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22 September, 2019

Taxation of Italian Companies.

The taxation of the income of an Italian company is based on its aggregate income earned both in Italy and abroad. This articles provides an introduction to corporate tax in Italy, outlining the types (IRES and IRAP) and rates of income tax and explaining how such tax is calculated.

Corporate Tax

The taxation of the income of an Italian company is based on its aggregate income earned both in Italy and abroad. The corporation tax to be paid by a foreign company is levied upon its income earned in the Italian territory where it has a permanent establishment.

The income of a company is subject to national corporate income tax (IRES) and regional income tax (IRAP). IRES is a proportional tax levied at the rate of 24% on the amount of the taxable income. IRAP is calculated at a rate of 3.9%.

The taxable income of a company is represented by the results shown in its profit and loss account. Losses of a company may be carried forward and deducted from the corporate income tax (IRES) taxable income of the subsequent fiscal years up to 80% of the taxable income. Losses incurred in the first three fiscal years may be carried forward and deducted from 100% of the corporate income tax (IRES) taxable income of the subsequent fiscal years.. 

Italian corporate tax law provides for two types of withholding tax: (i) final withholding tax levied at source; and (ii) withholding tax in advance payment of income tax levied upon a single item of income and which may later be added to the aggregate income. Withholding tax rates refer to dividends, interest and royalties. This document explains the types and rates of withholding tax in Italy, including double taxation relief, and a table of Italian withholding taxes applicable to European countries is provided.

Withholding Tax

Types of withholding tax

Italian tax law provides, inter alia, for two types of withholding tax:

(1)     final withholding tax levied at source; and

(2)     withholding tax in advance payment of income tax levied upon a single item of income and which may later be added to the aggregate income. The amount of withholding tax levied in advance is deducted from the tax levied on the aggregate income. The withholding tax is levied intermediaries, i.e. by those who pay the income subject to withholding tax. These are commercial organisations, business concerns, commercial agencies and entities which are not subject to IRES. The withholding tax is levied by companies in the following instances: 

(a)     on income from employment;

(b)     on fees for independent services;

(c)     on commissions to agents and brokers;

(d)     on royalties for the use of intellectual property rights, patents, trademarks and other rights on industrial property; and

(e)     on capital income (interest on loans, from bonds, bank and post office deposits and current accounts, and dividends).

Rates of withholding tax

Italian Tax Law provides for the application of the withholding tax with referenceto dividends, interest and royalties. 

Dividends distributed to entities other than individuals, which are not resident in Italy, are levied with a withholding tax rate of 26%; however if the entity is a company, which is subject to corporate income tax in a State belonging to the European Union and to the Economic European Area the applicable withholding tax rate is reduced to 1.2%. According to the parent/subsidiary Directive (90/434), if certain conditions are met, dividends distributed to the parent company by the subsidiary are exempted from any withholding tax. 

In order to avoid cases of double taxation (both legal and economic) inbound dividends received by a company (non-resident in “low tax countries”) are exempt from taxation in the amount of 95%. For the interest due, a withholding tax rate of 26% is charged; for all other interest Italian Tax Law provides for the application of general full taxation. 

Royalties paid to entities not resident in Italy are levied with a withholding tax rate of 30%; for other royalties Italian Tax Law provides for the application of general full taxation.

According to the interest/royalties Directive (2003/49), if certain conditions are met, interest and royalties paid to “group companies” (25% of participation) are exempted from any withholding tax. 

Double taxation relief

Some international Doub, entered into by Italy to mitigate double taxation, set forth particular provisions for exemption from withholding tax for certain types of income or fix reduced rates in relation thereto. A table of the withholding taxes on payments from an Italian company to a resident of various countries included in this Publication is set out at para [508].

However, as mentioned above:

  • according to the parent/subsidiary Directive (90/434), if certain conditions are met, dividends distributed to the parent company by the subsidiary are exempted from any withholding tax;
  • according to the interest/royalties Directive (2003/49), if certain conditions are met, interest and royalties paid (and received) to (from) “group companies” (25% of participation) are exempted from any withholding tax;
  • a specific Agreement provides a measure for the avoidance of double taxation on dividends, interest and royalties paid between EU and Swiss companies whose rationale strictly aligns to that of the EU Parent-Subsidiary Directive for dividend and to that of the Interest/royalties Directive for interest and royalties, payments between EU companies: it implies that, if certain conditions are met, dividend, interest and royalties paid to Swiss companies are exempted from any withholding tax.

In particular, Italy has signed 97 tax treaties to avoid double taxation. 

For information for each countries, please visit: convenzioni-e-accordi/convenzioni-per-evitare-le-doppie-imposizioni/ 

Table of Italian Withholding Taxes Applicable to European Countries

RecipientWHT (%)
Resident corporations00/26 (1)0
Resident individuals26 (2)2620 (3)
EU resident corporations0/1.2 (4, 5)0 (4)/DTT rates0 (4)/DTT rates
Swiss resident corporations0 (6)/DTT rates0 (6)/DTT rates0 (6)/DTT rates
Non-resident corporations and individuals:   
Non-treaty countries26 (7)2630 (3)
Treaty countries (8):   
Czech Republic1500/5
San Marino0/5/150/130/10
Slovak Republic1500/5
United Kingdom5/150/108


  1. The actual applicable rate depends on the nature of the recipient. Applicable rates are as follows: 0% applies on loan agreements and ordinary notes when the recipient is a corporation; 26% rate in all other cases.
  2. For resident individuals, generally a 26% WHT applies, but there is a grandfathering regime for dividends received by ‘qualified’ shareholders (i.e. holding more than 20% of voting rights or 25% of the share capital, 2% or 5% in case of listed companies). The rate applicable to ‘non-qualified shareholders’ is always 26%. Non-residents are always subject to a 26% WHT, irrespective of whether or not they are ‘qualified’.
  3. The domestic rate applies on 75% of the gross amount of the royalty paid; however, treaty ceilings apply on the gross amount of the royalty paid.
  4. Pursuant to the EU Directives and provided that the requirements set forth therein are met, payments of dividends, interest, and royalties made by an Italian company to an EU resident group company can be WHT exempt. Specifically for the dividends, the minimum shareholding requirement (to benefit from this exemption) is currently equal to 10%; for interest and royalties, it is 25% of voting rights; a one-year minimum holding period applies for both.
  5. Should the full WHT exemption not apply, 1.2% applies on dividends paid to EU and EEA tax resident corporations.
  6. Pursuant to the Swiss – EU tax agreement and provided that the requirements contained therein are met, payments of dividends, interest, and royalties made by an Italian company to a Swiss tax resident group company can be WHT exempt.
  7. Non-resident persons have the right to obtain reimbursement for up to 11/26 of the withholding effected, upon proof of the actual taxation of the dividends in the foreign country where the recipient is a resident.
  8. Provided that all conditions are met, domestic tax legislation is applicable if more favourable for the taxpayer. In a number of circumstances, tax treaties may provide for particular tax rates mainly dependent on the nature of the instruments and on the profile of the recipients/payers. In such cases, the applicable WHT rate must be verified from an analysis of the relevant tax treaty.

This document summarises the rules on the application of registration and transfer taxes in Italy, and provides the tax rates.

Registration and transfer taxes

Capital transactions resulting in an increase in capital in cash or in the transfer of movable goods, if they are subject to VAT, are subject to registration tax at a fixed amount of €200. Sales of real property are subject to a registration tax of between 1% and 15% depending on the type of property involved plus mortgage and cadastral taxes (about 3% as whole). Such tax is levied on deeds entered into within Italy and relates to the market value of such deeds, regardless of the values declared in the deeds themselves. 

Contracts for the transfer of rights are subject (depending on the type of deed) to proportional rates ranging from 0.5% to 3%. In some cases contracts of transfer are subject to VAT provided that, in accordance with the principle of alternative applicability between VAT and the registration tax, such contracts are only subject to registration tax at a fixed amount of €200. 

On the sale of property and on the performance of services by companies in Italy, VAT is applied at the rate of 21 percent on the amount of the sale or on the declared value of the services. This rate is reduced to 4 percent or 10 percent, as the case may be, if the company is involved in sales of particular categories of goods. This document explains the application of VAT on companies under Italian law. 

Value Added Tax (VAT)

On the sale of property and on the performance of services by companies in Italy, VAT is applied at the rate of 22% on the amount of the sale or on the declared value of the services. This rate is reduced to 4% or 10%, as the case may be, if the company is involved in sales of particular categories of goods (such as agricultural products, agronomic goods, fish, milk and dairy products, etc). 

VAT is also paid on imports from non EEC countries and on transactions abroad, but it is excluded, on the basis of the territorial principle, on particular export transactions (within the limits and the conditions provided by law). Transactions carried out in Italy by non-resident entities which have a permanent establishment in Italy are also subject to VAT.

EC Directive no 91/680, amending Council Directive 2006/112/EC, set forth a transitional regime for cross-border sales between business operations in the European Community. In the case of sales of goods, the VAT must be paid in the place where the goods are located. On the performance of services, there is a distinction: if the purchaser is a VAT subject, VAT must be paid in the State where the purchaser is resident or domiciled for tax purposes; if the purchaser is a consumer, VAT must be paid in the State where the performer is resident or domiciled for tax purposes. VAT is paid on the basis of the returns made either on a monthly or on a quarterly basis. 

Any sales of national or nationalised real estate or moveable property located in Italy are considered to be performed in Italy.

The act governing the application of VAT provides that certain transactions are exempt from tax (for example, credit and financing transactions; insurance transactions; foreign currency transactions; transactions concerning shares and bonds). VAT is based on the principle of ‘compulsory recourse’. Therefore, each commercial agent is bound to pay to the Italian Government, on a monthly or quarterly basis (depending upon the realised turnover) any VAT collected after deducting any VAT paid on the transactions in relation to which it was a beneficiary.

There are a series of steps involved in the application of VAT including the obligation of the performer of the service or seller of the goods to issue an invoice; the obligation to keep and maintain a book with a list of all invoices issued and purchases performed. Each year, companies must file a VAT return, at the same time as their income tax return, stating the turnover transactions performed, as well as the amount of VAT collected and the amount of VAT paid. By 16 March of each year any amount due in addition to the amount paid on a monthly or quarterly basis must be paid.

‘Capital gains’ (redditi diversi di natura finanziaria) are income deriving from the disposal of previously invested capital, including shares (or quotas in a society with restricted liability (srl)), foreign currency and bonds. As part of this commentary on company law in Italy, this document explains the tax treatment of capital gains, setting out the options as to how they may be taxed as well as the conditions for the application of the participation exemption regime. 

Capital Gains Taxes

‘Capital gains’ (`redditi diversi di natura finanziaria’) are income deriving from the disposal of previously invested capital, including shares (or quotas in an Srl), foreign currency and bonds.

Capital gains of an individual may be taxed, each having different advantages which are not dealt with in detail herefollows:

(1)     Regime della dichiarazione(‘tax return option’), which taxes the gains effectively realised at a rate of 26%, on an annual basis.

