Italy Branch Office

Having a presence in Italy is vital if you have business activities in the area. One way to do this is to open a branch office, although this method has many drawbacks compared to incorporating a limited company.

Key things to consider are that a branch office is not a separate legal entity from the parent company. The foreign parent carries full liability for the branches operations and there can be lengthy and complicated dealings with the tax authorities to fulfil the branches obligations.

The disadvantages of a branch office are:

• The parent company is fully liable for the liabilities of the branch
• The branches representatives may be held jointly and severally liable for tax debts
• The financial statements of the parent must be lodged at the Companies Registry
• The branches obligations are the same as the parent, including filing VAT returns, employees returns and corporation tax returns, so there are few savings in administering a branch
• Banks and clients may prefer dealing with a Italy company rather than a foreign branch
• A branch is rarely ideal for substantial projects because the parent company runs the entire risk
• Upon registration of a branch, evidence has to be provided of the legal existence of the parent
• Any public act by the branch, is likely to need ratification by the board of the foreign parent. A company that signs contracts in front of a notary on a regular basis, should incorporate for administrative ease

The advantages are:

• Less obligations to present accounts than with corporation

Opening a Italy Branch of a Foreign Company

In order to open a branch office in Italy you need to register with the Chamber of Commerce within 30 days of your company being created.

Upon initial registration, you must provide various documents to the Italian authorities. These documents deal with issues from the Register of Enterprises in Italy and contain company information and information about legal representatives assigned to the company. These must be translated into Italian and certified by an official.

Various documents will need to be translated, the documents include:

• your parent's registration certificate
• your company's articles of association
• the names of the company's directors and secretary

Differences between Branches and Companies

A branch has no capital base, so the foreign parent will be liable for Italian debts.

In specific situations the formation of a branch is compulsory, such as when the foreign company has to participate to Italian public contract tenders.

After your branch is registered

All stationery, order forms and similar documents used by your branch are required to show: 

• The place of registration of the parent
• The number with which it is registered
• The legal classification of the company
• The address of its registered office
• The place of registration of the branch, and its registration number

Also the following particulars must be shown at the branch office:

• The company name
• The name of the country in which the company is incorporated
• The parent of the branch has limited liability

Features of a branch office in Italy

A branch is usually an adequate vehicle for low cost projects. However, it is not the ideal choice for substantial projects because the parent company and branch offices activities are not differentiated, the parent company is fully liable for the branches liabilities.

The branch must have the same name as the parent company.

A branch of a non-resident company must appoint a resident individual or a company to represent it in its dealings with the tax authorities. The representatives may be held jointly and severally liable for the tax debts of the permanent establishments of non-resident entities, which they represent.

Taxation of Branches in Italy

A branch is taxed like any company or any subsidiary company.

The income of the branch is determined according the general rule of O.C.S.E. treaties against double taxation.