Doing Business in Italy
|GDP||1,939.62 billion USD|
|Average Monthly Gross Salary in Euro||€2,534|
|World Bank Doing Business Ranking||46 (USA Ranking 6)|
Most Common Form of Business Entity
A foreign business can establish their operations in Italy as companies, partnerships or branches. The most common form of legal entities are:
|Limited Liability Company (società a responsabilitàlimitata) “Srl”)||Joint Stock Company (società per azioni“SpA”).|
|Capital Requirements||€10,000 minimum
25% of the Share Capital needs to be paid in full when entity is formed.
At least 25% to be paid when entity is formed
|Directors||Minimum of 1 board members required||Minimum of 1 board members required|
|Shareholders||1 or more individuals or legal entities||1 or more individuals or legal entities|
Italy has both national and regional taxes on business. The 2018 corporate tax rate is 24%. The regional tax is a business activity tax, the standard rate is 3.9%.
Employment / HR Requirements
Employment Contracts: An employment contract can be verbal but it is recommended to execute employment contracts in writing. If an agreement was not entered into in writing, the employer must give the employee (within 30 days from the commencement date) a written schedule with the key point of the employment (Employee details, duration of employment, commencement date, remuneration and entitlements).
Employee Tax: Employees whose residence or usual place of abode is in Italy, are considered tax residents unless they are subject to a special regime for impatriates. The income tax rate ranges from 23% to 43%.The taxation is progressive and is applied in bands. The lowest band is 23% on the portion of income between €0 to €15,000, with the highest being 43% on the portion of income exceeding €75,000.
Social security contributions are paid by both employer and employee. Employee contributions are deducted at source from salary payments, with employee contributions being approximately 10% of the gross salary.
Employers: The total social security rate is around 40% of the employee’s gross compensation (the rate depends on the work-activity performed by the company, the number of employees of the company, the employee’s position), with the employer paying approximately 30% of the employee gross salary.
Valued Added Tax:
The standard rate of VAT is 22%; one reduced rate of 10% and one super reduced rate of 4% that applies to basic foodstuffs, books, medicines and a person’s main dwelling.
Valued Added Tax on Digital Services:
All Non-EU based businesses that provide electronic services or download to individuals or non-business consumers in Italy must register for Vat either in Itlayor in another EU state.
Italy has yet to adopt the EU General Data Protection Regulation into local law. The key variations from the GDPR Requirements are:
- Requires data protection authority notification under certain circumstances, for example, when the processing involves the use of either new technology or automated means and the data controller wants to rely on its legitimate interests as the legal ground for processing.
- Requires data protection authority authorization under certain circumstances, for example, to reuse personal data (except for genetic data) for scientific research or statistical purposes.
- Requires that the data processor’s appointment comply with the model schemes provided by the Italian data protection authority (which the authority has not made available as of today).