Italy’s economy, the third largest in the eurozone, offers real opportunities for entrepreneurs willing to navigate its regulatory environment. Whether you are launching a startup, opening a restaurant, buying an existing business, or expanding a company into the Italian market, understanding the legal structures, registration requirements, tax obligations, and operational realities is essential. This guide covers what you need to know to establish and run a business in Italy.
Choosing a Legal Structure
Italy offers several business entity types, each with different liability protections, capital requirements, and tax implications.
Sole Proprietorship (Ditta Individuale)
The simplest structure. The owner and the business are legally the same entity. There is no minimum capital requirement. Setup is fast (registration at the Camera di Commercio and tax authority). The owner has unlimited personal liability for business debts. Income is taxed as personal income through IRPEF (23% to 43% progressive rates). This structure suits freelancers, small traders, artisans, and sole operators. A variant, the regime forfettario (flat-rate regime), offers a 15% flat tax (5% for the first 5 years of a new activity) on revenues up to EUR 85,000/year, with simplified accounting and no VAT collection.
Limited Liability Company (S.r.l. / Societa a Responsabilita Limitata)
The most common structure for small and medium businesses. The owners’ (soci) liability is limited to their capital contribution. Minimum share capital is EUR 1 for a S.r.l. semplificata (simplified S.r.l., available to founders under 35 at reduced notary costs) and EUR 10,000 for a standard S.r.l. (at least 25% must be paid at incorporation). Corporate income tax (IRES) is 24%, plus IRAP (regional business tax) of approximately 3.9%. An S.r.l. requires a notarial deed (atto costitutivo) and articles of association (statuto), registration at the Registro delle Imprese (Business Register) through the Camera di Commercio, a registered office in Italy, and at least one administrator (amministratore).
Joint-Stock Company (S.p.A. / Societa per Azioni)
The structure for larger enterprises. Minimum share capital is EUR 50,000 (at least 25% paid at incorporation). Mandatory board of directors and board of statutory auditors (collegio sindacale). Same IRES/IRAP tax rates as an S.r.l. More complex governance and compliance requirements. Suited for companies seeking external investment, planning an IPO, or operating at significant scale.
Partnership Structures
S.n.c. (Societa in Nome Collettivo, general partnership): all partners have unlimited joint and several liability. S.a.s. (Societa in Accomandita Semplice, limited partnership): general partners have unlimited liability, limited partners’ liability is capped at their contribution. Partnerships are simpler to establish but expose partners to greater personal risk. Income is taxed at the partner level (pass-through taxation).
Branch Office (Sede Secondaria)
A foreign company can open a branch office in Italy without creating a separate legal entity. The branch is not a distinct legal person; the parent company retains full liability. Branches must register with the Registro delle Imprese and appoint a legal representative in Italy. Income generated in Italy is subject to Italian corporate tax.
Registration and Startup Process
Step-by-Step for an S.r.l.
The typical process for establishing the most common structure (S.r.l.) involves engaging a notary (notaio) to draft and authenticate the deed of incorporation and articles of association. The notary verifies the identity of founders, the legality of the statuto, and the deposit of initial capital. Next, register the company with the Registro delle Imprese at the local Camera di Commercio (Chamber of Commerce). This generates your codice fiscale and partita IVA (VAT number) for the company. Open a company bank account and deposit the required share capital. File the SCIA (Segnalazione Certificata di Inizio Attivita) with the comune if the business involves regulated activities (food service, retail, manufacturing). Register with INPS for social security contributions and INAIL for workplace accident insurance.
Timeline: 2 to 4 weeks for a straightforward S.r.l. incorporation. Cost: EUR 2,000 to EUR 5,000 in notary, registration, and professional fees.
The Regime Forfettario (Flat-Rate Regime)
For individual entrepreneurs and freelancers, the regime forfettario is often the most advantageous starting point. It offers a 5% income tax rate for the first 5 years (15% thereafter), no VAT obligation (you do not charge or collect VAT), simplified bookkeeping (no formal accounting books required), and reduced INPS contributions (35% reduction available on request). Eligibility: revenues up to EUR 85,000/year, no more than EUR 20,000 in employee costs, and no more than 50% of income from a single client who was your employer in the prior 2 years. Application is made through the Agenzia delle Entrate.
Tax Obligations
Corporate Taxes
Companies (S.r.l., S.p.A.) pay IRES at 24% on taxable income, IRAP at approximately 3.9% (varies slightly by region) on the net value of production, and VAT (IVA) at the standard rate of 22% (reduced rates of 4%, 5%, and 10% apply to specific goods and services). VAT returns are filed monthly or quarterly depending on revenue volume.
Individual Business Taxes
Sole proprietors and partners pay IRPEF (progressive rates: 23% on income up to EUR 28,000, 25% on EUR 28,001 to EUR 50,000, 35% on EUR 50,001 to EUR 50,000, 43% above EUR 50,000), plus regional and municipal surtaxes (1% to 3% combined), and INPS contributions (approximately 24% to 26% of income for self-employed individuals registered in the Gestione Separata, or fixed-rate contributions for artisans and traders).
