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Italy Routes to Market

So you've decided to expand a business in Italy and researched your market. Now it's time to decide how you will register or expand the business in Italy. What is the best, most viable option for your company, your products, and yourself? Which is the path of least resistance?

Foreign investors wanting to expand a business in Italy may do so in one of the following forms:

Representative Office

Foreign companies who intend to establish a representative office in Italy must act in accordance with some formalities at Company Registries. A part from other formalities, they must release:

• Corporate details of the representative office
  Personal details of the individual accountable for the representative office
  

Its important to know that if all the formalities are not respected, the individual accountable for the representative office is personally liable for the offices obligations.

Branch Office

Foreign companies may also expand business in Italy through a branch office. Branch office is considered a permanent establishment subject to corporate income tax. Apart from other obligations and formalities, branch office is obliged to keep books and file VAT returns and the annual financing statement.

Incorporating a Limited Company

Foreign companies looking to invest can choose a more stable organization incorporating a business in Italy. Usually to incorporate a company is necessary:

• Articles of association
• Notarial deed
• Registration with Registry of Commerce
• (not always) publication in a legal gazzette
  

The most common types of company for foreign investments interested in expanding a business in Italy are :
Societ a responsabilit limitata (SRL): It is a Private Limited Company. No minimum number of partners; it is also possible one partner for a sole proprietorship. Minimum capital: Euro 10.000 totally subscribed and released up to 25% at the creation. Liability is limited to the amount cotribuited. Taxation: IRPEG (corporate tax) + IRAP (regional tax).

Societ per azioni (SpA): It is a Public Limited Company. No minimum number of shareholders; it is also possible one partner for a sole ownership. Minimum capital: Euro 120.000 totally subscribed and released up to 25% at the creation. Their liability is limited to the amount contributed. Taxation IRPEG (corporate tax) + IRAP (regional tax).

Societ in accomandita per azioni (SApA): It is a Partnership Limited by Shares. Two types of partners: general partners who are liable jointly and severally liable without limitations for the company obligations; special partners who are liable within the limit of subscribed capital.

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Licensing

Licensing in Italy is the permission for someone else to use your intellectual property rights: either a patent, trademark, trade secret, or copyright. Different types of license include:

Non-Exclusive License - A non-exclusive license implies that your intellectual property rights can be awarded to more than one licensee.

Exclusive License - A little more complex because, although the license may not be exclusive to one licensee, it may be exclusive to a geographic location, a certain product, or limited area of use. For instance, you may grant a licensee exclusive use of the rights in France, yet grant another licensee its use in Germany.

Patent License - The allowance of another party to use your patented product, design or process.

Trademark License - Trademark licensing means permission is awarded to a licensee to sell a product or service. However, the licensor retains more control in order to ensure that quality is maintained. Quality control is in place to uphold the image of the brand / product / service / licensor, and therefore sustain customer confidence and satisfaction.

Franchising In Italy

Franchising is the licensing out of a business name, product, technique, philosophy, trademark, etc, for a percentage of the income. Instead of setting up new outlets as part of your expansion, you license your existing business blueprint out to franchisees who then set up and manage it for you.

The benefits of franchising your business in Italy include: more freedom, as the franchisee takes on major responsibilities; minimal expense; lower cost and higher profits; potential for fast growth; brand building.
Disadvantages of franchising a business in Italy: although few, rely predominantly on your franchisees. They include: poor quality franchisees; franchisees not declaring all income; poor performance.

After a peak growth rate in the first half of the 1990's, the sector has kept growing at a considerable pace, in terms of number of brands, franchisees and total turnover. In terms of turnover the two dominant franchising sectors are Variety retailing and Services (55%) sectors generating a considerable turnover are Clothing/fashion and Non food retailing, generating together about 27% of the national franchising turnover.

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