Setting a business and other options to get residency in Italy

There are two ways to stay in Italy for extended periods of time for business purposes. One way is to obtain a business visa. To get it, you’d need an invitation from an Italian partner.

The other way to enter the Italian market is to get a residence permit by setting up a company there. This is called the Golden Visa program, and it allows you to stay and enjoy Italy all year long while you conquer the local market.

Italy Golden Visa program

Citizens of the European Union and European Free Trade Association (EFTA — Iceland, Liechtenstein, Norway, and Switzerland) don’t require a business visa to stay or work in Italy. If they stay for more than three months straight, they need to go to the local municipality (comune) and enter the civil registry. If an EU/EFTA citizen wishes to open a company in Italy, they need to prove a sufficient income to support themselves and register a company in their local comune.

The requirements for starting a company for EU/EFTA nationals are:

• valid passport or ID;

• sufficient income — so an individual would not depend on social security;

• adequate health insurance.

Third-country nationals from outside the EU/EFTA who are willing to work in Italy must apply for a relevant business visa. Because of Brexit, this also includes UK nationals who were not living in Italy before January 1st, 2021.

The list of documents for a business visa can vary from country to country, but the main documents include:

• Italian visa application form;

• 2 photos, 35×45 mm, white background;

• passport valid for at least 3 months from the date of return, with at least two blank pages face to face to affix the visa;

• copy of the passport and previous Schengen visas issued during the last 3 years;

• residence permit card along with a copy, if you are not a citizen of the country from which you are applying;

• proof of accommodation in Italy valid for the entire duration of the trip;

• proof of travel — airplane round trip tickets, train tickets or car reservation;

• Schengen Countries travel insurance with minimum coverage of €30,000 per person for the entire duration of stay;

• covering letter from the Italian company, inviting you to visit for business purposes;

• registration Certificate of the inviting company;

• a letter from your employer;

• proof of adequate financing for the trip.

Additional supporting documents, like marriage certificates, may be requested in some cases.

The business visa must be applied for in person. All documents must be submitted in English, with original documents to be presented along with photocopies.

The mandatory requirement for a business visa in Italy is an invitation from a local company. If you cannot or don’t want to provide a guarantor from Italy, you can consider setting up your own company there or applying for the Italy Golden Visa program.

Before setting up a company in Italy, one should investigate the local market and choose the most appropriate business type, which can be either conventional or innovative. While boutiques and restaurants are examples of conventional businesses with a clear business model, ecommerce or food delivery can be considered innovative business ideas with fewer competitors entering the market.

As for conventional business ideas, it would be useful to examine the consumer priorities of Italians during the 12 months of 2022. The most popular categories of purchases among Italian nationals in the domestic market were:

• clothing — 43%;

• shoes — 40%;

• consumer electronics — 38%;

• book, movies, and games — 35%;

• bags and accessories — 31%;

• cosmetics and body care — 28%.

Italian consumers demand quality products, and they would be more concerned about the quality of goods and customer service than about promotions. When given the choice, Italians prefer products ‘made in Italy’, but foreign products are also in demand, especially fashion, footwear, and streetwear.

As for the ecommerce and online services, the most recent actively developing segments are:

• electronics and media;

• online fashion;

• toys, hobbies, and DIY;

• food and personal care;

• furniture and appearances.

When researching the market, consider visiting the official website of the Italian Ministry of the Interior. It has a section for entrepreneurs, where one would find information on incentives, the market, patents, possible competitions, or call offers.

Is the Italy Golden Visa worth it? Watch the video and find out

Italy offers a wide range of legal structures for setting up businesses, depending on the objectives, model, amount of capital, extent of liability of the founders, and tax implications.

Most Italian businesses fall into one of the following legal structures:

• sole proprietorships (ditta individuale);

• partnerships (associazione);

• corporations (società/corporazione/compagnia).

Sole proprietorship can be divided into two options:

1. Sole Trader (Ditta Individuale): individuals trade as businesses without a separate legal entity. There is no distinction between personal and professional income, and the owner is liable for all business debts. Taxes are based on personal income. Sole traders can have fixed premises or operate as mobile entrepreneurs and employ staff.

2. Freelancer (Libero Professionista): freelancers offer services and trade solely under their own name. They do not have fixed premises and cannot employ staff.

Partnerships involve two or more individuals who share profits, liabilities, and responsibility for business debts. It is also divided into two types:

1. General Partnership (Società in nome collettivo, or SNC): partners are jointly liable for the business. The business name must include at least one partner’s name and indicate the general partnership structure.

2. Limited Partnership (Società in accomandita semplice, or SAS): limited partners contribute capital but have no involvement in day-to-day operations. General partners have unlimited liability, while limited partners are only liable up to their invested capital. The business name must include at least one general partner’s name and indicate that it is a limited partnership.

