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Subsidiary vs. Branch in Italy

Subsidiary vs. Branch in Italy

Updated on Wednesday 06th November 2019

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Subsidiary-vs-Branch-in-Italy.jpgForeign companies that want to start doing business in Italy may register under one of the legal entities that are available under the Italian legislation or they may operate through a branch or a subsidiary, two business structures that are usually employed by foreign businesses that want to enter new markets. There are important differences between the two types of companies that should be known by the businessmen and our team of lawyers in Italy can provide in-depth legal assistance on the main characteristics of these two entities. 
 

What are the main characteristics of Italian branches/subsidiaries?  

 
When opening a company in Italy that will operate through a branch, it is important to know that the parent company will decide on behalf of the branch, as this business form is dependent on the foreign company and has limited powers. In the case of a company registered as a subsidiary, its representatives will be allowed to take management decisions without the consent of the parent company, as the business form is considered an independent legal entity.  
 
If the investors will choose to open a subsidiary, this legal entity can be set up under several business forms prescribed by the Italian legislation. An Italian subsidiary can be registered as a public limited company, a private limited company or a partnership and our team of Italian lawyers can offer more details on the advantages of each structure. 
 
It is important to know that the subsidiary is allowed to have a different name than in the case of the parent company, if its representatives may want to act in this sense. However, in the case of a branch, it is compulsory to register on the Italian territory the same trading name as the one of the parent company.  
 
More details on the registration of a branch office or a subsidiary in Italy are available in the presentation below:

 

 

How to register a branch in Italy

 
Companies operating in Italy are required to register with the Italian authorities a set of legal documents. In the case of a branch office, the investors will need to provide information on the parent company, as well as various documents attesting the incorporation of the branch, as follows:
 
  • the registration certificate of the parent company that wants to set up an Italian branch office;
  • the certificate of incorporation and the company’s articles of association and memorandum;
  • the names of the company’s secretary and appointed directors (minimum one director is required);
  • the proof of having a registered office through which the branch will perform its commercial activities in Italy.  
 

Public vs. private limited liability company in Italy

 
The liability of the shareholders of a private limited liability company is limited to their contribution to the share capital, which is why this is the most popular business form registered by both local and foreign businessmen operating in Italy. The company is managed by a board of managers appointed by the general meeting of the shareholders.
 
In the 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.
 

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Other relevant matters on Italian subsidiaries and branch offices 

 
Registering a subsidiary in Italy does not represent a difficult process and it can be accomplished in one week, if the applicants provide all the necessary documents. For the incorporation of a branch or of a subsidiary, it is necessary to address to a  public notary, who will notarize all the documents required by the Italian law.
 
The parent company is responsible for the debts of the branch, while the subsidiary manages by itself its 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 related to the similarities and differences between a branch and a subsidiary, foreign businessmen may contact our law firm in Italy. Our Italian lawyers will offer advice and consultancy services regarding the registration procedure applicable to these business entities and may advise on the tax regulations available for each structure.