(2)     Regime Amministrato(‘Administration option’), which taxes the gains effectively made at the completion of each transaction at a rate of 26%. It is not applicable to qualified shareholdings, and allows anonymity for the taxpayer.

(3)     Regime Gestito(‘asset management option’), where the taxation is based on a ‘yearly accrual basis’ regardless of the income realised. It is not applicable to qualified shareholdings and the tax rate is 26%.

A particular regime is applied to capital gains from participations performed by companies: if certain conditions are met (see below)the capital gain is levied only on 5% of the taxable amount (the percentage of exemption is 95%). In order to enjoy this participation exemption regime four conditions must be satisfied: 

(a)     uninterrupted possession of the participation from the first day of the twelfth month preceding its sale (the `holding period’);

(b)     the participation must be classified as a financial fixed asset (`Immobilizzazioni finanziarie‘) in the first financial statement closed during the first holding period; 

(c)      the residence of the company in which the stake is held must not be in a State which is not a non-resident in “low tax countries”;; 

(d)     the subsidiary must carry on business activity.


26 October, 2020

Last 6 October 2020, the EU Commission launched a new digital platform to support EU companies doing business with Iran.

The JCPOA (Joint Comprehensive Plan of Action) dated 14 July 2015intended to put an end to all economic and financial sanctions imposed by the European Union in connection with the Iranian nuclear program. However, some restrictions remained in place with reference to certain persons and in relation to particular categories of goods. Over the years, the scope of application of these restrictions has created significant uncertainty among EU companies that wanted to do business with Iran and the EU banking system, preventing the trade between the EU and Iran.

The new platform launched by the EU Commission include the following tools aimed at facilitating business with Iran:

  • a “Due Diligence Helpdesk”, and
  • a “Sanctions Tool”.

Both tools are aimed at helping EU companies that intend to engage in commercial relationships with Iran to  the identify their Iranian partners and permitted business.

The Due Diligence Helpdesk is an online platform that allows a free due diligence check on the compliance with European sanctions by the potential Iranian business partner. Using this tool, users can verify whether potential Iranian partners comply with European sanctions. The Due Diligence Helpdesk provides concrete and tailor-made support to European SMEs by performing due diligence and verifying whether specific business projects comply with European sanctions.

The Helpdesk will also publish guides, organize training courses, webinars and support business to business events.

The Sanctions Tool, on the other hand, is based on an interactive questionnaire, aimed in particular at small and medium-sized enterprises (SMEs) interested in engaging in activities involving Iran. This tool provides an easily accessible source of information on European restrictive measures. Its aim is to give a first general and non-binding orientation to assist SMEs in carrying out business projects, in full awareness and respect of the European restrictive measures against Iran.

EU companies that want to do business with Iran, can now visit the platform, enter a description of the type of goods they intend to export and of their Iranian counterparties, and quickly obtain a confirmation as to whether the transaction is legitimate and what measures  should be taken to carry out that specific transaction.


10 October, 2020

The real estate simple partnership (“società semplice immobiliare”) is a type of partnership that does not carry out commercial activity as its only purpose is to hold real estate assets. The shares of a real estate partnership can also be held by foreign companies.

There are many advantages for the incorporation of a real estate simple partnership: it acts as an aggregator of wealth of various subjects, overcoming some of the problems related to the co-ownership of real estate. This type of partnership does not have to keep company books or draft and file financial statements, therefore it allows to save a lot on operating costs. The great flexibility of this type of form allows the bylaws to be adapted to the needs of the shareholders. The rules regarding the company structure are also extremely simplified, with utmost freedom regarding the transfer of shares and the possibility for corporations and foreign subjects to hold shares.

The real estate simple partnership also has significant tax advantages: profits are taxed directly on the shareholders and the sale of real estate held by the partnership for more than five years does not create capital gains;  while the same property, held and sold by a s.r.l. always generates taxable income.

At the time of transfer, the real estate simple partnership pays a fixed amount of the registration tax (Euro 200).

In the case of transfer of real estate properties, instead, a taxation rate of 9% applies.

In conclusion, the simplified bureaucracy, the possibility of taking advantage of important tax benefits and the great corporate flexibility are the main features of a real estate simple partnership.


3 October, 2020

The Italian Investor Visa Program (Golden Visa), regulated by Article 26-bis of the Italian Consolidated Law on Immigration (Legislative Decree No. 286/98) has introduced a 30 days fast-track procedure to obtain an Italian residence permit for foreigners who intend to make one of the following eligible investments in Italy:

  • an investment of at least Euros 2 million in Italian Government bonds to be maintained for at least 2 years;
  • an investment of at least Euros 500,000 thousand into the share capital of an Italian company (including Italian listed companies) to be maintained for at least 2 years (the amount is reduced to at least Euros 250,000 if the investment is made into an Italian company that qualifies as “innovative start-up company”); it is worth noting that until recently these thresholds were, respectively, Euros 1 million and Euros 500,000;
  • a philanthropic donation of at least Euros one million to support a project of public interest.

It is worth noting that the purchase of real estate assets does not qualify for the Investor Visa.

Investors applying for the Golden Visa must provide evidence of available funds to make the eligible investment (e.g. a bank statement) and that they have sufficient financial resources to live in Italy.

The application can be submitted and approved before making the eligible investment, provided that the if the investment is not made within3 months from the entry in Italy, the residence permit will be revoked.

The Investor Visa is issued for a period of 2 years, renewable for further 3 years, subject to the condition that the relevant investment (or other eligible investment) is maintained,

Law No. 12 of 12 September 2020 – converting the so-called “Simplifications Decree” – has clarified that the eligible investment can be made also through corporate vehicles in which the investor is a legal representative. In case of donations, the eligible investment can be made through foundations.

Finally, the recent changes have provided that holders of an Investor Visa do not have an obligation to move their residence to Italy and are exempt from certain obligations that apply to other types of residence permit (e.g. Integration Agreement etc.).


18 April, 2020

Italy implemented a comprehensive reform of the Third Sector and other not-for-profit organizations.


Pursuant to Italian law, a Third Sector Organization or Ente del Terzo Settore (“ETS”) is a not-for-profit private organization or entity that pursues civic, solidarity and social benefits purposes carrying out, exclusively or principally, activities of general interest in an accountable and transparent way. The Code of the Third Sector (Legislative Decree No. 117 of 3 July 2017) introduced a common definition for not-for-profit organizations such as associations, foundations, social enterprises, philanthropic entities, and voluntary organisations, which are now all considered as “Entities of the Third Sector”. 

The Third Sector includes organizations and entities operating in different fields that promote Italian community solidarity and pluralism, in a context of autonomy and cooperation with governmental authorities. 

Main types of not-for-profit organizations (ETS)

Under Italian law, the main types of ETS are the following:

Volunteer Organizations (ODVs).

ODVs (in Italian) are a particular type of ETS regulated by the Code for the Third Sector. ODVs may use occasional volunteers for the furtherance of their activities, and the volunteers must register in a special registry. 

To be constituted, ODVs require a minimum of seven individuals or three other volunteering organizations. 

Volunteers may not serve simultaneously as employees of the respective ODV. Volunteers may only be reimbursed for their expenses, excluding non-refundable expenses in the case of, for example, blood and organ donors. 

Associations for Social Promotion (Aps). 

An Association for Social Promotion is a particular category of ODV that carries out activities of general interest for the benefit of its members or third parties using mainly the voluntary work of its members. 

An Association for Social Promotion must to adopt the legal form of an Association and be composed of at least seven individuals or three Associations for Social Promotion. Other third sector or not-for-profit entities may also be admitted as members, but these must not exceed 50% of the members. Exceptions are provided for sport organizations.

The number of employees cannot exceed 50% of the volunteers or 5% of the members.

Philanthropic Entities are those third sector entities whose purpose is to provide support to disadvantaged persons or to carry our “activities of general interest”.

Social Enterprises are private entities and companies that carry out mainly business activities of general interest, non-for-profit and for civic, solidarity or social utility purposes. Social Enterprises can, under certain circumstances, distribute limited profits and operating surplus. Social cooperatives and consortium of social cooperatives automatically acquire the status of Social Enterprise.

Associative Networks and Mutual Associations.

Under certain circumstances, religious entities are also subject to third sector regulations. Religious Entities recognized under civil law may adopt the status of Social Enterprise only if they carry out the activities of general interest as defined by Code for the Third Sector and identify such activities by means of a public deed or a notarized private contract.

Governmental agencies, political parties, unions, professional, entrepreneurial, commercial, or industrial associations cannot qualify as ETS.

Main features of ETS’s.

Each ETS must mention their non-profit nature in their founding documents. 

ETS may organize fundraising activities including solicitations to the public and acceptance of legacies. The distribution of funds, income or other assets to members of third sector organizations is prohibited with the exception of social enterprises. If the organization is dissolved or otherwise ceases to exist, the assets are transferred to Fondazione Italia Sociale, a private entity created by Law No. 106 of 2016 to support the activities of ETS. 

The law sets a minimum amount of initial capital for associations and foundations that intend to obtain legal personality (respectively €15,000 and €30,000). The assets of an ETS may also consist of contributions in kind, but in this case, the value of such contributions shall be audited. 

All Third Sector Entities must to register with the National Single Registry of the Third Sector (RUNT) held by the Ministry of Labour and Social Policies. The registration with the registry must be requested by the legal representative of the ETS.

The employees of a ET are entitled to the same benefits as other, equivalent private sector employees who are subject to collective bargaining agreements. 

Moreover, Government agencies at the national, regional, and provincial levels are mandated to provide ETS with access to their facilities, as feasible and appropriate.

Funding, tax Regime and exemptions.

ETS may have access to a dedicated government ETS fund. Financial institutions authorized to operate in Italy may issue “solidarity bonds” (titoli di solidarietà) to finance the activities of ETS. The issuing organization is exempted from the payment of placement fees.

General activities carried out by ETS pursuant to their mission through cooperative actions with government agencies are considered non-commercial activities. Hence, such activities are exempted from income tax liability. There is also a special tax credit equivalent to 65% of the cash donations made to ETS by individuals and 50% by legal entities. Additionally, 30% of the expenses incurred by taxpayers for in-kind contributions made to ETS for non-commercial activities are regarded as deductible for purposes of gross income tax. Managers of online portals that carry out social lending activities are subject to a different, more favourable tax regime for contributions received via their portals.

Measures to support Third Sector Entities during COVID-19 emergency.

The so-called “Decreto Cura Italia” (Decree-Law No. 18/2020) introduced a series of measures to protect workers, also applicable to the employees of Third Sector Entities.

In particular:

  1. the deadline to carry out the mandatory statutory changes required by the reform of the third sector is extended to 31 October 2020. Therefore, ODV, APS and Onlus registered in their respective registers will have until 31 October 2020 to modify their statute and update it to the Third Sector new legislation. Other associations that do not have one of the three qualifications mentioned and therefore are not registered in their respective registers have no time limit to adapt their statute to the third Sector reform and will be able to decide if and when to enter the “perimeter” of the Third Sector.
  2. The deadline for the approval of the financial statements of non-profit organizations and ETS is extended to 31 October 2020.