Corporations are businesses that exist as separate legal entities and pay corporate taxes. In Italy, corporations are required to have a managing director or board of directors and a certificate of incorporation.

There are several types of business structures:

1. Limited Liability Company (Società a responsabilità limitata, or SRL): this is the most common type, it is a private corporation with one or more owners. It requires articles of association, a minimum share capital of €1, and at least 25% payment upon incorporation.

2. Simplified Limited Liability Company (Società a responsabilità limitata semplificata, or SRLS): designed for young entrepreneurs, it has a simpler setup process and lower costs. It requires deeds of incorporation instead of full articles and a minimum share capital of €1 and up to €9,999, and only individual shareholders are allowed.

3. Public Limited Company (Società per azioni, or SpA): also called a joint-stock company, its shares can be publicly traded. It has stricter legal requirements, such as a minimum share capital of €50,000 with 25% paid upon incorporation, and a board of directors and auditors.

4. Cooperative Society (Società Cooperativa): a limited company benefiting members and employees rather than shareholders. It needs at least three shareholders and a minimum share capital of €25 per shareholder. The maximum share capital is €100,000.

While a foreign investor can set up a company of any size and with any liability, Italy is a country that especially favours small and medium-sized enterprises (piccole e medie imprese). These account for 90% of the national market. Most foreign entrepreneurs tend to choose between partnerships or corporation-sized companies like limited liability companies or public limited companies.

Choosing a segment of the market and a type of company are only the first steps to opening a business in Italy. If you’re going to set up an offline business, it is also wise to select an appropriate city for your company. Among the most business-friendly cities are Milan, Roma, Bari, Turin, Bologna, Florence, and Naples.

The process of founding a business in Italy can be quite lengthy and tiresome, and it can be especially challenging if one isn’t aware of the Italian laws and culture. To launch a business in Italy successfully, you will need to follow some obligatory steps.

1. Draft a business plan or memorandum. A well-crafted business plan is crucial when starting a business in Italy. It allows you to understand the market, identify your target customers, and plan your objectives. Include the objectives, short- and long-term goals, and calculate your initial expenses, e.g., costs for equipment, marketing, and other essential aspects.

By creating a comprehensive business plan, you’d gain valuable insights and a strategic roadmap to make up the Articles of Association (Statuto) and Memorandum of Association (Atto costitutivo). These two documents are essential to be submitted to the Chamber of Commerce and must be certified by a notary.

2. Decide on the type of company. After completing a business plan, you can move on to choosing the right company type. The most popular options for investors are General and Limited Partnerships, Limited liability companies, and Public limited companies.

3. Get a long-term permit. In order to set up a business in Italy, one needs to have a legal permit to live and work in the country. EU/EFTA nationals don’t have to apply for a visa, while non-EU citizens and foreign investors do.

A non-EU citizen who plans to start a business but does not have a residence permit must first apply for Nulla Osta — a document issued by an administration to indicate that no obstacle prevents a given action. In the case of starting a business, Nulla Osta indicates that there are no obstacles to starting one. Nulla Osta is issued by either a local comune or Chamber of Commerce.

The other way to get a long-term residence permit for doing business in Italy is by applying for the Italy Golden Visa.

Italy Golden Visa: Complete Guide

4. Deposit the required documents. When you have chosen the business segment, type of company and obtained a visa, it’s time to register the company in the Italian Business Register, which is managed by the Chamber of Commerce, within 30 days of the business starting date.

To do this, you will need:

• a name for the business;

• the articles of Association and Memorandum, if you are an incorporated business;

• a separate business bank account, if you are an incorporated business.

If you set up a corporation, it’s better to turn to a lawyer or a notary who is familiar with the Italian business ecosystem. The notary would oversee the paperwork and make it easier to register the company.

Apart from the Chamber of Commerce, the new business is also required to be registered with the following authorities:

• tax Agency (Agenzia Entrate): to register for taxes and get a business tax number, if setting up a corporation, and VAT number;

• National Institute of Social Security (Istituto nazionale della previdenza sociale): to make social security payments and access benefits, including state pensions;

• National Institute for Occupational Accident Insurance (Istituto Nazionale per l’Assicurazione contro gli Infortuni sul Lavoro): for insurance coverage of work-related accidents and illnesses.

5. Set up a bank account. Opening a separate business bank account is a legal requirement for businesses in Italy. When opening a bank account, one would need to provide the bank with some documents that show the legitimacy of a business.

