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A foreign company which plans doing business in Lombardy, or Italy as well, most of the time faces the problem related to which would be the most suitable kind of entity to be set up, aiming to balance costs and benefits arising from a given choice. It often happens that foreign investors are at an early stage, making market research and analyzing the market , so far from setting up a company.
So which could be the best solution addressed to them to operate in Italy in so different and various situations?
The Italian legislation provides three different ways to approach the Italian market:
- Representative office
- Branch
- Subsidiary
Representative office
Bureau de liaison in France Representative office in UK, Ufficio di rappresentanza in Italy. A very common and diffused modality to analyze, measure and test the market is the Representative Office which follows the customary international rules, providing a physical desk for the company in Italy during a promotion company products or services activity. The only big restriction lies in the absolutely interdiction to issue invoices, accept payments and pay suppliers. For a technical point of view it is assimilable to an accountability cost center. The relevant benefits deriving from opening a Representative office are a low cost presence compared to open a Branch or any kind of Subsidiary, a streamlined structure to be managed, a low bureaucracy level due to a lack of V.A.T number duty and a no taxes imposition, according to an invoice prohibition. Moreover having a representative office helps a company to build a trustful reputation with potential future clients and providers.
Branch
A more developed and trading oriented presence, could be represented by a Branch. This particular organization is characterized by a proper and direct connection with the parent company based abroad. Indeed a Branch is not a legal entity and the major difference between a Branch and a Subsidiary lies in the liability: in fact the economic and administrative dependence as well as the responsibility against third parts is entrusted to the parent company.
Subsidiary
This situation recurred when a foreign company establishes a new Italian entity endued with legal autonomy. A first condition of reciprocity verification is requested to equiparate the foreign and national entrepreneur status. Then it can go further with the company incorporation, with the possibility to choose within Limited Liability Company (s.r.l.) , Limited Company (S.P.A.) , or the different kinds of partnerships.
Find more information about how open a company download our handbook for foreign investors with information about investment opportunities and features into Lombardy Region and a guide about starting a business.