Do you want to start a business in Italy as a foreigner? If YES, here is a complete guide plus legal requirements for starting a profitable business with no money in Italy.

Okay, having provided an in-depth analysis of the 50 best small business opportunities in Italy and a series of industry-specific sample business plan templates; we will now analyze in detail the legal requirements, market feasibility and every other thing it takes to start a business in Italy. So put on your entrepreneurial hat and let’s proceed.

Why Start a Profitable Business in Italy?

For a long time, Italy has been a very popular destination for tourists, however, in recent years, this country has become even more popular as a destination for small businesses. The power of the ‘Made in Italy’ brand carries immense respect in a number of fields, particularly in food and drink, fashion and crafts. The economy has also begun to broaden and has posted strong showings in the last three years under its new government, ending a previous triple-dip recession.

Starting a small business in Italy is a popular past-time, with more than 3 million SMEs employing 50 people or fewer. There are a number of incentives and support structures available in the fourth largest market in Europe to take advantage of. However, the substantial amount of bureaucracy and paperwork, all of which has to be dealt with in Italian, can put some business owners off.

Event though a lot of businesses conduct business these days in English, the process of starting a small business in Italy is still complex. Everything including the online single point of contact is conducted in Italian, and several steps must still be undertaken by yourself or a representative in Italy. Here are the steps you can take in order to start a business in Italy.

Starting a Profitable Business in Italy as a Foreigner – A Complete Guide

1. Have the right business idea: in order the start a business anywhere, the very first step is to have a solid and workable business idea. It is best to set your eyes on niches, products or services that you already have some sort of experience in. Building a business in a field where you have no previous knowledge or experience is going to be a lot tougher.

You need to know whether or not your great idea can actually be a business. How do you know? Unfortunately, you don’t always know; some entrepreneurs have invested their life’s savings into a concept that couldn’t actually be a business.

To determine whether your business idea is viable, it helps to take a step back and look at the concept objectively. You should ask yourself the following questions;

  • Does the market for this product exist and is there enough demand for it?
  • Will your potential target market pay for your service or product? You have to bear in mind that at times, people will not embrace a product even if it is cheaper because they like to stick with what they know and are familiar with.
  • Is your potential target market already paying for something like your offering? Do you honestly believe they’ll switch to your product or service?
  • How will you determine your offering? Will you provide everything for everyone or will you decide on a niche product or service that you offer to a select target market?

The aim of asking all these questions is to do a sort reality check. You don’t want to invest time and money into a business that isn’t viable. Your business needs a worthwhile potential target market because if you don’t have any customers, your business isn’t going to make any profit.

Do some background research into your potential target market and determine if they will make a feasible customer base for your business.

2. Determine the type of legal structure that is best for you: Italy offers a wide range of legal structures for setting up a business, depending on its objectives, the model, the amount of capital, the extent of liability of the founders, and tax implications.

For those seeking to establish a business with other shareholders, the most common legal structures are:

  • Societa Cooperativa (SC) or cooperative society: this type of legal structure has no limit to the number of shareholders, and no minimum capital. Associates can benefit from a limited or unlimited liability but it has to be determined in advance.
  • Societa Semplice in Accomandita (SAS) or simple convenience company: this type of legal structure has no limit on the number of shareholders or minimum capital, and responsibility of the partners is unlimited.
  • Societa Collettivo in nome (CNS) or partnership: There is no limit to the number of shareholders or minimum capital. Partners have unlimited and many several joint liabilities.
  • Societa per azioni (SpA) or Limited Liability Company: this type pf legal structure has no limit to the number of shareholders. A minimum capital of €120,000 is required. It must be fully subscribed and will be paid at 3/10 of the company’s creation. Moreover, the partners’ liability is limited to the amount contributed. A quarter of the initial investment must be paid before the company’s registration in Italy.
  • Societa a responsabilita limitata (SRL) or Limited Liability Company: here, there is no limit to the number of shareholders. A minimum capital of €10,000 is required. The sum must be fully subscribed and will be paid at 3/10 of the company’s creation.

Partners’ liability is limited to the amount contributed. Moreover, a quarter of the initial investment must be paid before the company’s registration in Italy, though there are no incorporation taxes, less paperwork, and no notary fees.

If you want to charter a company without making yourself personally liable, you should choose the SRL or SPA. The SRL is best for shareholders wishing to maintain the management, while the SPA works better for bigger investments and a larger number of investors.

If the business goes bankrupt, shareholders will only lose the money they paid for their shares. If you wish to be the sole proprietor of a business, the following structures are most common:

  • Società per Azioni unipersonale (SA): here, you will be the company’s sole shareholder and your liability will be limited once the capital is fully paid. A minimum capital of €120,000 is required. You can either constitute a board of directors with several members, or a single director to manage your Società per Azioni unipersonale.
  • The Ditta individuale (DI): this structure allows you to own a craft business, but specific prerequisites apply. Capital or assets are not required. However, your personal belongings will be held as a guarantee in case you have debts.
  • Società unipersonale has responsabilità limitata (SRL): this structure allows you to have a single partner, whose liability is limited to the amount contributed. You are required to let out a capital of €10,000 which may consist of contributions. If your contributions are made in cash, you will have to appoint an expert auditor who is registered with the Revisori, that is the Auditors registrar.

You will also have to notarize your SRL’s constitution. Once you are done with this, you will be able to appoint a board of directors consisting of several members, or a single director. You are authorized to simple accounts provided your company’s turnover does not exceed €120,000 and it meets certain criteria (number of employees, etc.). Finally, you can in no case make a public offering.

3. Business Plan and market survey: in order to give your business the best chance at success, it is very important to have a good understanding of the Italian market, a clear idea of what you want to do, and good knowledge of how feasible your business proposal is before beginning the process for registering a company in Italy.

You will need to conduct a market survey, in which you research the businesses which already operate in your field, and identify your potential clients. You can then develop a business plan which outlines your business objectives, target market, and strategy, including a thorough risk assessment which details potential obstacles along the way.

4. Set up and registering your business: even though the process of setting up a business has become easier these days when compared to the past, it is still advisable to seek legal and financial advice. You can do this through a certified agency or use a notary who can take you through the legal procedures. You will need a bank account and will need to hire an accountant and lawyer if you do not have a notary.

5. Paperwork: If you decide to use a notary instead of an agency, you will be required to draft an Atto Costitutivo (memorandum) and Statuto (articles of association). The notary must be present either to draft the Atto Pubblico (incorporation agreement) or to certify the signatures of the shareholders (scrittura privata autenticata).

You will need to do this at Registro Imprese, at the local chamber of commerce, and the local tax office. The notary is also responsible for registering the company on the Companies Register, held by the Chamber of Commerce of the municipality where the business is incorporated.

The company will only exist following this registration. If one of the shareholders cannot be physically present to sign the contract, the incorporation process can be carried out by a legal proxy (normally a lawyer or a trusted person whom the investor knows).

Immediately upon registration, you (the company) will receive a reference number, the tax identification number, and the VAT number. Within 48 hours you will receive confirmation of registration with the Companies Register as well as documentation from INPS and INAIL (Accident Insurance Office).