Who this is for
Foreign founders, CFOs, and in-house counsel evaluating how to establish a presence in Italy for sales, projects, or hiring must consider the implications of Italian Market Entry 2025: SRL vs. Branch Explained.
In brief (2 minutes)
- SRL (subsidiary) offers limited liability and complete operational freedom; expect more setup formalities but cleaner risk separation.
- Branch is faster to start than an SRL but exposes the parent to liabilities and Italian tax nexus for local activities.
- Representative Office is the lightest footprint for non‑commercial activity only (marketing, liaison, research) — no invoicing.
- If you will invoice, hire, or hold contracts in Italy, you generally need an SRL or a Branch.
- Use our 5‑question decision tree below to choose, then book a feasibility call.
Comparison table — SRL vs Branch vs Representative Office
| Factor | SRL (Subsidiary) | Branch of Foreign Company | Representative Office |
|---|---|---|---|
| Legal personality | Separate Italian company | Same legal entity as the parent | No legal personality |
| Liability | Limited to the SRL’s assets | Parent remains fully liable | N/A (no commercial activity) |
| Corporate income tax presence | In Italy (on SRL profits) | In Italy (on profits attributable to Italian permanent establishment) | None (no commercial income) |
| VAT position | Own VAT number | Parent’s Italian VAT position (via branch) | Not eligible for VAT registration |
| Activity scope | Full commercial operations | Full commercial operations | Non‑commercial (liaison/marketing) |
| Governance | Directors; shareholders; local corporate books | Branch representative; parent governance applies | Local representative |
| Banking | Own Italian bank account | Local bank account in branch’s name | Not usually required |
| Capital | Flexible; typically set to signal substance | No capital; parent funds branch | Not applicable |
| Setup & formalities | Incorporation before notary; CCIAA registration | Branch registration of parent docs; CCIAA | Simple registration/notification (varies) |
| Ongoing compliance | Full bookkeeping, corporate filings, payroll if hiring | Italian bookkeeping for branch, filings | Minimal (no accounts if no costs beyond liaison) |
| Perception with clients/banks | High credibility; easier vendor onboarding | Medium; depends on counterparty policies | Low for contracting; cannot sign commercial deals |
Tip: If you need procurement eligibility, public tenders or complex client onboarding, an SRL is typically the least resisted path.
5‑question decision tree
- Will we invoice from Italy or enter local contracts?
→ Yes: SRL or Branch.
→ No: Consider Representative Office. - Do we need liability separation from the parent?
→ Yes:SRL.
→ No / acceptable: Branch can work. - Will we hire employees or operate worksites?
→ Yes: SRL is usually smoother for HR/H&S and vendor onboarding.
→ No: Branch still viable. - Do clients or banks require a local company?
→ Yes: SRL.
→ No: Branch could suffice. - How important is speed vs long‑term flexibility?
→ Speed: Branch.
→ Flexibility/scalability: SRL.
Typical documents you’ll need (checklist)
- Parent company certificate of incorporation and good standing (apostilled + translated for Branch/RO).
- Board/shareholder resolutions authorising the Italian setup and appointing a local representative.
- Passport/ID and tax codes for directors/representatives.
- Registered office address and service agreement (virtual office ok for many use cases).
- Bank KYC pack and proof of funds (SRL).
- Articles of Association (SRL) aligned to your governance and future investment plans.
Common pitfalls (and how to avoid them)
- Under‑capitalised SRL → sets off bank/KYC friction and weak vendor confidence. Fix: set a sensible capital and prepare a business plan summary.
- Branch without risk analysis → parent fully exposed; transfer pricing overlooked. Fix: PE/profit attribution memo and group policies.
- Using a Representative Office to “test sales” → high risk of reclassification. Fix: keep strictly non‑commercial and document scope.
Implementation roadmap (30/60/90 days)
Day 0–30: structure selection, name check, draft Articles/resolutions, office address, notary booking, bank pre‑work.
Day 31–60: incorporation/registration (or branch filing), VAT, social security/INPS/INAIL if hiring, open bank account.
Day 61–90: first invoices/contracts, payroll setup, H&S baseline (POS/PaC if construction), compliance calendar.
FAQs
Is a Representative Office allowed to invoice?
No. It is limited to non‑commercial liaison/marketing activities.
Can a Branch hire employees?
Yes. A Branch can hire and run payroll; ensure HR and H&S compliance is in place.
What capital is required for an SRL?
Italian law allows flexible capital; many groups choose a pragmatic amount to support banking and vendor onboarding.
When do we create a permanent establishment (PE)?
A Branch or an operating SRL is by definition Italian‑taxable; a Representative Office must avoid commercial activity to avoid PE risk.
Can we convert a Branch into an SRL later?
Yes, plan for contract/staff transfer and tax step‑up where relevant.
How long does setup take?
Timelines vary by city/bank. Expect faster registration for Branch/RO; SRL adds incorporation steps.
Ready for the Italian Market Entry 2025? SRL vs Branch,ask us
Ready to pick your vehicle? Book a 30‑minute feasibility call to map costs, timelines and risks for your specific case.
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July 8, 2025 Updates to Italy’s Patente a Crediti
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