17 April, 2020

The Italian Liquidity Decree: Covid-16 Government measures to support Italian enterprises.

Last 8 April 2020 the Italian government implemented new important measures to support and provide liquidity to Italian enterprises. Read our comprehensive guide.


10 April, 2020

Decree Law no. 23 of 8 April 2020

On 8 April 2020, the Italian Council of Minister approved Law Decree no. 23, published in the Official Gazette (General Series no. 94, Extraordinary Edition of April 8, 2020), containing “Urgent measures related to access to credit and tax obligations for businesses, special powers in strategic industry sectors, as well as healthcare and employment interventions, prorogation of administrative and procedural deadlines”.

Law Decree no. 23/2020 (the so-called ‘Decreto Liquidità’) (Decree) includes a number of provisions that significantly affect the application of Insolvency Law, for the period of Covid-19 emergency, which are summarised below.

Measures for access to credit for Small and Medium-sized Enterprises (SMEs)

Liquidity support for companies with registered offices in Italy (guaranteed amount up to €200 billion, with €30 billion reserved for SMEs), including:

  • SACE guarantee on bank loans issued by December 31, 2020 with a maximum duration of six years in favour of enterprises based in Italy
  • The maximum guaranteed amount depends on the number of employees and the turnover of the enterprise
  • The financing shall cover personnel costs, investments, or working capital related to activities to be carried out in the Italian territory

Liquidity support for SMEs (€1.7 billion), including:

  • Prohibitions to revoke, in whole or in part, overdraft facilities and loans granted against advances on credits existing as of 29 February 2020, until 30, September 2020
  • Extension of loans to be repaid bullet before 30 September 2020 together with the relevant ancillary items, without any formalities and under the same conditions, until 30 September 2020
  • Suspension of the payment of loan instalments and rental payments on financial leases due before 30 September 2020, until 30 September 2020 and extension of the relevant amortization or rental payments plans; at the request of SMEs, the suspension could be granted on the principal portion only

Increase in the Public Guarantee Fund for SMEs (EUR 1.5 billion).

  • The fund can release:
  • 100% guarantee for loans up €25,000, without any creditworthiness valuation;
  • 100% guarantee for loans up to €800,000;
  • 90% guarantee for loans up to € 5millions.

Extension of the deadlines for the fulfilment of arrangement with creditors and debt restructuring agreements proceedings.

The deadlines for completing the arrangement with creditors procedure (concordato preventivo) and debt restructuring agreements (accordi di ristrutturazione del debito) proceedings expiring between 23 February 2020 and 31 December 2021 are extended by 6 months.

Urgent labour measures 

State Aids to Companies and Workers

New Ordinary CIG:

General Rules: Ordinary CIG (“Cassa Integrazioni Guadagni Ordinaria”) is a State economic aid for companies active in certain sectors provided by Sec. 10 of Legislative Decree 148/2015, including manufacturing, industrial, building.

Italy Care Decree Exceptions: Italy Care Decree provides that Ordinary CIG may be exceptionally obtained without previous negotiation with Trade Unions (all steps, including such negotiation, shall be taken within 3 days after the request).

Both Ordinary CIG and Ordinary Check may be requested:

  • For all employees working in the company by February 23, 2020, notwithstanding their seniority;
  • For a limited term of up to 9 weeks starting from February 23, 2020 until August 2020.

Suspension of Solidarity Check and Temporary Change to Ordinary Check:

Solidarity Checks (“Assegno di solidarietà”) are economic aids granted at certain conditions to companies which may not enjoy Ordinary or Special CIG.

Companies currently enjoying Solidarity Checks (“Assegno di solidarietà”) – economic aids granted to companies which may not enjoy Ordinary or Speciali CIG – may suspend it and request its temporarily replacement with Ordinary Check for 9 weeks’ time.

Special Contributive Advantage:

With respect to any special aid granted under Italy Care Decree, the additional contribution to be paid by the employer is not due for the time such aid is given.

No Dismissals Policy:

For the period of 60 days after March 18, 2020, collective dismissal procedures pursuant to Sections 4, 5 and 23 of Law no. 223/1991 may not be activated;

Collective dismissal procedures activated after February 23, 2020 are suspended;

Dismissals based on objective justified reason pursuant to Section 3 of Law no. 604/1966 are forbidden and ineffective.

Tax and accounting measures

  • Suspension of tax contributions for taxpayers with tax domicile, operating, and/or registered office in Italy, until May 31, 2020
  • Suspension of tax contributions for companies with a turnover of less than €2 million with tax domicile, operating, and/or registered office in Italy, until 31 May 2020;
  • Suspension of tax contributions for individuals carrying on business activities with tax domicile, operating, and/or registered office in Italy, with turnover r earnings that o not exceed €50 million who recorded a decrease of more than 33% in their turnover, until 31 May 2020
  • Suspension of tax collection files and tax controls until 31 May 2020
  • Encourage the sale of impaired loans with the aim of supporting companies in terms of liquidity through the possibility of transforming into a tax credit a portion of deferred tax assets (DTA) relating to certain components, for an amount proportional to the value of the impaired receivables that are transferred to third parties.

We are at your disposal if you want to contact us for further information.


18 March, 2020

Covid-19 emergency measures: New rules for remote shareholders’ meetings and extension of the term to approve the yearly financial statements

The emergency measures against COVID-19 also apply to the corporate framework.

First, under the Italian law the shareholders’ meeting for the approval of annual financial statements must be convened within 120 days from the last day of the year to which the statements refer (which, for most companies, is December 31). For Italian companies with listed shares the shareholders’ meeting is also subject to a 30 day prior notice requirement (which is extended to 40 days if the appointment of a new board of directors or statutory auditors is in the agenda for the meeting).

Prior to the recent measures, the 120 day period could be extended to 180 days subject to the occurrence of at least one of the following circumstances: (i) the company is required to prepare consolidated financial statements or (ii) particular situations relating to the structure or purpose of the company occur. 

However, the Italian Government considers that the current Covid-19 could be treated as “force majeure” and therefore justifies an extension for all companies to approve their Financial Statement within 180 days.

Second, the Maxima No. 187, of March 11, 2020, of the Milan Notary’s Council allows that the shareholders’ meetings (and the boards of directors) of the companies take place even if all the attendees are connected by audio or video conference and, therefore, even if the chairman and the secretary of the meeting are not in the same place. The Maxima has been confirmed by Legislative Decree of March, 11, 2020, n. 18 (“Decreto Cura Italia”), where is specified that the shareholders’ meetings of the companies (as well as the boards of directors) may also be regularly held if the chairman, the secretary and, if required, the notary public, as well as all the attendees at the meeting, are connected by means of telecommunications that can guarantee their identification and participation (right to participate, expression of voting rights, etc.). The provision also applies where the company’s by-laws (i) do not regulate the conduct of the meeting by means of telecommunications, or (ii) condition the validity of meetings by audio or videoconference to the fact that the chairman and the secretary of the meeting are in the same place. The rule applies to shareholders’ meetings (or boards of directors) convened by July 31, 2020, or by the date, if later, until the state of emergency on the national territory related to the COVID-19 epidemic. The measures, while on the one hand promote and encourage participation in meetings at a distance and discourage travel that is not justified by necessity, on the other hand allow an easier management of meetings, which translates into a significant advantage for both resident and foreign shareholders and directors, who will under no circumstances be obliged to expose themselves to any risk at this particularly critical time.


18 March, 2020

Read our guide on the COVID-19 Emergency Italian labour law framework.


28 February, 2020

Which investments qualify as investments into a “company incorporated and operating in Italy” under the Golden VISA legislation?

Under Italian immigration law, one of the options to qualify for Golden VISA is to “invest at least € 1 million in equity instruments of a company incorporated and operating in Italy, to be held for at least 2 years“;

Pursuant to Interministerial Decree of 21 July 2017, investments qualifying for Golden VISA are equity investments into:

  • companies incorporated and operating in Italy” as “corporations, incorporated and resident in Italy pursuant to Article 73 of the Income Tax Code ” including both listed and non listed companies;
  • asset management companies including, SICAV, SICAF, SGR and SIM;
  • investment funds.


12 September, 2019

Come and work in Italy and have up to 90% of your employment income tax free

The preferential tax regime for “inbound workers”(a tax regime aimed at attracting to Italy non-resident employees / self-employed workers), provides for a 50% exemption of Italian-sourced employment (and assimilated) and self-employment income.

The preferential tax regime applies for the tax year when the transfer of tax residence takes place and the following 4 tax years (i.e. 5 years).

Requirements for eligibility:

  1. to have been tax resident outside of Italy for at least five years prior to the transfer to Italy;
  2. to remain tax resident in Italy for at least two tax years;
  3. to be hired by an Italian tax resident employer, or by a branch in Italy of a foreign company, or by a company of the same multinational group;
  4. to work in the Italian territory for at least 183 days in each year;
  5. to cover an executive role and/or be regarded as highly specialized employee (under the conditions provided by the Decree).

The preferential tax regime applies also to the “inbound workers” (EU Citizens or citizens of a Country with whom Italy has a Double Tax Treaty or alternatively, a Tax Exchange of Information Agreement), who meet all the following requirements:

  1. hold a university degree of at least three years duration and perform an employment or self-employment activity in Italy;
  2. have performed a work activity, or alternatively must have spent a study period outside Italy for at least 24 months before the transfer to Italy.

The Decree extends the scope of application the preferential tax regime:

  1. increases the tax exemption from 50% to 70%;
  2. increases the tax exemption from 50% to 90% in case of transfer of tax residence in one of the following regions: Abruzzo, Molise, Campania, Puglia, Basilicata, Calabria Sardinia and Sicily;
  3. extends the tax exemption to (individual) business income;
  4. reduces from 5 to 2 years the period for which the individual must not have been a tax resident in Italy prior to the transfer;
  5. eliminates the condition that the individual must cover a managerial role or be highly specialized;
  6. includes the possibility, in some cases, to extend the duration of the regime by 5 additional years under specific requirements (e.g. dependent children or a home property investment in Italy. The exemption for the additional five years period is limited to 50% of the employment income.


29 August, 2019

Rewarding scheme for “highly-qualified” workers that want to relocate to Italy.

The Italian government has recently implemented incentives for “highly-qualified” workers that want to relocate to Italy.

The rewarding system consists in a lowering of the personal income tax base to the extent of 50% and it applies from the tax year in which the transfer of tax residence in Italy occurred and for the next four taxing periods. Please note that “tax residence” requires compliance with at least one of the following conditions for most of the tax period: (a) registration in the Italian population register; (b) centre of vital interests in Italy (family etc.); (c) physical presence on the Italian territory.

The “lavoratori impatriati” lose the tax benefits if the residence in Italy is not maintained in the two years after the transfer, with consequent obligation of return the unpaid taxes together with penalties and interests.

