1) What are the general features of the limited liability company (S.r.l.) in Italy?
First, the shareholders will not be held accountable personally for the company’s debts and obligations. Moreover, the minimum capital required by law has been recently reduced from 10,000 euro to 1 euro, which is significantly less than what it is necessary for the setting up of a public limited company (S.p.A., minimum capital: 50,000 euro). Finally, the S.r.l. has a more streamlined corporate structure than the S.p.A.: the memorandum and articles of Association can be adjusted more freely to the founders’ needs, by derogating from much of the legislation governing an S.r.l.
Limited liability companies (as well as S.p.A) can be also set up by a single shareholder/equityholder.
They can collect capital also through equity crowdfunding authorised online portals in Italy.
2) Special types of S.r.l.: the Simplified and the Innovative S.r.l.
The simplified version of the limited liability company (S.r.l.s.) can be chosen only by natural person/s and the company’s statutory documents can’t be modified. Start up and SME companies may be registered as Innovative S.r.l. if they:
- i) expend in R&D and innovation at least 15% (start up) or 3% (other companies) of either their annual costs or turnover, or
- ii) are depositary or licensee of a registered patent or the owner of a registered software, and/or
- iii)employ highly qualified personnel. Innovative companies have a special legal regime and benefit from tax exemptions and incentives in Italy. For example, the innovative start up is incorporated and registered in Italy, following an online standard procedure, without the intervention (and the cost) of a notary public.
Moreover, a 30% tax deduction on investments in venture capital is aimed at supporting innovative companies at all stage of their life cycle. General information (also in English) can be found on the website of the Italian Ministry of Economic development at the following page:
3) How to incorporate a limited liability company (Srl) in Italy?
- a) The notarial deed: The Srl must be incorporated by means of a notarial deed. The equity holder(s) must appear – personally or represented by a proxy before a notary public in order to approve the Memorandum of Incorporation, as well as the Articles of Association. Non Italian persons or entities are entitled to acquire shares of a company on a condition of reciprocity. The condition of reciprocity is automatically satisfied by natural or legal persons of the EU Member States and those of the EEA Member Countries (Iceland, Liechtenstein and Norway), as well as by the citizens of non-EU States in possession of an immigrant or work permit visa for Italy.
Citizens of other countries can verify the condition of reciprocity on the list available on the Italian Ministry of foreign affairs’ website (http://www.esteri.it/mae/en/ministero/servizi/stranieri/elenco_paesi.html)
- b) The minimum capital requirements: The founders of an Italian limited liability company with a capital of 10,000 euros must deposit 25% of it before incorporation. If the capital ranges between 1 and 10,000 euro, they must fully subscribe it in cash. The minimum capital of a limited liability company, wholly owned by a single quota holder (€ 10,000.00), must be entirely subscribed at the time of incorporation.
4) The registration of the company as a pre-requisite to start operations
After the incorporation, the company must be registered on-line with the Italian Business Register. The
whole process (incorporation and registration) would take averagely ten days. Actually, in Italy (as in many other countries), a company acquires the corporate status and can start its operations upon registration. Please note that any action carried out in Italy by the company before the date of its registration imply the personal liability of those who have acted on behalf of the company (usually the directors).
5) Tax and book keeping activities of the new company
At the end of the registration process, the new company will receive both a Tax ID number and a VAT number from the Italian Revenue Agency, as well as other codes for social security and worker’s insurance purposes. The company’s books and accounting books shall be kept at the company’s registered office; however, the board of directors can delegate a consulting firm to keep the accounting books and for the accomplishment of any relevant tax formalities (including the filing of the annual financial statement).