Italy follows EU investment laws. In May 2021, the EU Commission granted "right-of-hand device" rights related to subsidies in the event of a merger and acquisition of EU companies by entities receiving offshore subsidies.
This measure aims to prevent distortion in the EU market following offshore subsidies.
According to the bill, companies receiving offshore subsidies exceeding 50 million euros must notify and obtain approval from the executive if they acquire and merge with EU companies with annual sales exceeding 500 million euros.

In principle, Italy imposes no restrictions on foreign investment, but reciprocity is applied to foreign companies starting businesses in Italy.
For foreign companies to invest in major industries designated by the state as strategic, they must obtain prior investment approval.
Industries requiring prior approval are continuously expanding, and under the law introduced in 2012, non-EU investors are obliged to report if they acquire more than 50% of voting rights in overseas investments in the EU. Key industries include defense, national security, energy, transportation, telecommunications, high-tech, 5G, and finance.

Particularly, foreign investment screening has been intensified not only nationally but also regionally to protect companies related to strategic infrastructure, which faced a liquidity crisis due to COVID-19.
Companies are restricted from mergers and acquisitions.
The strengthened screening of foreign investment in national security and key industries now takes at least 45 days for review as of 2023.

Regarding the Italian government's investment support policy, foreign investors in Italy receive the same rights as domestic companies.
Therefore, they are supported equally, irrespective of their domestic or foreign status.
Additionally, investment policies, including regional investment attraction policies linked to local government finances, are executed by local governments.
These policies are separate from investment incentives led by the National Tax Service and the Ministry of Economic Development.

Investment Incentives

Special Industry Incentives

It targets technology-intensive projects such as defense or aviation technology or small and medium-sized enterprises, and support for high-tech industries linked to sustainability and regional supply chain construction has recently been strengthened under the European Green Deal and the European Joint Interest Project (IPCEI).
In addition, incentives continue in the facility and R&D investment sector in connection with the company's Industry 4.0 (Industrial 4.0) project.
Detailed information on incentives can be found on the website of the Ministry of Economic Development, and the main contents are as follows.

Tax reduction system for small and medium-sized enterprises and innovative startups

• Companies or individuals who have invested in innovative startups can receive a reduction of up to 30% of income tax.
  Individuals can benefit up to 1 million euros per year and companies up to 1.8 million euros per year.

Super Depreciation, Hyper Depreciation

• In the case of new investments in facilities and equipment related to the Fourth Industrial Revolution, accounting for 40% and 150% of depreciation costs is allowed, providing accounting advantages.

R Tax benefits in the R&D sector

• Tax deductions are provided up to 50% for companies with increased R&D spending.
  In particular, if the minimum investment in the R&D sector is more than 30,000 euros through the operation of the patent box system, 50% of the tax will be deducted for five years by selecting one of income tax or local tax regardless of the company's sales, legal form, or field.

Tax Incentives

Incentives based on Law 338/2000

• In the case of Law 388/2000, the Italian government's "New Economy" promotion policy provides a 60% tax refund on the cost of companies investing in information technology (computer software, hardware, portals, security, electronic payment systems, employee education and training).

Incentives based on Law 145/13

• Companies that spend high costs on R&D compared to the previous year have tax deductions of up to 50%.
  In addition, in order to strengthen the Internet digital network, small and medium-sized enterprises will provide tax deductions of up to 65% and up to 20,000 euros when they spend on building such infrastructure.

Incentives Based on Location

Incentive based on Law 341/95

• It is an incentive to provide tax benefits when purchasing factory facilities or machinery for the development of southern and underdeveloped regions, and is applied to manufacturing and mining, and the degree of benefits varies by region.

Incentive based on Law 181/98

• It is an incentive organized by the Italian Development Corporation (Svilleupo Italy) that focuses on support for boosting investment in regions that have suffered from temporary economic crises.

Incentive based on Law 311/204

• It is an incentive organized by the Italian Development Corporation (Svilleupo Italy) that focuses on flexible support for investment in underdeveloped regions to revitalize the local economy.
  The degree of benefit varies depending on the region or size of the company, and like other support programs, approval from the EU Commission is required to confirm the limit of support under EU regulations.

R&D related incentives

Incentives using Fondo perle Agevolazionialla Ricerca (FAR) funds

• It is an incentive organized by the Ministry of Education, University and Research based on the Enforcement Decree 297/99, and is supported for research and development activities such as new product development, existing product improvement, and process improvement.
  It is mainly assigned to national R&D projects and research institution establishment projects.

