Italian Limited company SRL
Further to recent investigations regarding using a UK limited liability company with registered branches in Italy or setting up an independent Italian corporate identity i would like to further discuss the Italian limited liability company known in Italy as SRL (Società a responsabilità limitata), literally translated as “company with limited responsibility.” And similar to a UK ltd company.
For those of you considering DIY restoration of your Italian property, there are certain options. Forget just simply doing a DIY, unless you are a builder, because as soon as you require any trade to enter your property in Italy you need to “employ” them. You can do this as an individual (persona fisica) or as a self employed company (ditta individuale) or as a ltd company. Simple DIY paying cash to your workers for serious restoration jobs in Italy is not simple in fact it is illegal. MIPC as Italian Property Consultants exist for this reason. I would advise you to set up an Italian limited company for that complex DIY project SIMPLY to protect your personnel assets from any unfortunate 3rd party claims.
Beyond this article there is a further Italian corporate structure known as SPA (Società per Azioni) which is more like a UK PLC and is used by organisations to be quoted on the Italian stock exchange by large corporate businesses in Italy. The S.p.A. (similar to a Joint Stock Company) is the most regulated of the two major limited liability companies requiring a full-blown board of directors and board of auditors, as well as higher minimum capital requirements (i.e. 120.000,00 euros). The regulations set forth in the Italian Civil Code (“ICC”) for the S.p.A. also apply to the S.r.l., unless stated otherwise.
Here i will not go into the formalities but more the issues you should be aware of if you are in the phase of considering setting up and SRL in Italy.
An Italian SRL is similar to a small UK ltd company, the type of UK Ltd company you set up to have limited liability and when you are running the business yourself or with a few other shareholders/partners. In Italy the SRL does not actually have shareholders but you hold quotas, in the bigger picture the concept is the same, just its important to know that they are not shares. There are no requirements for management by a board of directors. Also in most cases, small S.r.l.’s can do without a board of auditors provided there be at least one director (Sole Director).
How to create an SRL in Italy:
In the UK there are many off the shelf ready made UK Ltd companies which for a small fee you can become the shareholder and sole director and company secretary. Personally i have always used Hanover Company Services in the UK, cheap efficient and professional to either buy an off the shelf ltd company or create a new Ltd UK company. The memorandums of associations are very generic and basically you can use the corporate structure to trade in most activities.
In Italy it is different and not so easy.
You must follow the following steps and costs;
1: Determine the articles of association (statuto) and specify all the trades you wish to operate in. Add as many as you possibly can think of, in which your business in the future may wish to operate in, as any future changes involve a visit to the notary (minimum 2000 euros). Get a professional (normally your commercialista, that’s the Italian accountant that everyone has in this country !!) to check that your statuto covers every possible sub section of a trade that exists in Italy. There are more than you think !!!! … be specific in your requirements to ensure you cover that minor trading section that you assumed obviously was covered but with the Italian law it isn’t. !!!!! You have been warned.
2: Obtain an Italian fiscal code for yourself. You need this as the person creating/owning the SRL. You can use your non Italian address if you don’t have a house in Italy.
3: You need an Italian address for the future SRL in Italy. Either use your Italian property address, either owned or rented or ask a friend to use their address. I haven’t got around to studying virtual Italian PO boxes just yet or service companies offering this option at their address, but i will. If necessary use your Italian accountant’s/lawyer’s address with their approval.
4: Fix an appointment with a notary to create and register the new SRL and ask for a quote for the expenses. This can vary from 2000 euros upwards.
5: Deposit the minimum nominal capital of the SRL 10,000 euros in the new “temporary” Italian company bank account at your preferred Italian bank. This is a strange concept in that you need to pay the nominal capital into the “temporary” company bank account, which actually doesn’t exist, as the bank cannot create the account until the notary has actually registered the company. But we are in Italy and the system works. Use a trusted Italian bank. I actually asked the bank but who has ownership of my nominal capital until the notary has registered the company and you, the bank, have transferred the deposit into the then new company account…answer…”its in the system”….just accept it …..it’s official and works.
6: if you are a sole director & sole quoteholder and also the future company secretary (delegato amministrativo) then you must deposit 100% of the nominal capital. If there is more than 1 person involved then you only need to deposit 25%. Here’s some small personnel advice….In Italy the best small companies are made of an odd number of quoteholders and i would advise you to ensure that they are less then 3 share/quoteholders J !!!! Is that clear !!!
7: With the relevant nominal capital paid to the bank, take the receipt to the notary. He will register the company in accordance with your statuto and then you have the act of registration, in Italian the atto di registrazione. Deposit a copy of the atto with the bank to ensure your money is deposited in your new Italian company bank account.
8: Get your accountant to register the new company with the local chambers of commerce (camera di commercio) and with the REC registro ditte. Also get them to apply for your VAT (IVA)number (obligatrory for any Italian company indentity.)
9: With an SRL you will be obliged to follow the company accounts filing and tax returns. All Italian company accounts follow the calendar year to 31/12. Company corporation tax returns are due. National and local company taxes will be due. Individual tax returns too.
10: The company must register with INPS and INAIL to pay employee taxes and social security taxes.
11: Your accountant with their services or their preferred wages burueau (consulente di lavoro) will also prepare wage slips (buste paghe).
Further SRL taxes and employee issues will be discussed in a separate article.
If you are considering a DIY Italian restoration in your house in italy or looking to buy Italian property MIPC are happy to advise as an Italian property consultant.