Key Tax Deadlines
June 30: annual income tax balance payment and first advance payment. November 30: second advance payment. Quarterly or monthly: VAT filings. Annual: Modello Redditi (formerly Unico) corporate or personal tax return, typically due November 30. An Italian commercialista (accountant/tax advisor) is essential for ongoing tax compliance. Fees range from EUR 1,500 to EUR 5,000+/year depending on business complexity.
Employment and Labor
Hiring employees in Italy involves significant regulatory obligations. Employment contracts must comply with the applicable CCNL (national collective bargaining agreement) for your sector. Standard contract types include contratto a tempo indeterminato (permanent, the default and most protected), contratto a tempo determinato (fixed-term, limited to 12 months extendable to 24 under specific conditions), and contratto di apprendistato (apprenticeship, with reduced social contributions).
Employer costs beyond gross salary include INPS social security contributions (approximately 30% of gross salary), INAIL insurance (varies by risk classification, 0.5% to 15%), TFR (Trattamento di Fine Rapporto, severance accrual of approximately 1 month per year), 13th month salary (mandatory) and 14th month (required by many CCNLs), and paid leave (4+ weeks annual, plus sick leave, parental leave). Total employer cost is typically 35% to 45% above gross salary. For a detailed breakdown, see our wages and salaries guide.
Terminating employees is more restricted than in the U.S. Italy does not have at-will employment. Dismissal requires giusta causa (just cause, serious misconduct) or giustificato motivo (justified reason, economic/organizational). Wrongful dismissal can result in reinstatement or substantial compensation (up to 36 months’ salary under current rules). The Ispettorato del Lavoro (Labor Inspectorate) oversees compliance.
Permits and Licenses
Depending on your business activity, you may need a SCIA (certified start of activity notification) filed with the comune for most commercial and food service activities, specific sector licenses (e.g., licenza di somministrazione for restaurants and bars, requiring an SAB or former REC certification), health and safety certifications (ASL inspections for food businesses), environmental permits (for manufacturing or activities with environmental impact), and professional qualifications registered with the relevant ordine professionale (for regulated professions like engineering, architecture, law, medicine).
The local Camera di Commercio is the primary resource for understanding which permits apply to your specific activity. The SUAP (Sportello Unico per le Attivita Produttive) at your comune is the single point of contact for filing permit applications.
Financing and Incentives
Italy offers several programs to support business creation. Invitalia (the national agency for inward investment and economic development) administers programs including Resto al Sud (grants and subsidized loans for businesses in southern Italy), Smart&Start Italia (zero-interest loans for innovative startups), and ON – Oltre Nuove Imprese a Tasso Zero (interest-free loans for young and female entrepreneurs). The startup innovativa designation (for technology/innovation-focused companies) provides tax incentives for investors (30% IRPEF deduction), simplified incorporation procedures, flexible corporate rules, and 12-month visa for non-EU founders. Regional incentives vary and can be substantial, particularly in southern Italy where EU structural funds are concentrated.
Practical Considerations for Americans
U.S. citizens starting a business in Italy face dual tax obligations. Business income earned in Italy must be reported on both Italian and U.S. tax returns. The U.S.-Italy Tax Treaty prevents double taxation, and the Foreign Tax Credit (FTC) allows U.S. taxes paid to be offset by Italian taxes paid. FBAR and FATCA reporting apply to Italian business bank accounts. A commercialista experienced with U.S.-Italy cross-border taxation is strongly recommended. See our tax guide for details.
If you do not yet have Italian citizenship or EU residency rights, you will need a visa that permits self-employment or business activity (e.g., lavoro autonomo visa, startup visa, or elective residence visa with business activity).
Frequently Asked Questions
How much does it cost to start a business in Italy?
For a ditta individuale under the regime forfettario: EUR 300 to EUR 800 in registration and accountant setup fees. For an S.r.l.: EUR 2,000 to EUR 5,000 in notary, registration, and professional fees, plus the minimum share capital. Ongoing costs include the commercialista (EUR 1,500 to EUR 5,000+/year) and the annual Camera di Commercio fee (EUR 120 to EUR 200).
Do I need to speak Italian to run a business in Italy?
For international-facing businesses in major cities, English may suffice for daily operations. However, all legal documents, contracts, tax filings, and regulatory interactions are in Italian. A commercialista and legal counsel who speak English are essential, but basic Italian is strongly recommended for managing employees, suppliers, and government interactions.
Can I run an Italian business remotely from the U.S.?
Technically yes, particularly for an S.r.l. with an appointed administrator in Italy. However, Italian tax authorities may assess whether the company’s “effective management” is in Italy or abroad, which affects tax residency. Consult a cross-border tax advisor before structuring a remote arrangement.