Business Operations in Italy (Portfolio 968)

Tax Management Portfolio, Business Operations in Italy, is designed to provide an introduction to Italian business life, including the requirements that must be met and principal problems encountered in making investments, and in particular the establishment and operation of commercial interests in Italy.

To view this Portfolio, take a free trial to Bloomberg Tax

Bloomberg Tax

This Portfolio is available with a subscription to Bloomberg Tax, a comprehensive research solution including over 500 Tax Management Portfolios, practice tools, primary sources and timely news.


This Portfolio includes an analysis of the tax on corporations, the tax on individuals and, in general, all taxes imposed on business firms and investments. It presents the various alternatives under Italian law for creating fixed business relationships in a more concrete form than mere contract, distribution, or agency relationships. Each form of business organization is summarized and particular attention is paid to the tax system, which has an important impact on Italian business operations.

The foreign exchange laws and foreign investment laws, which are significant to anyone wishing to introduce capital into Italy for investment purposes, and the mechanisms and characteristics of the more important corporate forms are explained to provide potential investors with a better understanding thereof.

Additionally, there is a brief discussion of the provisions of the Italy-United States Tax Treaty.


Business Operations in Italy was authored by the following experts.
Christine Marciasini, Esq.

Christine Marciasini, Esq., B.A. University of the Pacific (1984); J. D. Hastings College of Law, University of California, (1987); consultant Tonon & Associati (2000–2007); associate Alegi & Associates (1989–1999); articles: Vasques & Marciasini, “Italy,” International Comparative Legal Guides To: Merger Control 2010; Carroll & Marciasini, “Advance Care Directives: Florida, Italy and the Holy Grail of Wishes (October 2008), American Bar Association; Real Property Trust and Estate Law online eReport; Tonon & Marciasini, “Exchange Control Deregulation” International Banking & Financial Law Bulletin (Issue No. 67, 1990); contributor Alegi, Italian Income Taxation (translation of Unified Text of Italian Tax Code) 2d Ed. (1994); lecturer American University of Rome, business law and international law (1990–1999); member of the State Bar of California.

Table of Contents

Detailed Analysis

I. Introduction

A. Constitutional History

B. Government

1. Executive Branch

2. Legislative Branch

3. Judicial System

a. Ordinary Courts

(1) Justice of the Peace (Giudice di Pace)

(2) Tribunal (Tribunale)

(3) Court of Appeal (Corte d'Appello)

(4) Supreme Court of Cassation (Corte Suprema di Cassazione)

b. Administrative Courts and Commissions

(1) Administrative Tribunals

(2) Tax Commissions

(3) Court of Accounts (Corte dei Conti)

c. Constitutional Court (Corte Costituzionale)

d. Arbitration System

(1) Informal Arbitration

(2) Formal Arbitration

(3) Enforcement of Foreign Arbitration Awards

II. Business Regulations and Practice

A. Foreign Investment Regulation

1. Incentives

a. Regional Assistance

(1) Scope

(2) Cash Grants

(3) Tax Concessions

(4) Low-Interest Loans

(5) Initiatives for Economic Development in Depressed Areas

(6) Reduction of the Cost of Labor

(7) Work Grants for Unemployed Young Persons in the Mezzogiorno

(8) Fiscal Incentives for Small and Medium-Sized Businesses in Depressed Areas

(9) Reduction of Social Charges in the Mezzogiorno

(10) Sviluppo Italia

(11) Tax Incentives for Investment in Depressed Areas

b. Industrial Reconstruction and Conversion

2. Procedures

B. Currency and Foreign Exchange

1. Currency

2. Foreign Exchange Laws

a. General

b. Specific Provisions

(1) Residents

(2) Nonresidents

c."Tax Monitoring" and Remaining Restrictions

d. Selected Transactions

(1) Imports and Exports

(2) Foreign Borrowing

(3) Purchase and Sale of Securities Issued or Payable Abroad

e. Foreign Accounts

C. Regulation of Trade and Commerce

1. Trade

a. Imports

b. Exports

(1) L'Istituto per i Servizi Assicurativi del Commercio Estero


2. Commerce

a. Antitrust and Merger Controls

(1) Antitrust

(a) The Authority

(b) Restrictive Agreements and Practices; Abuses of Dominant Position

(c) Merger Control

(2) Regulation of Securities Markets and Tender Offers

b. Mandatory Tender Offers

c. Insider Trading

d. Price Controls

e. Labeling, Advertising, and Fair Trade Regulations

(1) In General: Consumer Laws

(2) Advertising

(3) Consumer Contracts

(a) Binding Contracts

(b) Door-to-Door and Similar Sales

(c) Distance Contracts

(4) Labels

3. Industrial Property

a. Patents

b. Patents for Utility Models and Registration of Designs and Models.

