Opening a Representative Office in Italy


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The representative office is the easiest operating mode for foreign companies.

What Is a Representative Office and What Are the Advantages for Foreign Companies

To open a representative office in Italy is a very common practice for foreign companies interested in becoming operational on the Italian market.

The representative office is the easiest operating mode for foreign companies (those which are not able to bear high costs of establishment and management
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of a branch or a satellite office) to operate inside the Italian market for promotion of products, activities or services with low cost of setting up and handling, thus without any tax liability in Italy.

It does not undergo any tax charge, since the Office does not generate any income, and its costs are generally entirely deductible for the parent company.

It consists in a fixed place on the Italian territory, eligible to perform auxiliary or preparatory functions, for advertising and promotional purposes, and for collecting information, aiming at entering the Italian market. It is not possible to develop any production or commercial activity undertaken differently from the “permanent establishment of the foreign company”.

The representative office does not require any registration in the Companies' Register or filing any financial statement or certificate of incorporation, even if its foundation shall be submitted to the Companies' Register for the registration in the Administrative and Economic Repertoire Directory (REA), prior to an application to the Revenue Agency for receiving a fiscal code.

Requirements of a Representative Office

In order to understand which costs should be borne by a representative office in Italy, it is necessary to differentiate between “mere representative office” and “non-mere representative office”.

Actually, the “mere representative office” for promotional and advertising purposes does not represent a permanent business establishment and it is not considered liable to taxes, therefore it is not required to record financial transactions, to file financial statements or VAT and income returns.

On the contrary, it shall keep record of regular accounting, that is to keep record of costs and expenses which will be covered by the foreign parent company, and also be registered by the foreign company legal representative, or even by a special attorney, in the (REA). The registration shall be carried out by sending the Single Communication, after that the Revenue Agency will issue a Fiscal Code for the mere representative office.

Whereas the “non-mere representative office”, even if it is exempt from carrying out production and commercial activities, may provide services of non-commercial nature to third parties with respect to the foreign company. Since it may be qualified as permanent establishment, it shall: be listed in the REA, have a fiscal code, keep record of financial transactions, be provided with a VAT identification number, annually submit VAT and income returns to the Revenue Agency, file the foreign company annual accounts at the CCIAA.

The Employees of a Representative Office

The different modes a foreign company may operate in Italy result in social insurance and fiscal obligations lying with subjects involved in separate ways.

The representative office in Italy is something very different from the permanent establishment, which is characterized by a permanent place of business, where the foreign company fully or partially performs its activity. Its unfailing conditions are the following:

- the natural or legal person shall depend on the foreign company;

- the performance of powers which allow the agent to sign contracts on behalf of the foreign company.

In case the foreign company operates in Italy through a permanent establishment, the latter shall be required to:

- set up an insurance position at the relevant social insurance and assistance bodies;

- compile and keep the required accounts and apply and pay the withholding taxes and retirement taxes, in compliance with Article 23 of the Presidential Decree no. 600/1973;

- issue the CUD model;

- submit the taxpayer declaration mod. 770.

In the case of a foreign company representative office, the inclusion or non-inclusion in the taxpayers shall be considered.

For fiscal purposes, in case of exclusion, the employee shall fulfill his tax obligations through the natural person single model (MODELLO UNICO PF).

While, for social insurance purposes, the representative shall set up a social insurance position on behalf of the foreign company and comply with the requirements, as keeping the Single Employment Ledger, timely paying contributions, drafting the CUD model and preparing the taxpayer declaration mod. 770 (on behalf of the foreign company).

AUTHOR: Arnone & Sicomo - International Law Firm

Copyright Arnone & Sicomo
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.

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