The incorporation of a company to deal with property purchase and management in Italy is a complex process which involves attaining a variety of legal acts from both private persons and public bodies. When considering company incorporation one must necessarily keep in mind the distinct types of companies that Italian law allows for, as these are differently regulated. The first criterion to be used to define these regards the limits of company liability. In partnerships, called società di persone, the company shareholders are liable for any debts of the company with their own property – that is, assets of the shareholders in their personal capacity can be used to satisfy the company’s creditors regardless of the amount of participation of the given shareholder in the company. These companies are furthermore classified depending on the structure of their management and with some exceptions as to the principle of liability, and are, as follows: società semplice (S.s.), società in nome collettivo (S.n.c.), società in accomandita semplice (S.a.s.).

The most commonly used companies, however, are those in which the liability of the company is only limited to the assets of the company itself, and are named società di capitali – or, in other words, companies, where the shareholders could not be held liable with their personal assets for any debts of the company in question. they are only liable to the extent of their participation in the company. Once again, subject to several subdivisions, such companies can exist in the following forms: società per azioni (S.p.A.), società in accomandita per azioni (S.a.p.a.), società a responsabilità limitata (S.r.l.), società a responsabilità limitata semplificata (S.r.ls.).

The establishment of a branch, on the other side, does not involve the establishment of a separate legal entity, but instead only organizes a foreign unit of the mother company. The mother company is therefore held responsible for the assets and liabilities of the branch, whereby the latter shall operate under the name of that mother company. The incorporation of a branch in Italy is also easier than that of a separate company – the branch shall be registered at the Italian Register of Companies, a branch representative shall be appointed, and the branch shall obtain an address and a VAT number in Italy. A branch is subject to corporate taxation in Italy.

Looking at the establishment of the most common type of company regulated by Italian law – which is the società a responsabilità limitata (S.r.l.), there are several key steps in the process. First of all, an Articles of Association act needs to be drafted. This document presents the type of commercial activity the company will undertake (it is advisable to hereby include a wider scope of activities), the capital, shareholders, and structure of the company. A notary legalization of the Articles of Association is furthermore required. The notary is to provide their stamp and signature on the act, as well as on any of its future amendments, in the case of a company with a capital structure (società di capitali, as described above). The company’s Constitutive Act is also signed in front of a notary, upon obtaining the due capital, as provided by in the Articles of Association. This capital is transferred by the shareholders to a provisional bank account, to be established at an Italian bank for that very reason. Finally, the company shall be registered in the Italian Register of Companies.

EU citizens are eligible to establish a S.r.l. pursuant to the provision of an identity document and a document, certifying Italian residency and issued by the competent municipal authorities (required only for establishment, but not for participation as a shareholder in a S.r.l.). The process for non-EU citizens depends on the presence and content of a ratified international treaty between the Italian Republic and the third country, from which the respective citizen originates.

Last but not least, establishing a company in Italy also involves running its operations in a smooth and successful manner. In order to ensure this, especially when it entails foreign shareholders working in Italy, it is highly advisable to employ expert local advisors. This because, first of all, each company would require the opening of a company bank account (other than the provisional one – to be only used for collection of the initial capital) and execution of the required accounting and book-keeping actions, including properly complying with the Italian taxation regulations. In addition to this, and in case the company works in the sphere of property management, expertise in the local market and careful consideration of each real estate unit needs to be applied. This would furthermore include evaluation of the properties, drafting of due diligence reports, complying with the applicable property regulations, and answering the needs of the dynamic Italian real estate market.