A cooperative is a specific type of company in which the primary focus is not solely on making a profit, but above all on promoting the interests of its members. The members join together to pursue economic, social or professional objectives collectively.
The legal basis for cooperatives is set out in Articles 2511 et seq. of the Italian Civil Code.
Characteristics of a cooperative
A cooperative is characterized in particular by the following features:
- Open membership: New members may be admitted subject to certain conditions; members may also resign.
- Member participation: In principle, each member has one vote, regardless of how much capital they have contributed.
- Benefits for members: The cooperative’s activities are primarily aimed at promoting the economic or professional interests of its members.
Cooperatives may, for example, be established by employees, producers, farmers or consumers.
Predominantly mutual
An important distinction is that between cooperatives with predominant mutuality and other cooperatives.
A cooperative has this status if it carries out its activities predominantly with or for the benefit of its members. This classification is particularly relevant for the application of certain tax concessions.
Formation and registration
The following steps, in particular, are required to set up a cooperative:
- Drafting of the memorandum and articles of association by a notary
- Entry in the Register of Companies
- Entry in the Register of Co-operatives
In principle, a cooperative can be formed with just a small number of members, provided the legal requirements are met.
Taxation of cooperatives
Cooperatives are generally subject to the Italian corporate tax (IRES). Further information on IRES can be found in our glossary entry on IRES.
Special tax rules apply to cooperatives. In particular, cooperatives with a predominantly mutualist structure may, under certain conditions, benefit from tax advantages, for example in connection with the allocation of profits to indivisible reserves.