The rewarding system applies to the following subjects, who transfer their fiscal residence in Italy:

  1. workers (employees or self-employed – Italian citizens or foreigners):
    • non-residents in Italy in the five previous tax years;
    • who commit to stay in Italy for two years after the transfer of residence;
    • who commit to carry out their business operations mainly in the Italian territory;
  2. Additional conditions are required for employees:
    • they must have leadership roles or they must be in possession of highly-qualified requirements;
    • the work must be carried out in a company residing in Italy by an employment relationship.
  3. EU citizens, or citizens of non-EU States with which Italy adhered to treaties against double taxation or agreements for the exchange of information on tax matters, that:
    • have graduated and have carried out continuously abroad, in the preceding 24 months, an employment, self-employment or a business activities;
    • carried out a study activity earning an undergraduate or postgraduate specialization.


9 August, 2019


1    Types of shares and denomination

a     Introduction

Only the SpAs and SapAs corporate capital is divided into shares while the corporate capital of an Srl is divided into quota which represents the amount of the corporate capital owned by each member.

Shares must generally be of equal nominal value (this need not be indicated on the share certificates or in the articles of incorporation, but the aggregate value of the issued shares cannot exceed the company’s corporate capital) and confer equal rights upon holders of shares of the same class. The articles of incorporation can provide for the issuance of different classes of share embodying different management and/or financial rights. It is also possible to have classes of share other than ordinary shares, which give their holders special rights to profits and special voting rights (eg veto rights for qualified resolutions). Pursuant to Legislative Decree 179/2012 also innovative start up incorporated as Srl can now create different categories of quotas which give their holders special right.

The issuance of new shares or new quotas is not permitted until all those already issued are fully paid up.

b     Shares with limited voting rights – article 2351

The articles of incorporation can provide for the issuance of shares with limited voting rights. The shares may confer no vote, a vote limited to certain matters or a vote subject to certain conditions, but the value of these shares may not exceed half of the share capital in total. Further, it is possible for the articles of incorporation to provide a maximum limit on the votes exercisable by a single shareholder.  Without prejudice to the provisions of special laws, the articles of association may provide for the creation of shares with multiple voting rights even for particular topics or subject to conditions that are not merely potestative. Each multi-voting share may have a maximum of three votes.

c     Shares issued to the employees’ benefit – article 2349

If the articles of incorporation so provide, a company may, by resolution of a special shareholders’ meeting, distribute profits by the issuance of special shares to be allocated to employees or to employees of controlled companies. These shares might be subject to special regulations as regards their form, transfer, and other rights. In order to issue shares for the benefit of employees, the company’s capital must be increased by a corresponding amount. Innovative start up may offer to their collaborators, employees, suppliers and consultants capital shares by way of additional remuneration (e.g. stock option and work for equity).

d     ‘Saving’ shares – Legislative Decree No 58/98

A different class of share dedicated to small investors may also be issued by Italian companies listed on the Stock Exchange. No voting rights attach to such saving shares (`azioni di risparmio‘), but their holder will have a preference in the distribution of profits and a limited share of the losses. Saving shares are not represented by share certificates and may not exceed half of the outstanding corporate capital.

e     ‘Enjoyment’ shares – article 2353

`Azioni di godimento‘ (enjoyment shares) have no voting rights but give a right to dividends subject to distributions of dividends to holders of other classes of share. Azioni di godimentocan be issued only in connection with a reduction of capital and are distributed as a type of indemnity to those who are entitled to reimbursement as a consequence of the cancellation of their shares.

f      ‘Tracking shares’ – article 2350

`Azioni correlate‘ (tracking shares) are shares that give their holders dividend rights that are connected with the performance of a specific line of business of the company. The articles of incorporation must specify the criteria for identifying the costs and profits attributable to the particular line of business, the accounting methods to be used in calculating the revenues and the profits or the losses of the relevant line of business, the dividends and rights granted to the holders of tracking shares and any conditions or procedure for the conversion of tracking shares into ordinary shares. Dividends will be payable to tracking shares holders only on the profits the company makes in the relevant line of business and which are tracked in the company’s accounts.

g     ‘Redeemable shares’ – article 2437 sexies

As an exception to the general rules on purchase of its own shares, the articles of incorporation may authorise the issuance of redeemable shares (`azioni riscattabili‘) which are shares that are redeemable by either the company or the shareholders. The redemption price is determined in accordance with the formula used to liquidate shares to a member withdrawing from a company (when the conditions to do so are met).

h     Privileged shares

A resolution of the extraordinary shareholders’ meeting may vote to issue privileged shares (`azioni privilegiate‘) to which the following rights are attached:

(a)     Profit-related privileges:

(i)      preference in profit distribution – the shares will carry the right to a greater dividend in relation to the profits distributed;

(ii)     priority in profit distribution – these shares will participate first in any distribution of profits, with only the profits remaining after distribution being distributed to holders of other shares; and

(iii)     guaranteed dividends – irrespective of a decision to distribute them.

(b)     Loss-related privileges.

So called `azioni postergate‘ (deferred shares) enjoy some insulation from diminution of value in circumstances of the reduction or total loss of the company’s capital, as their value will only be reduced if necessary after the diminution of capital has been reflected in a reduction of the value of the ordinary shares. It is not possible to totally exclude any reduction in value of deferred shares.

(c)      Liquidation-related privileges

The holders of privileged shares might have the rights to the return of the nominal value of the shares or greater shares in the residual capital in case of liquidation.

i      Other financial instruments

SpAs may raise capital by means of:

(1)     Financial instruments issued in consideration for the provision of services/goods (`strumenti emessi a fronte di particolari apporti‘, article 2346 of the Civil Code). If provided under the articles of incorporation, such financial instruments may be allocated among members or non-members as consideration for the provision to the company of goods or services. Pursuant to article 2351 of the Civil Code such financial instruments may grant their holders property or administrative rights, excluding voting at general meetings of shareholders. The articles of incorporation provide for the conditions under which those instruments can be issued and on the effect of the failure to provide the related services.

(2)     Instruments issued in connection with funds established by the company to carry out specific activities (`strumenti emessi a fronte di patrimoni destinati‘, article 2447 bis and ter of the Civil Code). An SpA may constitute funds of assets dedicated to specific projects. Under Italian corporate law it is possible to finance such projects by issuing financial instruments linked to the performance of the funds and granting specific dividend rights to their holders. The instruments must be managed separately by means of a register keeping details of the nature of the instrument, the holders thereof and transactions relating thereto.

Such instruments are quite uncommon in Italian practice.

j      Quotas

As previously indicated, Srls do not have shares, but their corporate capital is divided into quotas. Quotas are fractions of the capital and cannot be represented by shares/certificate. In contrast to shares, quotas may be of different values, but they cannot be divided into different classes, however the by-laws can grant one of more members with special rights over the management and participation in the dividends; the relevant rights will attach to the members and not the class of shares. The deed of incorporation of the so-called innovative start-ups(ie those companies registered with a special section of the competent Register of Enterprises) can create classes of shares with different rights regardless to the provisions of article 2468.2 and 2468.3 of the Italian Civil Code.

(i)    Debentures: ‘Obbligazioni’ and Srls – article 2483

Under article 2483 of the Civil Code, an Srl can issue debentures to accredited investors.

Debentures issued in this way may only be subscribed to by professional investors subject to supervision pursuant to the applicable special laws. The subsequent trade in the debentures is also limited by the provision which specifies that if a debenture is transferred, the assignor will be liable in respect of the solvency of the company in circumstances in which the transferee was not a professional investor or a member of the company.

2    Share certificates

Shares and quotas represent a portion of the company’s corporate capital as evidenced by their nominal value. Shares must be of equal nominal value. They can be issued for a value higher than the nominal value (share premium), but not for an amount lower than their nominal value.

The share certificate (which does not apply to public companies) if issued must provide for the following information:

(a)     the name and address of the company;

(b)     the date of execution of the articles and of the company’s registration in the Register of Enterprises and where the Register is kept;

(c)      the nominal value and the share capital or, in the case of shares issued without a nominal value, an indication of the number of shares issued;

(d)     the amount of shares not fully paid up; and

(e)     the rights and obligations attaching thereto. Share certificates must be signed by a director (also digitally). It is also possible to issue temporary share certificates while the final ones are prepared. Share certificates can be either single (representing only one share) or multiple (representing more than one share).

3    Issuance

a     Introduction

As already mentioned, one of the conditions necessary for the incorporation is the full subscription of the company’s corporate capital. The subscription consists of a declaration or undertaking to contribute to the company the value of the subscribed shares/quota. If the company is incorporated by two of more shares/quota-holders, it is sufficient to have only 25% of the corporate capital paid-up at incorporation. If the consideration for the subscription of the corporate capital is in kind then the non-cash contributions must be made in full at the time of subscription regardless the number of incorporators.

If the corporate capital is increased after incorporation the share premium (if any) must be fully paid-up upon subscription of the increase while at least 25% of the nominal value of the shares/quota issued under the corporate capital increase must be paid upon subscription of the same.

An increase of corporate capital may be:

(a)     for no consideration: where the increase is financed by capitalising available reserves or other funds either by distributing newly issued shares among the shareholders, or by increasing the nominal value of the existing shares; or

(b)     by means of subscription for cash of newly issued shares of existing or new classes (and/or convertible bonds or warrants).

New shares cannot be issued if those already in issue have not been fully paid up, although a resolution to increase capital before existing shares have been paid up would appear to be valid.

b     Option rights

The new shares/quotas must first be offered to the existing shares/quota-holders in proportion to their participation in the corporate capital and also to holders of convertible bonds (if issued). By exercising an option right members are entitled, in the event of an increase in capital, to maintain an unchanged participation (pro-quota) in the corporate capital. Those who exercise their option rights have an option right on the shares of other shareholders who have not exercised their option rights. For companies listed in the Stock Exchange, the un-exercised option rights must be offered by the directors to the market.

The resolution (by the members’ meeting or by the Board of Directors if the articles of incorporation empowers it to do so) to increase the corporate capital can limit or exclude the option rights over the increase of the company’s capital provided that: (i) the directors file with the company a report explaining the reasons why the option right has been excluded or limited, including an explanation of the company’s interests which justify such exclusion; and (ii) the statutory auditors file an opinion on the congruity of the price of the shares to-be-issued under the capital increase. Generally speaking, the exclusion of the option right is justified if:

(a)     it satisfies a corporation’s interests; or

(b)     the increase occurs in the context of a merger; or

(c)      the increase occurs through the issue of convertible bonds; or

(d)     the increase occurs through contribution in kind; or

(e)     the new shares are issued for the employees’ benefit; or

(f)      the new shares are issued for the benefit of an external investor.

Furthermore, for companies listed on the Stock Exchange, the resolution increasing the company’s capital and excluding or limiting option rights is subject to a favourable opinion of an auditing company. A resolution excluding option rights that fails to fulfil these conditions can be challenged and will usually not be accepted by the notarising Notary public.

(i)    Reforms

While in relation to Srls the general principles as regards SpAs will apply, since 2 January 2004 it has been possible to include a clause in the articles of incorporation that allows the company to increase its capital through offers to third parties, thereby eliminating the right of option to existing members or a clause whereby the option does not operate in proportion to the quotas already held by members.

c     Procedure

The decision to increase the corporate capital is reserved to the extraordinary shareholders’ meeting to be held before a civil law notary public. The articles of incorporation may grant the board of directors with the power to increase the corporate capital up to a defined amount and for the time indicated in the articles of incorporation and in any case for no more than five years from the date of the resolution.