c. Trademarks

d. Copyright

e. Software

f. Databases

g. Designs

h. Biotechnology Patents

i. Litigation

D. Labor Law

1. Workers’ Rights

2. Collective Bargaining Agreements

3. Labor Relations

4. Hiring

a. Period of Employment

b. Compensation

c. Working Hours

d. Time Off

e. Absence Due to Illness

f. Work Assignments

g. Termination

h. Workers’ Rights to Information

i. Night Work

j. Employment of Minors

k. Labor Disputes

E. Immigration Law

1. Application for Visa

2. Residence Permit

3. Alien Work Permits

4. Consultants

F. Privacy Law

III. Forms of Business Entities

A. Introduction

1. Partnerships - Overview

a. Unlimited Partnership (Società in Nome Collettivo)

b. Limited Partnership (Società in Accomandita Semplice)

2. Joint Stock Corporations - Overview

a. Limited Liability Company (Società Responsabilità Limitata)

b. Corporation (Società per Azioni)

c. Limited Partnership with Shares (Società in Accomandita per Azioni)

3. Branches - Overview

4. Joint Ventures - Overview

5. European Economic Interest Grouping

6. Agencies and Distributorships

a. Distributorships

b. Agencies

B. Joint Stock Corporations

1. Formation

a. Purpose Clause

b. Corporate Name

c. Articles of Incorporation

d. Capital Structure

e. Incorporation Procedures

f. Costs of Incorporation

2. Operation

a. Amendment of Articles

b. Increases and Reductions of Capital

c. Acquisition of Own Shares

d. Corporate Officers

e. Shareholders’ Meetings

(1) Ordinary Meetings

(a) Corporations without a Board of Overseers

(b) Corporations with a Board of Overseers

(2) Special Meetings

f. Shareholders' Remedies

g. Directors

(1) In General

(a) "Traditional" System

(b) The "Two-tier System"

(c) The "One-tier System"