The primary costs involved in a company registration in Italy may include:

• business registration fee — €520;

• virtual office — starts at €100 per month. This is required if one does not have an office space for a business;

• trademark registration expenses — up to €234;

• the cost of incorporation — approximately €2,300;

• accounting fees — at least €130 a month, based on the number of invoices received and the annual turnover;

• minimum share capital starting with €1 for a limited liability company and going up to €100,000.

The process of registering a new company varies from 5 days to 3 weeks.

Setting up a company in Italy can be followed by some issues one should be prepared for.

Business taxes in Italy include:

• corporate tax of about 24%, along with a regional tax on productive activities of usually 3,9%;

• VAT that you will be expected to pay, at 22%;

• property tax can be up to 0,16% of the value of the building, tax on financial transactions (up to 0,2%), and other minor taxes you are expected to pay.

Language. While English is an international language, it’s not wide-spread in Italy. You will probably be able to find English-speaking lawyers when registering a company, but it can be quite a challenge to find English-speaking employees and an accountant. If you plan to work in Italy for a long time, it can be useful to start learning the Italian language.

Italian employees. If you have to hire employees, you’ll need to adhere to the Italian labour law to protect workers’ rights, take responsibility for taxes and social security payments, and obtain work permits to hire foreign staff from outside the EU/EFTA.

Italian working style. Italian working culture is characterised as a high context culture, where the interpretation of contextual cues plays a crucial role in accurately understanding messages.

In this culture, relationships tend to hold greater significance than mere tasks. Italians generally prefer oral communication over written exchanges, and in both forms, the approach is typically more expansive, encompassing a wider range of topics and details. This engagement in both work and private matters may cause delays in business. So when starting a business in Italy, be prepared for deadlines to be missed.

There is an easier way to join the number of international businesses in Italy — to get an Investor, or Golden, Visa. This is the program that allows investors to get legal grounds for living in Italy in exchange for investment in the country’s economy.

Under this program, investors from non-EU countries can get a residence permit for 2 years, then it can be extended for three-years periods. After 10 years of living in Italy, investors can apply for citizenship.

While having the investor visa, living in Italy or passing the Italian language exam is not mandatory. The exam will be required if the investor plans to get a permanent residence permit or Italy citizenship.

The Italy Golden Visa entitles investors and their family members to reside in the country, open a business with a special tax regime, get employed in Italian companies, and seek medical treatment. Investors can also enrol their children in kindergartens, schools, and universities in Italy — the tuition fees are lower for Italian residents than for international students.

To apply for an investor visa, the applicant has to meet the following requirements:

• to be over 18 years old;

• have proof of the legal origin of the investment;

• make a written commitment to investing in the Italian economy;

• have sufficient funds to reside in Italy;

• to be without a criminal record;

• have valid health insurance.

According to the conditions of the program, investors can apply with their family: spouse, children, and parents.

There are four options for participation in the program, varying by the amount of investment.

Investment in an innovative startup — €250,000+. This means you can put money in stocks or shares of a startup approved by Italian authorities. This is a high-risk option, but it also requires the least amount of investment. The full list of available initiatives can be found on the Italy Trade Agency website.

Business investments — €500,000+. This means investing in listed or unlisted shares in a company incorporated and operating in Italy. This option requires the filing of a tax return for financial reporting.

Investment in socially essential projects — €1,000,000+. You can pick a public interest initiative of your choice and make a donation. The investment is to be made in any of the following areas: culture, education, immigration control, scientific studies, or cultural and natural heritage protection.

Purchasing the government bonds — €2,000,000+. You have to invest in the limited number of bonds with a remaining maturity of over two years, e.g., CCT/CCTeu, CTZ, BTP, Long-Term Treasury Bonds index-linked to Eurozone inflation, and BTP ITALIA.

To obtain the investor visa, the applicant would provide a list of documents:

• passport valid for at least 3 months from the date of the visa requested;

• one passport-size photo;

• Nulla Osta certificate. When investing in a start-up, the applicant asks for Nulla Osta via the Italia Startup Visa Committee, in other cases — through the Investor Visa Committee in Italy;

• proof of accommodation in Italy, including hotel bookings;

• proof of income from the previous financial year showing that you earn above €8,500;

• certificate of no criminal record for the past 10 years in each country of residence.

All necessary documents must be translated into Italian or English, notarized, and apostilled.

1. To start a business in Italy, non-EU nationals must apply for a business visa or investor visa.

2. Before setting up a company in Italy, one must make a business plan, decide on a company type, and register the company with the Italian authorities.

3. The minimal sum for opening a new business in Italy would start at €3,200 plus share capital between €1 and €100,000.

4. The Italy Golden Visa is another way to invest in the Italian economy, with 4 options: investment in an innovative startup, business investments, investment in socially essential projects, or the purchase of government bonds.

5. To get a Golden Visa, you have to make an investment of between €250,000 and €2,000,000.