FAQ Founding company (GmbH/Srl) in Italy

The Italian “Società a responsabilità limitata” (Srl) corresponds largely to the German GmbH. It is a capital company with its own legal personality and with shareholders’ liability limited to their contributions.

The Srl is ideal for companies wishing to operate in Italy with clear liability limitation and a professional appearance, ranging from SMEs to subsidiaries of international groups.

If the company is based in South Tyrol, the deed of incorporation and the articles can be drafted and registered in both German and Italian. Therefore, both suffixes “GmbH” and “Srl” are often used in communications, even though they refer to the same company form.

The company is established through a notarised deed (“deed of incorporation”) and articles of association, signed by at least one shareholder. Typically, an Italian accountant prepares the documents, the notary certifies them, and then the company is registered with the Companies Register and for tax purposes.

The minimum share capital of a standard Srl is €10,000. At least 25% of the subscribed capital must be paid in before incorporation. In practice, it is advisable to equip the company with sufficient equity to cover initial financial needs.

The capital is usually transferred by the shareholders to a private bank account of the future director – this may also be an account abroad. Proof of payment is presented to the notary. After opening the Italian business account, the capital is transferred to the Srl’s account.

Both individuals and legal entities may be shareholders, regardless of nationality or registered office. Shareholdings may be freely structured and generally determine voting and profit rights.

Management may be entrusted to a sole director, multiple directors with individual or joint powers, or a board of directors. Directors must be natural persons and do not need to be shareholders.

Yes. Every director must have an Italian tax code to be properly identified in the Companies Register. Possessing a tax code alone does not trigger tax liability in Italy.

Procurators can be appointed, but this requires a notarised deed and each amendment results in additional costs. Therefore, companies in Italy more commonly use a board of directors with powers defined by shareholder resolutions.

This is only possible in limited cases. A clear separation between corporate powers and employee subordination must be proven. Otherwise, the social security authority may challenge the employment relationship and related pension rights.

Due to European anti-money laundering regulations, the natural person(s) who ultimately control the company must be identified. As a rule, individuals holding more than 25% are considered beneficial owners.

The Srl is an independent legal entity, and shareholders are liable only up to the amount of their contribution. Their personal assets cannot be accessed, except in cases of personal guarantees or specific legal breaches.

Each year, an Srl must prepare financial statements, usually approved within 120 days of year-end and filed with the Companies Register. Depending on size, the company may prepare ordinary, abridged, or simplified accounts.

Profits are subject to corporate income tax (IRES) at 24% and, in most regions, to IRAP, which generally ranges from about 3% to 6%.

Dividends to individuals are usually subject to a 26% withholding tax, which fully settles the tax liability for the recipient. Transitional rules may apply for older retained earnings.

If the parent company holds at least 20%, dividends are typically exempt from withholding tax in Italy. In many countries, only 5% of the dividend is taxable under participation exemption rules, resulting in a very low effective tax burden.

Appointment is required once certain size thresholds are exceeded or if required by statute or law. In such cases, a supervisory body or external auditor must be appointed.

Directors represent the company externally and must ensure adequate organisation, proper accounting, and crisis detection systems. They are liable for breaches of legal or statutory duties, including potential personal or criminal liability in some situations.

If losses exceed one-third of capital, the director must convene a shareholders' meeting. If capital falls below €10,000, measures such as recapitalisation, capital reduction/increase, conversion, or liquidation must be considered.

An Srl has separate legal personality. Personal expenses and personal taxes of shareholders can no longer be paid through the company account. Withdrawals generally require resolutions (e.g., dividends or director remuneration). Taxation shifts from the individual to the company.

Subsidiaries often require additional equity or shareholder loans. Interest-bearing shareholder loans may be subject to 26% withholding tax, which may be reduced under double taxation treaties.

Individuals resident in Italy are generally not allowed to drive vehicles with foreign licence plates, except in narrowly defined cases. Even with correct documentation, complications may arise. It is usually recommended to use vehicles registered in Italy.

Such payments may be subject to withholding tax of up to around 30%. Double taxation treaties often allow reductions or exemptions, but require annual applications and residency certificates.

The notarisation itself is quick, but overall timing depends on document preparation, issuing tax codes, opening the bank account, and company registration. It is advisable to start early so the company is operational when needed.

Required documents include valid ID, tax codes, company name, registered office, business purpose, and capital information. If a foreign company acts as shareholder, extracts from the companies register and notarised powers of attorney are required.

Yes. Graber & Partner specialises in the incorporation and ongoing support of Srls and foreign subsidiaries in Italy. Services include preparation of incorporation documents, coordination with the notary, tax registrations, accounting, payroll, financial statements, and labour-law consultancy.