(2) Composition of the Board of Directors

(3) Special Appointments

(4) Election of Directors

(5) Resignations and Vacancies in the Board

(6) Duties of Directors

(7) Directors' Liability

(8) Directors'Compensation

(9) Dismissal of Directors

h. Directors' Meetings

i. Board of Statutory Auditors

(1) Composition of the Board

(2) Compensation

(3) Meetings

(4) Liability

j. Books and Records

k. Financial Reporting

(1) Annual Accounts

(a) Contents of the Balance Sheet

(b) Criteria for Valuation of Assets

(2) Profit and Loss Statement

(3) Abridged Balance Sheet

(4) Assets Destined for a Specific Transaction

l. Audit Review

(1) Unlisted Corporations

(2) Listed Corporations

m. Dividends and Other Distributions

n. Reserves and Funds

o. Securitization

p. Shareholders' Agreements

3. Liquidation

C. Companies Listed on the Stock Exchange

1. Mandatory Public Purchase Offer

2. Conditional Offer

3. Notification of Material Shareholdings

4. Notification of Shareholders' Agreements

5. Broad Share Ownership

6. Proxy Solicitation

7. Board of Statutory Auditors of Listed Companies

8. Outside Auditing Firms

9. Insider Trading

D. Limited Liability Company (Società a Responsabilità Limitata)

1. In General

2. Incorporation

a. Corporate Name

b. Articles of Incorporation; Main Differences from a Società per Azioni

c. Conditions for Incorporating

3. Capital Structure

a. Liability

b. Contributions

c. Quotaholders' Loans

d. Quotas

e. Quota Transfers

4. Corporate Governance

a. In General: Relationship between Quotaholders and Directors

b. Directors

c. Quotaholders' Meetings

d. Board of Statutory Auditors and External Audit

E. Mergers and Spin-offs

F. Corporate Groups

IV. Principal Taxes

V. Taxation of Resident Corporations

A. Accounting

1. General

2. Accounting Periods

3. Accounting Methods

4. Inventories

5. Consolidated Returns

a. National Tax Consolidation

b. Worldwide Consolidation

c. Consolidated Accounts

6. Transparent Taxation

a. Comparison Between Ordinary and Transparent Taxation

b. Transparent Taxation in the Case of a Società a Responsibilità Limitata

7. Reserves

B. Calculation of Net Income

1. Capital Gains

2. Taxation of Dividends

a. Tax System Applicable to Dividends Received Through December 31, 2003

b. Taxation of Dividends Received Beginning January 1, 2004

(1) Comparison between Old and New Systems

(2) Foreign-Source Dividends

3. Stock Options

4. Exclusions from Gross Income

C. Business Expenses

D. Capital Expenditures

E. Thin Capitalization

F. Interest Deduction Regime

G. Loss Carryovers and Carrybacks

H. Foreign Tax Credit

I. Tax Rates and Calculation of Taxable Income

J. Assessment and Filing

K. Convenience Companies (Società di Comodo)

L. Taxation of Trusts

M. Easing of Taxation on Extraordinary Company Operations

N. Tonnage Tax

O. Tax Amnesty

1. Tax Amnesty for Taxpayers Who Certify Revenues below a Certain Threshold

2. Additional Return for the Settlement of Tax in Prior Years

3. Global Amnesty (Condono Tombale)

P. Transactions Between Resident Taxpayers and Residents of Tax Havens

Q. Controlled Foreign Corporations

VI. Taxation of Nonresident Corporations

A. What Is a Nonresident Corporation?

B. Determination of Taxable Income

C. Method of Taxation

VII. Branch Taxation

VIII. Taxation of Partnerships and Small Businesses

A. Taxation of Partnerships

B. Taxation of Small Businesses

IX. Regional Tax on Productive Activities

X. Income Taxation of Resident Individuals

Introductory Material

A. Individuals Subject to Personal Income Taxation (Imposta sul Reddito delle Persone Fisiche)

B. Determination of Aggregate Income

1. Business Income

a. Deductions

b. Capital Gains from the Transfer of Securities

2. Income from Capital

3. Income from Real Property

4. Income from Personal Services

5. Other Forms of Income

6. Aggregate Taxable Income

7. Estimated Tax upon Standard of Living

C. Income Subject to Separate Tax

D. Income Tax Rates

E. Tax Reductions or Credits

F. Additional Taxes on Imposta sul Reddito delle Persone Fisiche

G. Filing and Payment of Tax

H. Withholding at Source

1. Withholding on Wages and Fees

2. Withholding on Passive Income

I. Penalties

J. Dividend Tax Credit

K. Foreign Tax Credit

XI. Income Taxation of Nonresidents

Introductory Material

A. Italian-Source Income

B. Withholding at Source

C. Assessment and Payment of Tax

XII. Inheritance and Gift Taxation

XIII. Stamp Tax

XIV. Registration Tax

XV. Tax on the Increase in Value of Real Property

XVI. Value Added Tax

Introductory Material

A. Transactions Subject to Imposta Sul Valore Aggiunto

B. Rates

C. Payment of Tax

D. Territorial Application

E. Record-Keeping Requirements

F. Simplified Record-Keeping Requirements

G. Audits

H. Penalties

XVII. Inter-Company Pricing

XVIII. Taxpayers' Bill of Rights

XIX. Tax Treaties

A. General

B. 1984 Italy-United States Tax Treaty

1. Taxes Covered

2. Permanent Establishment

3. Business Profits

4. Shipping and Air Transport

5. Dividends

6. Interest

7. Royalties

8. Capital Gains

C. 1999 Italy-United States Tax Treaty (Not Yet in Force or Effect)

1. Taxes Covered

2. Correlative Adjustment Procedure

3. Taxation of Dividends

4. Branch Profits Tax

5. Government Entities

6. Interest

7. Royalties

8. Treaty Shopping and Avoidance

Working Papers

Working Papers

Finding Aid

Worksheet 1 Special Power of Attorney - Procura Speciale, with English Translation

Worksheet 2 Public Deed of Incorporation - Italian Republic

Worksheet 3 Charter of an SpA

Worksheet 4 Corporate Income Tax Return

Worksheet 5 Corporate IRAP Return

Worksheet 6 Withholding Tax on Royalties

Worksheet 7 Withholding Tax on Dividends

Worksheet 8 Withholding on Interest and Other Income From Capital

Worksheet 9 List of Double Taxation Agreements and Related Protocols Signed by Italy As of November 30, 2008

Worksheet 10 1984 Italy-United States Income Tax Treaty, Protocol and Exchange of Notes

Worksheet 11 1999 Italy-United States Income Tax Treaty, Protocol and Memorandum of Understanding

Worksheet 12 Treasury Technical Explanation of 1999 Italy-United States Income Tax Treaty

Worksheet 13 Items To Be Included in Company Balance Sheet

Worksheet 14 Items To Be Included in Company Profit and Loss Statement

Worksheet 15 Items To Be Included in Abridged Balance Sheet

Worksheet 16 Italy: 2008 Budget Law Reduces Corporate Tax Rate, but Expands Tax Base






Web sites:

Tax Services: