Italy is known for having a diversified economy in the industrial sense, thanks to the companies operating in various sectors, including banking, construction, manufacturing and others. The country is one of Europe’s major economic forces and an attractive hub for investment. It ranks eighth among the largest economies globally and is the third biggest in the EU. The economy is growing yearly at a steady pace in terms of GDP post-pandemic.
The top advantages of setting up a company in any form in Italy are-
- It is a logistics hub located strategically.
- Italy has a pro-investment culture.
- There are ample firms that have hi-tech reputations backed by government incentives.
- It is a hub for innovation.
- It serves as a robust manufacturing base.
The top sectors for investment in Italy for businesses are research and development, manufacturing, aerospace, chemicals and biotechnology.
The country ranks 58th on the World Bank’s Ease of Doing Business report 2020. Hence, several companies are willing to set up a company in Italy. One of Italy’s most accessible and popular business entities is sole proprietorship due to its unlimited liability and limited compliance requirements.
Sole proprietorships in Italy can benefit companies wanting to set up a business globally. Read up on how to register a sole proprietorship in Italy and the applicable considerations.
Who can be a Sole Proprietor in Italy
A sole proprietorship is a business controlled and owned by an individual, company or limited liability partnership. In this form of business entity, there are no partners. If you want to establish a small business with little monetary investment in Italy, as a foreigner, a sole proprietorship in Italy is the option.
Anyone can start a sole proprietorship in Italy, irrespective of their nationality. However, foreigners willing to establish a sole proprietorship in Italy must apply for work permits and relevant business licenses.
Benefits of Sole Proprietorship
Establishing any sole proprietorship in Italy can allow an entrepreneur to manage a business independently and significantly reduce management costs. It offers some other benefits, including:
- A single individual will run the company.
- Due to the zero legal separation of a proprietor from a business, the individual has rights to the overall profits.
- Lack of any obligation to keep accounting-related records.
- No complex fiscal regime.
- Individual tax rules apply to the proprietor.
- Proprietorships are not subject to any bankruptcy and insolvency procedure.
- No initial minimum capital.
- No notarization is involved or stipulation of any memorandum of association.
- There is no need to file annual financial statements.
Documents Required for Registering Your Business in Italy
The documents you need to register a sole proprietorship in Italy are listed below-
- Firm name that includes owner name plus business name. This is not mandatory.
- The sole trader must be a country resident with a local address.
- Valid work permit
- Ateco code for the activity of proprietorship
- Identity card
Other Criteria for Registering a Sole Proprietorship in Italy
To establish a sole proprietorship in Italy, remember the following points.
- There are no specific requisites around the capital or even structure-related plans that apply to a proprietorship.
- The proprietorship is active on the day the owner begins business operations.
- Make sure you complete the registrations mentioned earlier.
- You need to exclusively present electronically single communication related to registration. This is known as ComUnica to Company Registrar, which helps complete the registration process. The registration takes place via software that is available without costs by Chambers of Commerce on the website of the Company Register. Registration may be made via the Starweb app too.
- The sole proprietorship is registered under a particular section if the entrepreneur is a small business owner. The registration occurs under the general section if the entrepreneur is a commercial business. The registration occurs under the general section if the entrepreneur is a commercial business.
- Request for VAT registration to the Revenue Agency.
Post-registration compliances
- All sole proprietorships in Italy must register a company name. Remember to combine this with the owner’s name and business name. However, in the absence of such a name format, you can indicate the firm name as a business name, denoting the proprietorship’s activity.
- You need to digitally sign any modifications in the sole proprietorship process of registration.
Taxation
- Sole traders don’t need to pay any corporate tax.
- The proprietor pays income tax based on individual profits.
- For sole traders, income tax rates vary depending on the income and range between 23% and 40%.
- In the case of small entities with revenues of about 30, 000 Euros, you may opt for forfettario, which allows you to pay only 15% tax and not apply VAT.
How to Register a Sole Proprietorship Firm in Italy
Setting up a sole proprietorship in Italy requires a few compliance requirements. Find out how to register a sole proprietorship in Italy here:
Register with Trade Register
- The first step to registering a sole proprietorship in Italy is registering with the Trade Register before starting activities.
- You must fill out an application form and share a valid email address.
- Once the registration is done, the Companies Register issues a registration certificate.
Obtain VAT number
- You can apply for a VAT number and other sole proprietorship taxes in Italy with the registration certificate.
- The Italian Inland Revenue Authority (Agenzia delle Entrate) issued a VAT number.
- This will help you to create a unique identity for your sole proprietorship.
Inform REA of the business start date
- Notify the Economic and Administrative Index (REA) of the start date at the Chamber of Commerce.
- The notification needs to be made via the ComUnica website within a month from the starting date.
Register for INPS and INAIL
- The last step is registering with the National Social Insurance Agency (INPS) and National Institute for Insurance against Industrial Injuries (INAIL).
- This is helpful if you plan to hire employees while expanding your business. You can conveniently pay for social security.
If you require authorization from the municipality before starting a business, you must get in touch with the Productive Activity One-Stop Desk– the Sportello Unico Attività Productive. It is an online desk where all applications for licenses and permits can be made.
Why Choose Multiplier for Your Business
As mentioned above, sole proprietorships in Italy do not have specific requirements. As you begin to operate and hire staff in Italy, payroll-related functions could be challenging. In this context, Multiplier, a global employment solution, is the right pick for sole proprietors. It offers reliable EOR solutions to ease all management processes for international employers.