Within 30 days of the subscription date of the newly issued shares, the directors must file with the Register of Enterprises a declaration certifying that the increase of the corporate capital has been fully or partially subscribed and paid up to the minimum amount required by the applicable regulations.

The above rules concern an SpA, but the same rules also apply to an Srl. It is now possible to pass a resolution concerning an increase in capital excluding the option rights.

4    Transfer – article 2355

Shares can be transferred in two ways:

(a)     by notarised endorsement (either by a broker or a Notary Public) of the share certificate (if issued) and registration of the transfer in the shareholders’ ledger; or

(b)     by registration of the transfer in the shareholders’ ledger (so-called ‘transfert’) performed by one of the directors of the company upon delivery of a notarised transfer deed.

Shares traded on a regulated market are transferred through registration in the account held by the intermediary (bank or other authorised body) that deals in the shares.

Bearer shares are transferred by simply handing over the certificate.

The articles of incorporation can prohibit the transfer of shares. This restriction may however last no more than five years from the date of incorporation.

The articles of incorporation may restrict the transfer of shares by pre-emption provisions or consent provisions (clausole di gradimento). This latter provision allows the Board of Directors or the shareholders’ meeting or the shareholders, to decide whether or not the registration of a new shareholder with the company should be subject to their consent, based on pre-determined criteria or personal characteristics. While until 31 December 2003, the law deemed consent provisions ineffective in SpAs if not based on reasonableness, a clause under which the consent provisions would be subject to the pure discretion of the Board of Directors are now valid provided that the articles of incorporation contain an obligation for the members or the company to buy the shares to be sold or for the selling member to withdraw from the company. Other clauses potentially affecting the transfer of quotas/shares (eg tag-along, drag-along) are enforceable under Italian laws.

With regard to an Srl and the transfer of quotas, the Civil Code states that quotas are transferable both by ‘inter vivos’ transactions or by inheritance. However, under article 2469 of the Civil Code the articles of incorporation can prohibit or limit the transfer of quotas. In the case of an absolute prohibition of transfer, on the death of a quotaholder, the estate will have a right to the liquidation of the quota.

As for the ‘inter vivos’ transfers, the change of ownership becomes effective with respect to the company from the date of the registration of the transfer with the Register of Enterprises. The registration is performed either by the Notary Public who notarises the transfer or by an accredited accountant within 30 days from actual date of the transfer.

5    Company dealings in its own shares

An Srl cannot purchase its own quotas in any circumstance save: 1) for the purpose of annulling the quota and reducing the corporate capital under articles 2357, 2357 bis and 2357 ter; and 2) it is an innovative start-upregistered with a special section of the competent Register of Enterprises and purchases its own quotas only in order to implement incentive plans in favour of its own employees, directors or service providers. An Spa may purchase its own shares up to the value of its distributable profits and of its available reserves as resulting from the last approved financial statement provided that:

(a)     the shares are fully paid up;

(b)     the shares do not exceed one-tenth of the capital including shares owned by a subsidiary company; and

(c)      the purchase is approved by the shareholders’ meeting.

The same requirements apply to a purchase by the company through a trust company or a third party.

Such a purchase may only be carried out following a resolution of the ordinary shareholders’ meeting, which may in the same resolution make provision for post-acquisition transactions on the shares.

While the shares are owned by the company, rights to distribution of profits and options arising from them are attributed proportionally to the other shareholders.

If these requirements are breached, the company must sell the shares so acquired within a year or otherwise it must ensure that such shares are cancelled and that the corporate capital is reduced correspondingly. This can be achieved through a resolution of the shareholders’ meeting or through a decree of the competent court. However, this does not apply if the purchase is gratuitous or if the corporate capital is reduced through redemption and cancellation of part of the shares. In any event, the shares must be fully paid up. The voting rights pertaining to such shares are suspended while the shares remain the company’s property.

The acquisition by a listed company of its own shares may be implemented by means of a public purchase offer, or in compliance with the rules given by the stock market, in order to grant the shareholders equal treatment.

A company may not underwrite its own shares. If this occurs, the shares must be paid up by the promoters, the founding shareholders or the directors.

Article 2358 of the Civil Code set forth the conditions under which an Spa may finance or deliver guarantees for the acquisition or underwriting of its own shares; the same statutes also set forth the conditions under which an SpA can receive its own shares as security.

The extraordinary meeting of the members must authorise those transactions and the directors must deliver a report explaining the positive outcomes of the transaction for the company. The directors’ report must certify that the transaction is made at fair market conditions and must be filed at the registered office of the company at the latest 30 days prior to the meeting. If the shares the purchase or underwriting of which are traded on the stock market their purchase price cannot be lower than the average price at which the shares have been traded during the prior six months. Article 2358 does not apply if the financing or the guarantee support the acquisition or underwriting of shares by the employees of the company or of its subsidiaries; directors do not fall within the meaning of employees under article 2358 of the Italian civil code. An Srl cannot in any event acquire or accept as a guarantee its own quotas or grant loans or guarantees for their acquisition or subscription.

The aggregate amount of the funds financed or guaranteed by the company cannot exceed the amount of the reserves/dividends available under the latest approved financial statement.

Article 2359 bis of the Civil Code contains other provisions concerning the acquisition of shares by subsidiaries. In particular, a subsidiary can purchase shares of its controlling company for an amount not higher than the reserves/dividends available under the latest approved financial statement, and in any case it cannot exceed 1/5 of the corporate capital of the controlling company. An unavailable reserve, equal to the amount of the shares/quota must be provided and maintained until the shares/quota are non-transferred. The subsidiary cannot vote in the shareholders’ meeting of the parent company.

Article 120 of Decree No 58/1998 contains other provisions concerning cross-participations involving a listed company.

6    Reduction of capital

Only the extraordinary shareholders’ meeting has authority to resolve upon the reduction of the corporate capital. Such a resolution may result from a reduction in the assets and liabilities of the company or from losses made by the same. The law provides that a reduction of capital may take place where there is an excess of capital with respect to the company’s needs. As reduction of capital causes a decrease in the security of creditors, it can only be implemented 90 days after the registration of the relevant shareholders’ resolution with the Register of Enterprises. The creditors have the right to challenge the resolution to reduce the corporate capital before the competent court during such period. If such a claim is filed, the resolution will be suspended; the court can however authorise its interim implementation if the company gives sufficient guarantees to the creditors. A reduction of capital with a reduction of the assets and liabilities can also occur when a shareholder leaves the company. In this case, however, the law does not require the company to provide the creditors with any guarantee. Restriction to the power to reduce the corporate capital applies to companies issuing bonds.

A reduction of the corporate capital due to losses may be resolved by the shareholders’ meeting upon approval of the financial statements. If the losses exceed the amount of the corporate capital by one-third, the directors must convene the quota/share-holders’ meeting without delay in order to either dissolve the company or recapitalise it or transform it to another form having a lower corporate capital. A longer term to recapitalise or transform the company is provided for innovative start-ups. If the losses are not reduced to less than a third of the capital within the subsequent accounting period, the shareholders’ meeting approving the relevant financial statement must reduce the corporate capital (within the minimum amounts provided by the applicable laws) in proportion to the existing losses. If the shareholders’ meeting does not so resolve, the reduction of capital can be ordered by the competent court.

If, due to losses, the corporate capital falls below the minimum amount required by law, a shareholders’ meeting must be convened in order to resolve upon either:

(a)     the reduction of the corporate capital for the amount of the loss and the simultaneous increase of the corporate capital up to the legal minimum corporate capital provided by the applicable laws); or

(b)     the transformation of the company into a different form of company which requires a lower legal minimum capital (eg from an SpA to an Srl).

If no such resolutions are taken, the corporation will be liquidated eventually by order of the competent court.

If there is no corporate capital left to ensure the operations the corporation must be liquidated.

As a general rule under Italian corporate law, each shareholder has voting rights. Shares of different classes give title to different voting rights and under certain conditions holders of financial instruments may be granted the right to vote on certain matters. This document discusses shareholders’ rights in Italy as follows: voting under the Italian Civil Code, art 2351; dividends; general shareholders’ meetings; and protection of minority shareholders.


1    Voting – article 2351

As a general rule, each shareholder has voting rights. Nonetheless, according to article 2351 of the Civil Code the articles of incorporation could provide for the creation of shares without voting rights, with voting rights limited to particular matters, with voting rights subject to the occurrence of particular conditions that are not merely potestative. The total value of such shares may not exceed half of the share capital. The Articles of Incorporation may also provide that, in relation to the number of shares held by the same party, the right to vote is limited to a maximum amount or may provide for a staggering of voting rights. It may also provide the issue of shares with multiple voting rights even for particular topics or subject to the occurrence of particular conditions that are not merely potestative, except as set forth by special laws. Each multi-voting share may have up to a maximum of three votes. Shares of different classes give title to different voting rights and under certain conditions holders of financial instruments may be granted with the right to vote on certain matters (see above).

a     Right to attend the meetings

Members vote in the quota/share-holders’ meeting. Therefore, quota/share-holders who do not have the right to vote do not have the right to attend quota/share-holders’ meetings; however under certain circumstances quota/share-holders can attend the meeting, but are not entitled to vote: quota/share-holders in arrears in the payment for their shares, quota/share-holders holding `azioni di godimento‘ (enjoyment shares) or shares with limited voting rights can generally speaking attend the meeting, but are not granted the right to vote.

The articles of incorporation can make the right of participation at the meetings subject to particular conditions.

According to article 127 of Decree No 58/1998, the articles of incorporation of listed companies can allow shareholders to exercise their voting rights by correspondence or electronically. The National Commission for Listed Companies and the Stock Exchange has indicated the formalities to comply with in order to exercise the voting rights by correspondence or electronically.

Since 1 January 2004, this procedure has been extended to all companies if the articles of incorporation authorises to do so and provides for the formalities to vote by correspondence.

b     Third party rights

Under article 2352 of the Civil Code, if the shares are pledged or are subject to a right of usufruct in favour of a third party, the voting right is given (except where otherwise provided by the parties) to the pledgee or to the holder of the right of usufruct. In the event of seizure (pignoramento) or attachment (sequestro conservativo o giudiziario) of the shares, the right to participate and to vote in the shareholders’ meeting is given to the custodian of the shares, according to the instructions of the court. These rules also apply to quotas in an Srl. Furthermore, article 2468 of the Italian Civil Code provides that, where there is joint ownership of quotas in an Srl, the voting rights should be exercised by a joint representative of the co-owners.

c     Limitations on the right to vote

The right to vote cannot be exercised by a shareholder who is in arrears with payments on his or her shares.

Shareholders owe fiduciary duties to the company. Under article 2373, a shareholder with a conflict of interest may take part in the debate and may in fact vote, but if the vote is determinant for the resolution to be passed and the passing of the resolution causes damage to the company, the resolution may be challenged. Directors may not vote in resolutions concerning their responsibility, also, the members of the supervisory board may not vote in resolutions concerning the appointment, dismissal or responsibility of the supervisory board members.

d     Disclosure requirements

The shareholders of a company which is listed on a stock exchange, or shareholders of a private company who acquire certain participations in a listed company, may find themselves subject to various duties of disclosure by the National Commission for Listed Companies and the Stock Exchange (‘CONSOB’).

According to article 120 of Decree No 58/1998and article 117 of CONSOB Regulation No 11971/1999, Whenever a shareholder has, directly or indirectly, acquired the ownership of more than three per cent of the capital of a listed company (or five per cent in a PMI), he or she is required to give notice to the company and CONSOB within four trading days, starting from the day on which the party became aware of the variation suitable for determining the occurrence of the said obligation. Further variations of the shareholding must be communicated in accordance with the terms specified by Consob with specific regulations   if such variations exceed one-half of the previously held percentage participation.

Further notices to the company and CONSOB are requested whenever the shareholder acquires more than 5%, 10%, 15% 20%, 25%, 30%, 50%, 66,6% and 90%. Where there are cross-shareholdings, the company that has notified CONSOB last is prevented from voting the shares that exceed the thresholdand is required to sell such shares within 12 months. In the event of failure to sell within the prescribed period, the suspension of voting rights extends to the entire shareholding The same notice requirements apply to listed companies which hold, directly or indirectly, a participation that exceed the mentioned thresholds .

e     Proxies

Unless otherwise provided by the articles of incorporation, a quota/share-holders may be represented at the quota/share-holders’ meeting by proxy-holder. A proxy must be given in writing and must comply with any other condition set forth by the articles of incorporation. The proxy may be for one or more meetings and may be revoked at any time. Directors, statutory auditors cannot act as proxy holders.

f      Voting agreements

So called `sindacati di voto‘ (voting agreements) are generally considered valid and admissible. They consist of a shareholders’ agreement by which some shareholders undertake reciprocally to vote according to the will of the majority of the signatories to the agreement. Shareholders’ agreements that are directed towards the regulation of the transferability of shares, voting rights, or the exercise of influence over the company are regulated by article 2341 bis and ter of the Civil Code. Shareholders agreements may not last more than five years. According to the majority of commentators the five-years term does not apply to Srls. Shareholders’ agreement are valid in so far as they do not deprive the shareholders’ meeting of its functions, abolish freedom of voting or conflict with the company’s interests.

According to article 122 of Decree No 58/1998, voting agreements relating to listed companies must be disclosed to the company and CONSOB within five days from the date of their execution, published in the daily press and filed with the Register of Enterprises. If these formalities are not accomplished, the voting rights pertaining to such shares cannot be exercised. Public SpAs have a duty to declare shareholders’ agreements to the company and at the opening of shareholders’ meetings; such declaration being registered in the minutes of the meeting. This requirement is not applicable to put and call option agreements.

2    Dividends

Each share entitles its holder to a proportionate share of the net dividends, resulting from the balance sheet, subject to any limitations in relation to particular classes of share. The same provision applies to the quotas of an Srl.

The right to receive dividends arises only as a consequence of a duly approved resolution taken at a shareholders’ meeting after a resolution approving the balance sheet has been passed. These are two distinct resolutions. If dividends are paid based on a duly approved balance sheet and the approving resolution is void, the dividends may not be reclaimed from shareholders who received them in good faith.

Dividends can be paid only out of profits actually earned (ie shown in a duly approved balance sheet). They cannot be paid where losses in the company’s capital have occurred until either the capital is refunded or reduced by an amount equal to the losses. The shareholders’ meeting may resolve not to distribute dividends but, instead, to put them into voluntary reserves. Companies that are required by law to have their balance sheets audited may distribute an interim dividend during the financial year if expressly provided by the articles of incorporation.

According to article 2340 of the Civil Code, in any case and without prejudice to any provisions of special laws, a minimum of 5% of the annual net revenue must be allocated to a reserve until the mentioned reserve has reached 5% of the share capital. The reserve must be restored if it is reduced for any reason.

The distribution of interim dividends is possible only in the case of a company whose balance sheet is legally subject to external audit. The interim distribution must be passed by a resolution of the directors, on the basis of an economic and financial statement of the company showing a forecast of profits at the end of the financial year and with the consent of the Board of Statutory Auditors. If the predicted profits are not realised by the end of the financial year, interim dividends received by shareholders in good faith cannot be reclaimed.

3    General shareholders’ meetings

A duly convened shareholders’ meeting is necessary to express the company’s will. Majority voting is the rule and is binding on absent or dissenting shareholders.

a     Convening of a meeting

The shareholders’ meeting must be duly convened pursuant to the law and to the articles of incorporation; the meeting is generally convened by the directors (and, during a winding up, by the liquidators) by means of a written call notice. In special instances it may be convened by the statutory auditors or by the court.

 According to article 3266 of the Civil Code and 125 bis of Decree no 58/1998 in public SpAs’ shareholders’ meeting are called with a call notice to be published in the website of the company or in a daily newspaper indicated in the articles of incorporation at least 30 days prior to the meeting’s date. In privately owned SpAs, shareholders’ meeting are called with a call notice to be published in the Official Journal of the Italian Republic (‘Gazzetta Ufficiale della Repubblica’) or in a daily newspaper indicated in the articles of incorporation at least 15 days prior to the meeting’s date; if the articles of incorporation so provides, the shareholders’ meeting may be called by means of a call notice sent to the shareholders’, to the Directors and to the statutory auditors using a means that guarantee proof of receipt (eg email delivery receipt requested, fax, registered mail) and sent at least eight days before the date of the meeting.

In Srls, members’ meeting are called by means of a notice of call sent to each shareholder at least eight days prior to the meeting unless differently provided by the articles of incorporation. The articles of incorporation can authorise the call of the meeting by any means guaranteeing proof of receipt (eg email delivery receipt requested, fax, registered mail).

The notice must state the day, time and place of the meeting and an agenda of items to be discussed. The shareholders’ meeting cannot pass resolutions on matters not contained in the agenda or not strictly connected therewith.

Failure to comply with the formalities to call a quota/shareholders meeting will not invalidate a meeting attended by the whole of the company’s capital, as represented by all the shareholders and all the directors and statutory auditors (if any) (a so-called `assemblea totalitaria‘, or full shareholders’ meeting). At such a meeting, however, participants may challenge the discussion of matters on which they have not been sufficiently informed.

Generally speaking, a shareholders’ meeting is convened at the discretion of the directors, however, in the following instances the law requires the directors to convene a meeting:

(1)     at the end of the financial year and in any event at least once a year for the approval of the balance sheet;

(2)     for the replacement of directors whose absence makes it impossible for the remaining directors to reach a majority;

(3)     where one of the statutory auditors needs to be replaced (when, even by using alternate statutory auditors, the Board of Statutory Auditors is not complete);

(4)     where the company has incurred losses exceeding one-third of its capital (if this occurs, the company’s capital must then be reduced accordingly);

(5)     if requested by shareholders representing at least one-twentieth of the company’s capital;

(6)     to pass resolutions for the winding up of the company, if an event causing winding up has occurred.

In all the above cases, if the directors fail to convene a meeting, then the statutory auditors or other body of control must do so. The statutory auditors are also required to convene a shareholders’ meeting where there are no directors left in office, when shareholders representing at least one-twentieth of the capital report possible violations of law which appear to the Board of Statutory Auditors to be based on reasonable grounds, or when in carrying out their function they become aware of irregularities to be discussed during such a meeting.

b     Types of meeting

In SpAs there are two types of shareholders’ meeting, an ordinary meeting and an extraordinary meeting. A different majority is required to pass votes at each. Holders of shares with limited voting rights and holders of ‘saving’ shares cannot vote at ordinary meetings. Resolutions taken at ordinary meetings relate to the normal management of the company.

The business of an ordinary meeting varies depending on whether the company has a supervising board. If it does not, the business of the ordinary meeting is, inter alia, to:

(a)     appoint directors and statutory auditors and replace them upon expiry of their terms of office or for other reasons, or to dismiss them, fixing the number of directors if the articles of incorporation simply indicate a minimum and maximum, and appointing the Chairman of the Board of Director and Board of Statutory Auditors;

(b)     fix the remuneration of the directors and statutory auditors if not already determined by the articles of incorporation;

(c)      vote to approve the annual balance sheet, distribute dividends and buy own shares, and decide what action to be taken in the event of losses to the company;

(d)     decide upon any action to be taken against the directors in the event of mismanagement of the company or violation of their duties of care; and

(e)     decide upon all matters concerning its own competence according to the articles and on all matters submitted to it by the directors.

In companies with a supervisory board, the business of the ordinary meeting is, generally, to:

(i)      appoint and dismiss members of the supervisory board and determine their remuneration if this is not provided for in the articles of incorporation;

(ii)      decide upon any action to be taken against the directors in the event of mismanagement of the company or violation of their duties of care; and

(iii)     resolve upon the distribution of dividends.

The business of the extraordinary meeting, at which all shareholders may participate except the holders of ‘saving’ shares, resolves upon:

(a)     amendments to the articles of incorporation and byelaws;

(b)     the issue of bonds;

(c)      the appointment and powers of the persons in charge of a liquidation;

(d)     the proposal of composition with creditors or of temporary receivership; and

(e)     the issue of shares for persons giving service to the company or financial instruments for employees of subsidiary companies.

These matters are fixed by law and any clause in the articles of incorporation that seeks to establish otherwise will be invalid. However, there are a number of other matters that can be delegated by the shareholders’ meeting to the directors for decision, including:

(a)     which directors have the power to represent the company;

(b)     the proposal of composition with creditors or of temporary receivership; and

(c)      under certain conditions, the increase of the company’s corporate capital and suppression of the right of option.

c     Quorum

In an investment transaction it is quite common to include in the articles of association a special quorum or to subject the resolutions on specific matters to super-majorities in order to ensure that certain resolutions are taken with the actual vote of the investors.

If the quorum or the required majorities are not met then the meeting must be convened again. The date of the subsequent meetings may be (as is often the case) contained in the call notice of the first meeting. The agenda of the second meeting must be the same as for the first. During ordinary meetings convened for the second time, a simple majority of the capital present at the meeting is sufficient, whilst at extraordinary meetings convened for the second time, resolutions must be approved by at least one third of the company’s capital. Higher majority requirements may always be provided by the articles of incorporation. A majority of more than half of the capital may even be required for certain matters in meetings convened for the second time. Again, the articles of incorporation may make provisions for different quorums, along the lines of those for the first meeting.

Special quorum and qualified majorities apply to listed companies and those having recourse to risk capital.

