Italy, with its strategic location in the heart of Europe, is an attractive destination for foreign investors. Italy’s diverse economy, from the luxury fashion industry to cutting-edge technology, offers a variety of promising business opportunities. However, in the process of establishing a company in Italy, customers need to pay attention to some information, Viet An Law would like to present some content through the following article.
For foreign investors to set up a company in Italy, the two most common types are:
Minimum charter capital when setting up a company in Italy
Joint Stock Company (Società per Azioni or S.p.A.)
This is a suitable form of company for large businesses that want to raise capital from the public. According to Article 2327 of the Italian Civil Code, the establishment of an S.p.A. company requires a minimum charter capital of 50,000 euros.
Limited Liability Company (Società a responsabilità limitata or S.r.l.)
This is a popular form of company, suitable for small and medium-sized businesses. Theoretically, the formation of an S.r.l. company requires a minimum charter capital of 10,000 euros. However, there is a point to note as follows: S.r.l. companies can be established with a capital contribution of less than 10,000 euros, even from only 1 euro. In the event that the contributed capital is less than 10,000 euros, the company must comply with an important provision stated in article 2463 of the Italian Civil Code. Specifically, the company must:
Set aside an amount of money from annual net profit, equivalent to at least one-fifth (1/5) of that profit.
This money will be retained as a reserve fund until the total value of the reserve fund and charter capital reaches 10,000 euros. This reserve fund is only used for two purposes: allocating capital and offsetting losses.
If the reserve fund is reduced due to loss compensation, the company is obliged to replenish the fund.
Why is the minimum charter capital stipulated?
Regulations on minimum charter capital are established to ensure stability and transparency in business activities, protect the interests of stakeholders and create a healthy business environment.
Protection of stakeholder interests: Charter capital serves as a financial commitment, ensuring that the company is capable of fulfilling its obligations to creditors, partners, and customers. The minimum capital level helps to minimize risks for stakeholders in the event that the company encounters financial difficulties.
Build credibility and trust: Companies with large enough charter capital are often highly appreciated for their reliability, facilitating cooperation and attracting investment.
Compliance with legal regulations: In addition to the minimum charter capital when establishing a company, in some specific industries (e.g. finance, banking), legal capital is a mandatory requirement according to the provisions of law. This is to ensure the safety and stability of the financial system.
The investment licensing system in Italy is significantly different from that of Vietnam, especially for foreign investors (outside the EU/EEA and Switzerland). Investment licenses in Italy are classified according to the following sectors:
The investment licensing system in Italy is classified in great detail according to each business sector. Therefore, investors may need many different types of licenses for the same project. Example:
Commercial license (Licenza commerciale) for trading and service activities.
Building permits (Permesso di costruire) for real estate projects.
Environmental license (Autorizzazione ambientale) for activities that have an impact on the environment.
The investor is an EU/EEA citizen and Switzerland
Freedom to do business: They enjoy the freedoms set forth by the European Union (EU), such as not having to apply for an investment license that allows them to set up and operate a business in Italy easily.
Although they do not need a special investment license, they must still comply with the regulations on business registration and other administrative procedures according to Italian law. This includes the procedure for establishing a company at the Chamber of Commerce (Camera di Commercio), registering a tax identification number (Partita IVA), and procedures related to labor and social security.
The investor is a non-EU/EEA citizen and Switzerland
The incorporation process will likely have to go through a more complex investment process, including applying for investment licenses and special licenses depending on the business sector.
Some businesses, such as real estate, finance, or industries that have an impact on the environment, may require special permits or meet specific conditions.
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