Foreign companies that want to start doing business in Italy or only test the market in order to decide later if they will expand their activities abroad may open a branch or a subsidiary. There are important differences between the two types of companies that should be known before choosing the right form of business you will open in Italy.
The parent company will decide on behalf of a branch, which is not a legal entity, while the representatives of a subsidiary are allowed to take actions and measures on their own and the company is a legal entity.
If you choose to open a subsidiary, this legal entity can be a public or a private limited liability company. For the first option, you need a share capital of EUR 100,000 and for the second – only EUR 10,000. Minimum a quarter of the share capital must be deposited in a bank account.
The liability of the shareholders of a private limited liability company is limited to their contribution to the share capital. The company is managed by a board of managers appointed by the general meeting of shareholders.
In case of a public limited liability company, the shares can be sold and the entity can be registered with the Stock Exchange. The company can be managed by a person who is a professional and it is not mandatory to be a member of the company.
Registering a subsidiary in Italy is not a difficult process and it can be accomplished in one week, if you have all the necessary documents. For incorporation of a branch or a subsidiary you must go in front of a public notary with all the documents required by the Italian laws.
The parent company is responsible for the debts of a branch, while a subsidiary manages by itself the debts and assets. The tax for the profit of a branch is similar to taxes paid by an Italian company, even if the branch is not a legal entity.
For more details about the similarities and differences between a branch and a subsidiary, you may contact our law firm in Italy. Our Italian lawyers will offer you advice and consultancy related to opening a company in this country and the type of firm that suits you best.