Srls have greater flexibility in regulating quotaholders’ meetings. Article 2479 of the Civil Code allows members to make decisions in writing as an alternative to holding an actual meeting; the articles of incorporation shall regulate the process to take decisions by means of written consent; if the articles of incorporation do not provide so, then the members shall meet in person. By operation of laws, there are a number of matters that may not be decided by means of written consent, eg the modification of the articles of incorporation and any decisions to carry out transactions out of the scope of the company’s objects or impairing members’ rights. Further, under article 2479 of the Civil Code a members’ meeting must be called if required by one or more directors or by members representing at least one-third of the company’s corporate capital.

The quorum for the members’ meeting is at least 50% of the capital. Resolutions are passed with the favourable vote of the majority of the corporate capital represented at the meeting. Decisions regarding the modification of the memorandum and articles of incorporation or transactions that require a substantial modification of the company’s objects or which impair members’ rights are taken with the favourable vote of members representing at least 50% of capital is required.

d     Procedure

A chairman of the meeting, appointed either in the articles or by the attendees, chairs the meeting. The Chairman is assisted by a Secretary; the Chairman and the Secretary of the meeting must be in the same location during the meeting. At extraordinary meetings only, the attendance of a Notary Public is required by law. The Chairman is given powers to check that the meeting has been duly convened, to exclude from voting those not entitled to vote and to state the returns of the voting.

Minutes of the meeting must be taken. At ordinary meetings, these are signed by the Chairman and the Secretary. At extraordinary meetings, they are executed by the Chairman and the Notary Public, who is also in charge of drafting them. Upon request, shareholders are entitled to have their statements recorded in the minutes. Before being signed, the minutes must be read to and approved by the attendees. If no minutes are taken, although it is a debatable issue, the most recent court cases state that the resolutions taken are void. If the minutes are only incomplete, the resolutions are voidable.

Resolutions passed by a shareholders’ meeting may be voidable if they are unlawful under the general law or in breach of the company’s articles of incorporation or deed of incorporation. Also voidable is a resolution:

(a)     in which a vote was cast by a person with no right to vote and this vote determined whether there was a constitutive quorum;

(b)     where there was a vote by a person with a conflict of interest and this caused damage to the company;

(c)      the minutes of the meeting are incomplete to the extent that the resolution’s content, effect or validity cannot be determined; or

(d)     the deliberative quorum was reached by counting invalid votes.

However, even if a resolution is voidable, unless there is a legal challenge to it, it will have effect. An action may be brought by shareholders having a right to vote and that were absent, dissenting or abstained, directors, members of the supervising committee and statutory auditors. Third parties who have no rights over voting shares may not bring an action for voidability.

A legal challenge shall be filed within 90 days of the date of the resolution or, if it is subject to registration in the Register of Enterprises, within 90 days of its registration or, if it is subject only to filing at the office of the Register of Enterprises, within 90 days of the date of the resolution.

A further class of resolution will be void. These are resolutions that:

(a)     have an impossible or unlawful object, including modifications of the company’s objects to include an impossible or unlawful object;

(b)     were passed without convening a meeting (except if the meeting passing the resolution was a meeting of all the shareholders having a right to vote); or

(c)      do not have any minutes.

Actions to declare a resolution void may be brought by ‘anyone having an interest’, a category that will include the company office holders and shareholders and third parties that can demonstrate their interest. Further, the court may act of its own volition. Generally, there is a three-year limitation period for challenging void resolutions save for those that modify the company’s objects, which can be challenged at any time. Further, in some cases, including resolutions taken without convening a meeting or those without minutes, the company may take remedial action that effectively makes the resolution lawful (in the two cases mentioned, this would be to obtain the consent of absent members to the resolution passed and to draft proper minutes).

e     Special or class meetings – article 2376

The Civil Code provides that special or class meetings (of an SpA) must be held if there are different classes of shares or financial instruments with voting rights that will be affected by a resolution of the shareholders’ meeting. These class meetings are regulated by the rules for SpA extraordinary shareholders’ meetings. If shares or financial instruments are admitted to the centralised management system, the right to attend and vote at the relevant shareholders’ meeting shall be governed pursuant to special laws.

4    Protection of minority shareholders

In addition to rights held by minority shareholders virtue of general principles of law, such as ‘good faith’, ‘fairness’ and ‘abuse of right’, the Civil Code identifies the following rights:

(a)     shareholders representing at least one-third of the company capital may have a matter included on the agenda of a shareholders’ meeting, have a meeting held despite the presence in the articles of incorporation of an alternative mechanism for decision making (article 2479 of the Civil Code) or require a meeting to be adjourned;

(b)     shareholders representing one-tenth of the company capital may oppose the waving or settlement of an action for directors’ liability (article 2476 of the Civil Code); and

(c)      any shareholder may bring an action against a director for the determination of the directors’ liability or put a matter to the Board of Statutory Auditors for their examination (article 2408 of the Civil Code).

Additionally, generally speaking, all shareholders have the following basic rights:

(a)     the right to maintain the status of a shareholder until the winding up of the company;

(b)     the right to dividends (which is, as already mentioned, subject to a resolution of the general meeting);

(c)      the right of pre-emption on newly issued shares (as already stated, this right, under certain conditions, can be excluded);

(d)     the right to transfer shares; and

(e)     the right to share in any surplus assets on a liquidation.


3 July, 2019


22 September, 2018

Types of Italian companies and incorporation process.

This document provides an introduction to Italian corporate law, the main source of which is chapter 5 of the Italian Civil Code.

The main source of Italian corporate law is the chapter V (libro V’) of the Italian Civil Code (the ‘Civil Code’) which defines and regulates the types of business organisations available under Italian law. 

In general, Italian law provides for two categories of company: the ‘società di persone’ which are unincorporated companies; and the ‘società di capitali’ which are incorporated companies. This document concentrates on the different types of incorporated company in Italy, these being the most commonly used company models in Italian business practice.

Types of companies.

In general Italian law provides for two categories of company: the first is the `società di persone‘ (namely the `società semplice‘, the ‘società in nome collettivo‘ and the `società in accomandita semplice‘) which are unincorporated companies; and the second is the `società di capitali’ (namely the `società à responsabilità limitata’, the `società a responsabilità limitata semplificata’, the `società per azioni‘ and the `società in accomandita per azioni’) which are incorporated companies.

Given their main characteristic (ie association of two or more persons to carry on as co-owners a business for profit), the ‘società di persone’ could be regarded as common law partnerships. The most significant features of the `società di persone’ are the active role of members in the management/operation of the company; the close connection between the members and the company, and the unlimited liability of the members for the company’s obligations.

The most significant features of the second category of companies, the ‘società di capitali’, are: limited liability for share/quota-holders (some limited exceptions apply), the legal status of those companies as separate entities, and the possibility to separate ownership and management (ie members can be appointed directors, but also non-members can act as directors).

This chapter deals only with ‘società di capitali’ which are the companies most commonly used in the Italian business practice.

Italian corporate law does not provide for corporate officers other than directors. Duties which are usually undertaken by officers, such as treasurer, secretary or comptroller, are usually undertaken by directors and/or corporate executives.

As indicated above, there are three types of corporations:

(a)     `societa per azioni‘ (known with the acronym of `SpA’), a stock corporation in which the capital is contributed by the shareholders and divided into in shares (of one or more classes) which might be represented by certificates;

(b)     `societa in accomandita per azioni‘ (known with the acronym of `SapA’), a subclass of stock corporation where some shareholders (`soci accomandatari‘) act also as directors of the company and are therefore held liable for the company’s liabilities, while other shareholders (`soci accomandanti‘) do not act as directors of the company and therefore are shielded from its obligations and are liable only up to the limit of the value of the shares they have subscribed; and

(c)      `societa a responsabilita limitata‘ (known with the acronym of `Srl’), a limited liability company where the members are shielded from its obligations. The share of the corporate capital held by Srls’ members is called a `quota’. In 2012 two new types of limited liability companies have been introduced, namely the simplified limited liability company (Srls) which  are subject to the same rules applicable to regular limited liability company, but:

(i)      the quota holders must be individuals; 

     (ii)     the incorporation deed must be drawn up as a public deed in accordance with the standard model typed by decree of the Minister of Justice no. 138;

(iii)     the amount of the share capital, equal to at least 1 euro and lower than 10,000 euro, must be subscribed and fully paid up at the date of incorporation.

The statutes applicable to the SpA are also generally applicable to the SapA (and to some extent also to the Srl) unless a specific provision to the contrary applies. In Italian practice, SapA are not commonly used despite the fact that this company, compared to an SpA or an Srl, allows its directors greater protection in a takeover bid scenario; this higher degree of protection justifies the use of SapA in sophisticated transactions, mainly as a holding company.

Innovatie startup companies

The Italian Government with the Decree-Law 179/2012, converted into Law 221/2012, has introduced into the Italian legal system a definition of a new innovative enterprise of high technological value, the `innovative startup’. The regulations for innovative startups have been strengthened in the last years by several subsequent legislative interventions implementing a new legislation package to favor the setting up of such technologically innovative startups, which includes the introduction of significant benefits, for a maximum of 5 years since their date of incorporation, in areas such as tax, labour, company law, access to bank loans etc. 

Definition and requirements of innovative startup

The legislation in support of innovative startups apply to any companies with shared capital (i.e. limited companies, `società di capitali’), including cooperatives, whose capital shares – or equivalent – are neither listed on a regulated market nor on a multilateral negotiation system.

These enterprises must also comply with the following requirements: 

  • be newly incorporated or have been operational for less than 5 years (in any case, not before 18 December 2012);
  • have their headquarters in Italy or in another EU country, but with at least a production site branch in Italy;
  • have a yearly turnover lower than €5 million;
  • do not distribute profits for 5 years from the enrollment into the special section of the Registrar of Companies (if the company distribute profits the company will be moved in the ordinary section of the Registrar of Companies);
  • have as exclusive or prevalent company object and core business the production, development and commercialization of innovative goods or services of high technological value;
  • are not the result of a merger, split-up or selling-off of a company or branch.

The innovative character of the enterprises is identified by at least one of the following criteria: 

  • at least 15% of the company’s expenses can be attributed to R&D activities;
  • at least 1/3 of the total workforce are PhD students, the holders of a PhD or researchers; or, alternatively, 2/3 of the total workforce must hold a Master’s degree;
  • the enterprise is the holder, depositary or licensee of a registered patent (industrial property), or the owner and author of a registered software.

Further requirements are:

  • the shareholder(s) and the Company must have a certified email address (PEC);
  • the shareholder(s) and director(s) of the Company must have an Italian digital signature device;
  • the Company must have a website (the website does not need to be ready during the incorporation procedure, but the Company must have already registered the domain).

Conversion to innovative SME

Decree-Law 3/2015 (`Investment Compact’) has extended many of the facilitations conferred to innovative startups to a wider range of companies. Successful innovative startups and whose activities are still characterized by a significant component of technological innovation, may transit to innovative SME status. An `innovative SME’ may be any Small and Medium Enterprise operating in the field of technological innovation, irrespective of its date of incorporation, its company purpose – as stated in the articles of association –and its stage of maturity.

Differently from innovative startups, the application of the supporting measures and benefits in favor of innovative SMEs is not subjected to any deadline, as long as the applicable legal requirements are met. The measures in question apply only to those small and medium size enterprises as defined by the European Commission Recommendation 361/2003 (that is, companies with less than 250 employees and with a total turnover that does not exceed €43 million).

