Executive Summary
The Italian Republic is located on the Italian Peninsula, to which two big islands in the Mediterranean Sea – Sicily and Sardinia, belong. Italy borders with France, Switzerland, Austria and Slovenia. The Vatican City and San Marino are the enclaves within its territory, while Campione d’Italia is an exclave within the territory of Switzerland. Italy covers a total area of 301,338 sq km. Rome is the capital of Italy. Italian is the official language of the country which has diverse local dialects; other languages are used and recognized as co-official in different regions.

Italy has one of the richest cultures of the world, having been the country of the first University in Europe, place where the Renaissance started, and an important centre of art and science – these are only few out of many examples of the Italian contribution to the world’s cultural heritage.

Italy is a democratic republic, member state of numerous international organizations. It is a developed country, member of the G8 as well. A bi-cameral parliament has a legislative power, executive power belongs to a Council of Ministers, guided by the Prime Minister. The President of the republic is elected for seven years by the parliament and regional delegates. The Italian judicial system is based on Roman law which has been modified by the Napoleonic code at a later stage. Roman Catholicism is the largest religion of the country.

Economy of Italy is ranked as the fourth largest in Europe, even though the development rate of Italy has significantly slowed down in the last decade. The country is still divided in two parts: industrial North and agricultural South. The lack of energy resources and raw materials make Italy highly dependent on imports, the frequent change of government make political system rather instable, plus state bureaucracy is not efficient. Corruption is still one of important problems of Italy. In comparison to other developed countries Italy has a small number of important multinational corporations. Its economy is based on small and medium enterprises which makes it always harder to compete within the global economic market. Tourism has a great importance for the state economy. Italy is the fifth most popular tourist destination in the world.

Italy does not have a particularly favourable taxation regime, nor business legislation; in most cases it is necessary to address professional for advice, in order to understand a particular law or realize a certain strategic step. However, Italy has one of the best reputations at the international level, and the opportunity of “Made in Italy” products attract foreigners from all over the world for establishing and conducting a business there, regardless complicated rules and regulations.

The Euro is the currency adopted by Italy and used on its territory.

Italy has a highly diversified landscape – high mountains, hills, forests, beautiful beaches. It is rich with big and small lakes, rivers, there are some active volcanoes. Flora and fauna is rich with numerous species.

The landscape diversity and a large country’s extension from North to South determine significant climate differences within different zones of Italy. Lowlands are very hot in summer and mountainous zones experience low temperatures in winters. But generally, the climate of Italy is referred to as Mediterranean.

Map, Flag and Coat of Arm

Types of Company

Private Limited Liability Company (SRL)

All shares are registered, and a share register must be kept at all times. The minimums registered share capital is EUR 10,000 and such a company’s shares may not be offered to the general public. One shareholder may establish a company.

Public Limited Liability Company (SPA)
At least two shareholders, private persons or corporate entities may establish this type of company. A minimum share capital is fixed at EUR 120,000, and at least 30% of this amount must be deposited in a bank. General public may subscribe shares of this company and a register of shareholders must be kept. Shares of different classes may be issued, which can give their holders diverse rights.

General Partnership
All partners of this partnership have unlimited liability to a partnership’s debts and obligations. All partners may take active part in a partnership’s daily management.

Limited Partnership
This partnership must have both general partners and limited partners, the liability of which is limited up to the capital invested. Only general partners can take part in a partnership. Limited partners hold quotas of a partnership.

Partnership Limited by Shares
This structure is similar to a limited partnership, with the difference that limited partners hold shares of a partnerships, not its quotas.

This structure is generally used for charitable purposes. It operates on a specific territory, of which a board of directors should be experts, in order to understand a local society and act in its interests. A foundation is an independent entity which acts according to its own goals and strategy.

A tax year in Italy coincides with a calendar year, which starts on 1st January and ends on 31st December.

A person who is physically present in Italy at least for 183 days in a year is considered to be resident for taxation purposes there and is liable for paying taxes on his world-wide income. A non-resident must pay taxes solely on income derived from the activities conducted in Italy. Personal income tax in Italy has a scalable nature, starting at 23% and reaching a maximum of 43%, depending on the amount of income. Capital gains tax is usually added to the income tax and is levied at a rate of 12.5% up to 25%. There is a number of tax relief categories, which are normally granted to residents of Italy.

Residents are liable to tax on the worldwide income, while non-residents must pay taxes only on income generated within the Island.

A standard rate of a corporation tax in Italy is 27.5% to which local taxes at a rate of 3.9% are added, making a total of 31.4% payable on a company’s income. Generally, companies are liable to pay 27.5% on capital gains, but in some cases they may be exempted from this tax. A standard VAT rate is 20%. Withholding tax is levied on some transactions and should be addressed on the Individual basis.

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