How to establish a branch in Italy?
As opposed to the establishment of an Italian company, a branch is not a separate legal entity but a foreign “unit” of the mother company. Branches do not enjoy, as such, organizational and decision-making autonomy. For tax purposes, branches are considered as permanent establishments and are therefore subject to taxation in Italy.
The establishment of a branch enables the company to operate in Italy with a more streamlined, cost-effective structure than if a full subsidiary (i.e. an Italian company) were established.
The establishment of a branch in Italy requires:
- Registration of the branch with the Italian Registrar of Companies (section of branches of foreign companies);
- To appoint a representative of the branch whose name will be shown in the Italian Registrar of Companies (the branch representative does not need to be an Italian resident and can be the same director of the foreign company);
- To have an address in Italy (if you don’t have an office in Italy, we can provide a virtual address);
- To obtain an Italian VAT number.
The establishment of a branch shall be authorized by a special resolution of the company’s corporate body that is competent pursuant to the law of the place of incorporation.
As far as Italian law is concerned, such resolution shall:
- authorize the establishment of a branch and indicate an address in Italy;
- appoint a representative of the branch and specify the powers granted to such representative.
A branch establishment deed shall be executed in Italy before and Italian public notary. However, the full process can be carried out by distance through a power of attorney granted to our firm. In this case, the power of attorney shall be notarized and apostilled or (or notarized and legalized with a local Italian Embassy or Consulate if the country where the power of attorney is executed is not a member of the apostille convention).
What are the documents required to establish a branch?
To establish a branch in Italy, you shall provide us with the following documents:
- a certificate of incorporation and memorandum and articles of association (by-laws) of the company that intends to establish a branch in Italy including the name of the directors and shareholders;
- copy of the directors’ resolution that authorized the opening of a branch in Italy.
Such documents shall be notarized and apostilled pursuant to the Hague Convention of 5 October 1961 (or notarized and legalized with a local Italian Embassy or Consulate if the country where the power of attorney is executed is not a member of the apostille convention) and translated in Italian with sworn translation with and Italian public notary.
Is a branch subject to corporation tax in Italy?
Yes, for tax purposes, branches are considered as permanent establishments and are therefore subject to taxation in Italy.
What are the periodic filings of a branch with the Italian Registrar of Companies?
Pursuant to Article 2508 of the Italian Civil Code and to the provisions of the EU Eleventh Directive on Company Law, a branch is subject to the same corporate disclosure requirements with the Registrar of Companies applicable to Italian companies including, among others, the filing of:
- financial statements;
- any changes in the shareholdings or directors of the Company;
- any other significant corporate changes (e.g. change of registered office etc.).
Contact us for more information about the establishment of a branch in Italy.