive income.

Treaties and the MLI. Italy has a large treaty network but has signed the OECD Multilateral Instrument without ratifying it: the OECD list of signatories and parties (status at 26 May 2026) shows no deposit for Italy. Its treaties with India and the UK therefore carry no MLI principal purpose test, but domestic anti-abuse rules still apply, so the logic in our note on the principal purpose test still holds.

The UK–Italy convention of 1988 gives 5% dividend withholding for a company holding at least 10% (15% otherwise), 10% on interest and 8% on royalties. Since Brexit, that treaty rate replaces the EU directive exemptions.

Minimum tax for large groups. Legislative Decree 209/2023 introduced the income inclusion rule and a domestic top-up tax from 2024 for groups with revenue of €750 million or more; see our guide to the GloBE 15% minimum tax.

How do you set up a company in Italy, step by step?

The notarial deed and registration take only days once everything is ready, but a realistic end-to-end timeline for a foreign-owned SRL, including tax codes, translations and a bank account, is four to ten weeks.

1. Decide the vehicle and the plan. SRL or SpA, ownership, governance and whether it will qualify as an innovative start-up.

2. Get an Italian tax code (codice fiscale) for every foreign shareholder and director, through a consulate or the Agenzia delle Entrate.

3. Prepare the deed. A notary drafts the articles; foreign corporate shareholders need apostilled, translated documents. Owners can sign by power of attorney, or by videoconference for an online SRL formation.

4. Pay in capital. At least 25% of cash contributions is paid on formation, with the rest called later.

5. Sign and register. The notary files the deed with the Registro delle Imprese through the single ComUnica filing, which also triggers registration with the tax agency, social security and the chamber of commerce. The VAT number is issued at this stage.

6. Set up operations. Obtain a certified email address (PEC) and digital signature, connect to e-invoicing (SdI), open the bank account and, if hiring, register with INPS and INAIL.

How much does it cost to open a company in Italy?

Opening an Italian SRL typically costs €2,500 to €6,000 in notary and professional fees plus several hundred euros of registration taxes and duties, and running a small active company typically costs €6,000 to €20,000 a year. These figures are indicative; complex shareholder agreements, SpA formation and payroll cost more.

How hard is it to open an Italian business bank account?

Opening an Italian corporate account is manageable but slow for non-resident owners, often three to eight weeks, and banks often want to meet the legal representative.

Expect requests for every owner's codice fiscale and passport, the deed, an ownership chart to individuals, source of funds and a business plan with Italian activity; Indian parents are asked for accounts and ODI filings. Multi-layer ownership, trusts and nominees slow things down. Our piece on why banks challenge group structures before tax authorities do explains how to prepare a file that passes.

What substance does an Italian company need?

An Italian company needs people, premises and decisions that match its business. Italy also applies non-operating company rules (società di comodo) that deem a minimum income where revenue is low relative to assets.

The home-country risk runs both ways. An Italian subsidiary run from India could be treated as Indian resident under the place of effective management test, which we cover in our guide to POEM.

Conversely, since the 2024 reform Italy treats a foreign company as Italian resident if its place of effective management or its day-to-day management is in Italy, which matters for founders who move to Milan and keep running an Indian or UK holding company from there.

UK companies owning an Italian subsidiary should check the UK controlled foreign company rules in our CFC guide. At Italian rates, a trading subsidiary will usually fall within the UK's lower-level-of-tax exemption.

Which Italian residence and tax regimes connect to a company?

These personal regimes often drive the decision, but the company has to make commercial sense on its own.

The flat tax rose to €300,000 under the 2026 Budget Law, and the Agenzia delle Entrate handles the election. The impatriati regime, rewritten by Legislative Decree 209/2023, now requires a high level of qualification. The Italia Startup Visa portal and the Investor Visa for Italy portal set out the visa routes.

The flat tax covers foreign income only, and a founder who runs a foreign company from Italy puts that company's residence in question. Our article on how founder behaviour quietly shifts tax residency explains why this deserves planning before the move.

How should an Indian resident fund and own an Italian company?

An Indian company invests in an Italian SRL or SpA under the Overseas Direct Investment (ODI) route, and a resident individual uses the Liberalised Remittance Scheme (LRS) within its USD 250,000 annual limit. Our guide to funding an overseas company through ODI or LRS compares the routes, and our explainer on India's ODI rules covers the filings and the reporting that follows.

The India–Italy DTAA. The treaty was signed on 19 February 1993 and has applied since 1995. It limits Italian withholding on dividends to 15% where an Indian company holds at least 10% of the Italian company (25% otherwise), interest to 15%, and royalties and fees for technical services to 20%, consistent with PwC's treaty table.

Against Italy's 26% domestic rate, the Indian shareholder must supply a tax residence certificate and treaty forms before payment, or claim a refund.

Indian tax on Italian dividends. Dividends are taxed in India at the recipient's normal rates under the Income-tax Act 2025, with credit for Italian tax up to the treaty rate; any excess must be recovered from Italy. India has no CFC regime, so POEM is the main home-country risk.

For UK owners. A UK company generally receives Italian dividends exempt from corporation tax, after 5% treaty withholding. Individuals moving to Italy should time their UK exit around the statutory residence test and the flat tax election.

What are the ongoing compliance requirements for an Italian company?

Italian compliance is detailed and calendar-driven.

• Tax returns: IRES and IRAP returns are due by the end of the tenth month after the year end (31 October for calendar-year companies), with advance payments of 40% and 60% based on the prior year.

• Financial statements: approved by shareholders within 120 days of the year end (180 in some cases) and filed with the registry.

• E-invoicing: mandatory through the SdI for domestic transactions, with cross-border transactions also reported.

• VAT: standard rate 22%, with periodic payments, quarterly communications and an annual return.

• Statutory audit: required for every SpA, and for an SRL that exceeds the size thresholds.

• Beneficial ownership: beneficial owners must be notified to the Registro dei titolari effettivi, although access to the register has been suspended by litigation.

• Transfer pricing: documentation is optional but gives penalty protection.

Italy vs Greece vs Spain: which one fits?

Italy, Greece and Spain serve different goals. Our sister guide on company formation in Greece covers the lower-cost alternative, and our guide to company formation in Spain covers the Iberian and Latin American route.

The Greenwolf view

Italy rewards businesses that are genuinely there. A subsidiary with Italian customers and staff is easy to defend and to bank; a thin company booking profits without people invites questions from the Guardia di Finanza and the bank.

For families, decide who becomes Italian resident and under which regime, check the founder's role in any foreign company, and only then design the Italian company. The €300,000 flat tax suits very large foreign incomes, not modest ones, and never shelters Italian profits.

Italy's treaties are not yet MLI-modified, but domestic anti-abuse rules fill the gap. Substance over postcode, every time.

Setting up in Italy with Greenwolf

If you are planning an Italian subsidiary, a relocation under the flat tax or impatriati regime, or both, speak with a Greenwolf strategist. We design the company and ownership around your commercial and family plan, handle the Indian ODI or LRS filings, and coordinate formation and ongoing compliance in Italy.

This article is general information, not advice for a specific case.