In Italy, a company is formed when the articles of incorporation in the form approved by incorporators is filed with the competent Register of Enterprises (‘Registro delle Imprese’). This document explains how companies in Italy are incorporated, covering: pre-incorporation transactions; preliminary contracts to incorporate a company; and incorporation procedure.

Incorporation process 

  1. Pre-incorporation transactions

A company is formed when the articles of incorporation in the form approved by incorporators is filed with the competent Register of Enterprises (`Registro delle Imprese’). Pursuant to article 2331 of the Civil Code anyone acting on behalf of a company prior to the registration of the same with the Register of Enterprises will be held liable vis-à-vis third parties for the obligations undertaken in the interest of the to-be-incorporated company. In addition, any incorporator and/or a member who has approved or otherwise authorised a pre-incorporation transaction will be jointly liable with the individual who undertook the pre-incorporation transaction.

After incorporation the members can ratify a pre-incorporation transaction and as a consequence the company will be jointly liable for all the ratified pre-incorporation transactions.

2    Preliminary contracts to incorporate a company

Parties may enter into a preliminary contract (`contratto preliminare‘) in which they agree to incorporate a company. Under an `equal dignity rule’ such a preliminary contract must be in the same form as the form required for the incorporation documents (ie notarised deed). Under the Italian case law a preliminary contract to incorporate must indicate clearly the following information:

(a)     type of company to be set up;

(b)     company’s purpose;

(c)      company’s registered office; and

(d)     company’s corporate capital and members’ shares of the corporate capital.

Failure to provide any of the information indicated above could trigger the unenforceability of the agreement; it is contentious under Italian case law as to whether a court may order specific performance of a preliminary incorporation contract and so force the parties to incorporate a company.

3    Incorporation procedure

a     Pre-incorporation requirements

At incorporation the members:

(a)     shall fully subscribe the company’s corporate capital;

(b)     if the company is incorporated by a sole member: the entire corporate capital must be paid-up at incorporation; if the company is incorporated by two or more members: at least 25% of the corporate capital (plus the entire share premium for a Srl) must be paid-up at incorporation; and

(c)      any authorisation required to start the company’s business (eg authorisation from the Bank of Italy to start a banking business) must be obtained prior to incorporation.

The incorporation deed of a company is a three-stage process:

(a)     execution of the incorporation (`atto costitutivo‘) and of the articles of incorporation (`statuto‘). The incorporation of Srls requires standard, simplified articles of incorporation consistent with the template issued by the Ministry of Justice;

(b)     the notarisation of those documents by a civil law Notary Public. Prior to notarising the incorporation documents, the civil law Notary Public has a duty to verify that the incorporation documents comply with all the applicable regulations and that the funds to incorporate have been paid-up in the company accounts; and

(c)      registration of the company with the Register of Enterprises.

An SpA may also be incorporated through a public subscription process where incorporators will call for a public subscription of the corporate capital.

The form and content of the incorporation deed is regulated by article 2328 of the Civil Code. Members in person or represented by attorneys in fact must sign the incorporation deed before a civil law Notary Public (digital signatures are also admitted under certain conditions). The actual contents of the deed of incorporation vary depending on whether the company is an Srl or an SpA/SpaA. The deed of incorporation must contain:

(a)     the name, place and date of birth, place of domicile and citizenship of the incorporators (or, if incorporated by a company, the date and place of incorporation and the registered office of that company). SpAs and Srls can be incorporated by a single member;

(b)     the company’s name and the city where the company will have its registered office or any additional branch office;

(c)      the company’s objects;

(d)     the amount of the subscribed corporate capital;

(e)     the value attributed to capital contributions made in kind (if any); and

(f)      the amount of the pre-incorporation expenses.

Further, the articles of incorporation of a SpA must provide for the following information:

(i)      the number and nominal value of shares issued, the class of shares (if more than one class is to be issued) and the rights belonging to each class of shares and the any restriction on the transfer of shares;

(ii)      rules on distribution of profits;

(iii)     the form of management, the number of directors, their respective powers and an indication of which directors have the power to legally represent the company and the names of the individuals appointed directors at incorporation;

(iv)     the number of statutory auditors and the names of the individuals appointed statutory auditors at incorporation;

(v)     the name of the auditor (if the by-laws provide for the appointment of an auditing body); and

(vi)     the duration of the company or the notice required to withdraw from the company if no term is provided in the incorporation deed;

(vii)    for a SapA the articles of incorporation shall also indicate the identity of the accomandatarimembers.

In the case of a Srl, the following information is required:

(a)     the quota of the corporate capital held by each member;

(b)     the form of management and the person who represents the company at law;

(c)      the directors and the auditing body (if any).

In the case of a Srls, it is possible to use only the standard articles of incorporation issued by the Ministry of Justice. Any different or further clause included in the deed shall be deemed as null and void and so automatically replaced.

The failure to include the information required by the applicable laws could trigger the invalidity of the articles of association and so of the company; however, a company not complying with those requirements will be validly incorporated if registered with the Registry of Enterprises.

Non-Italian citizens/residents can be members subject to reciprocity in their jurisdiction.

Directors do not need to be Italian citizens or Italian residents subject to reciprocity (ie citizens of countries which do not allow Italian citizens to be directors cannot serve as directors in an Italian company). 

Non-Italian directors and members must obtain an Italian fiscal code. Applying for an Italian fiscal code does not imply any tax liability vis-à-vis the Italian Republic.

Even if not expressly provided by the statutes companies may, under certain conditions, be appointed as directors of other companies. All quota-holders of Srls must be natural persons.

Companies with a sole member are subject to special regulations (eg at incorporation the entire corporate capital must be paid-in at incorporation).

Incorporators of all companies must, as a general rule, have legal capacity to enter into a contract, although it is possible for a member without legal capacity to participate in a company provided that there are sufficient members with legal capacity.

As indicated above, an SpA can be incorporated either by simultaneous incorporation (costituzione simultanea) by means of execution of the incorporation documents before a civil law notary public or by means of public subscription of the corporate capital (`costituzione per pubblica sottoscrizione‘) pursuant to articles 2333 to 2336 of the Civil Code (this latter form of incorporation is not available for SapAs and Srls). Under Italian practice, the incorporation by public subscription is not so common. 

The minimum corporate capital for an SpA and a SapA is €50,000. The ordinary Srl must be incorporated with a minimum share capital of 10,000 euro, the amount of the share capital can be determined as less than 10,000, equal to at least one euro, but in this case contributions must be made in cash and must be paid in full to the directors. Srls can have a share capital of between 1 and 9999 euro. Shares in SpAs and SapAs must have a par value equal to €1 or a multiple thereof. Higher minimum capital requirements might apply to certain types of businesses (eg banking, financial services).

The civil law notary public is required to verify that all the legal requirements to incorporate the company are met. In particular the civil notary public must certify that:

(a)     the members complied with the incorporation procedure; and

(b)     the company is organised in accordance with the applicable laws and the incorporating documents comply with the applicable laws; and

(c)      the corporate capital has been fully subscribed and paid-up as provided under the applicable regulations.

A civil law notary public may refuse to notarise the incorporation deed if all the legal requirements to incorporate are not met. A civil law notary public notarising an irregular incorporation deed might be subject to professional and administrative sanctions. 

By signing the incorporation deed the company is formed with respect to its members against which the incorporation deed is enforceable, but the company is recognised as an autonomous legal entity only upon registration of the incorporation deed with the Register of Enterprises.

The civil law notary public must file the incorporation documents with the Registry of Enterprises within 20 days from execution and simultaneously apply for the registration of the company.

The Registry of Enterprises will verify that the documents comply with the necessary formalities and if they do so it will authorise the registration of the company with the Register of Enterprises. Registration with the register completes the legal formation of the company.

Post-registration requirements

Following the incorporation there are a number of further formalities a company and its directors must comply with. Among the others, the following formalities have to be completed:

(1)     prior to hiring any employee, the company must deliver a notice to the local labour office. This notice contains information on the business conducted by the company and on its work environment; and

(2)     within 30 days from the start of the business a director must apply for a VAT registration number (partita IVA) and notify the commencement of business activity to the tax authorities as well as to the register of enterprises.

The costs to incorporate include:

(a)     fees of the civil law Notary Public, which vary depending on the complexity of the incorporation deed;

(b)     fees to register the company with the Registry of Enterprises (less than €200);

(c)      registration stamp and rights €200);

(d)     payment of the corporate capital (ie at least 25% for multi-member companies or 100% in companies having one member);

(e)     costs of any translation to be made if some of the original incorporation documents (eg, power of attorney) are not in Italian;

(f)      application fees for the VAT number: roughly €300; and

(g)     other disbursements will arise from the opening of the duly certified accounting books.

 Branch offices

A company may open a branch office anywhere in Italy including in the same place as its main office. If the by-laws so provide, a branch office may be opened at incorporation or subsequently following a resolution of the general meeting of the members or following a decision of the management body if empowered to do so.

If the branch office is set up at the time of incorporation of the company, this must be expressly indicated in the deed of incorporation. If it is set up following incorporation, the directors must comply with various registration requirements. 

Generally speaking, Italian companies may also open branch offices abroad, in which case the branch will be subject to local laws and in particular to local fiscal laws; branches opened abroad usually keep separate accounts.

Generally speaking, foreign companies may set up branch offices in Italy, however a business unit which has the purpose of simply collecting and supplying information to a foreign company does not qualify as a branch office under Italian laws. In fact, a branch office requires a permanent establishment (`rappresentanza stabile‘) in Italy with one or more persons with the legal power to represent the foreign company vis-à-vis third parties and managing the affairs of the branch office on a regular basis. A branch office qualifies from a tax point of view as a permanent establishment within the Italian territory and therefore it will trigger the application of Italian taxes to all the activities conducted at such branch in Italy. For this purpose, the Italian branch of a foreign company might be required to keep autonomous accounting books. 

An office collecting information on the Italian market and actually not carrying out the foreign company’s business in the Italian territory will not qualify as a permanent establishment, but as an `ufficio di rappresentanza‘. To open an `ufficio di rappresentanza‘ does not require any specific authorisation from the Italian authorities other than the fulfilment of few administrative formalities such as being registered with the ‘Repertorio Economico Amministrativo’ of the Registry of Enterprises. 

Foreign branch offices are obliged to file the following documents with the competent Registry of Enterprises:

(a)     an extract of the resolution of the foreign company’s competent body resolving upon the opening of the branch office. The extract must be certified by a local notary public as to its compliance with the laws in force in the country of the company;

(b)     a list of powers granted to the local representative of the Italian branch; and

(c)      copies of the articles of incorporation and/or by-laws of the foreign company opening the branch in Italy.

All these documents must be translated into Italian through a sworn translation.

Individuals legally empowered to act on behalf of the Italian branch (called in Italian `institori‘) must register their name and date and place of birth and their Italian fiscal code with the Registry of Enterprises and the same details must be lodged for persons subsequently appointed.


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