Incentive using Fondoper'Innovazione Technologica (FIT) funds

• Based on Act 46/1982, incentives organized by the Ministry of Economic Development are supported for high-tech milk powder, pre-competitive development, industrial research, and the establishment of research institutes.
  In the southern region, it may be supported as part of an integrated support package

Incentive based on Law 140/97

• It applies to local governments collectively by providing tax benefits to research and development projects in the pre-competition.

Green New Deal Project Incentive

• Eligible costs for projects related to the Green New Deal range from 3 million euros to 40 million euros, which are executed from project funds managed by the Ministry of Economic Development and are governed by Invitalia.

Recruitment Incentives

Youth Employment Incentive

To promote the employment of newcomers to society under the age of 30, employers will receive up to 90% of the employer's tax for three years if young people under the age of 30 are hired under an "apprentice" contract.
The incentives will be provided for up to 36 months after hiring employees, terminating when the employee reaches the age of 30 or older during the application period.

Incentive for New Full-time Employment:

Effective until December 31, 2023, these incentives will exempt employers from taxes up to 8,000 euros per year, aiming to promote youth employment under the age of 36.
Employers can receive support for up to 36 months after hiring employees.
In the eight southern states, this support can extend to 48 months.
To qualify for the incentive, employees must not have a record of individual or collective dismissal within six months before and more than nine months after employment.

Training Incentives:

Job seekers between the ages of 18 and 29 can be hired through full-time or part-time apprenticeship contracts related to a specific major or research field.
The training period lasts approximately 36 months, during which the employer's social security tax is only 11.3% of the salary.
If the apprentice's contract is renewed, employers can benefit from reduced social security tax rates for the following 12 months.

Incentives related to revitalizing the local economy and fostering local talents:

'Resto al Sud' Policy:

The primary objective is to provide subsidies and low-interest loans to support young people aged 18 to 45 in the southern region.
Young individuals in the southern region are eligible for 100% support, comprising 50% cash assistance and 50% in loans, up to 50,000 euros.
This support covers various expenses such as real estate, machinery purchases, and startup-related management costs.

Restrictions and Prohibitions (Industries):

Certain investment restrictions apply under relevant laws, particularly in non-EU countries, for Italian domestic flight operations, shipbuilding, defense industries, and national strategic sectors like energy, mining, telecommunications, medicine, tourism, insurance, and agriculture.

Financial Industry:

Approval from the central bank is necessary to acquire more than 5% stake in financial institutions, whether domestic or foreign, or to gain substantial control.
Non-financial companies are limited to owning a maximum of 15% stake in banks.

Specific Fields such as Defense, Aviation, etc.:

The government retains the authority to restrict investments at the government level if a foreign investor's country implements discriminatory measures against Italian companies due to serious concerns for the national economy.
Additionally, the government holds more than 30% of government shares in major companies in the energy, defense, and aviation sectors, exercising veto power through golden stocks over significant decision-making.

Strategic Industries in Other Countries:

In March 2011, the "Decretto Anti-scalate," a foreign hostile M&A protection bill for Italy's strategic industry, was enacted.
The bill allows CDP (Cassa Depositi), a special state-run financial company under the Ministry of Finance, to intervene in four national key sectors, including food, energy, telecommunications, and defense.
The establishment of Fondo Strategico Italiano was a part of this initiative.

Post-COVID-19 Measures:

After the COVID-19 pandemic, Italy strengthened investment screening in April 2020.
The government passed a temporary bill to protect companies whose financial structures were weakened due to the prolonged pandemic.
This included strengthening foreign investment screening, even within the EU, and expanding the scope of industries subject to "Golden Power." This government authority restricts overseas transactions involving defense and strategic industries to defend key assets from being sold overseas.

Special Economic Zones and Free Trade Zones

The ports of Trieste and Venice in northeastern Italy have free trade zones.
These zones offer the advantage of importing, manufacturing, and re-exporting products without tariffs imposed by local customs authorities.
Additionally, foreign companies in the region can hire workers according to their own labor laws and social security systems, serving as a strong incentive for foreign investments.
Currently, the Italian government plans to establish additional free trade zones in Genoa and Naples, in addition to Trieste and Venice.

Furthermore, in southern Italy, eight regions (Abruzzo, Molise, Campania, Apulia, Basilicata, and Calabria) with comparatively lower economic levels than other regions offer incentives to companies investing in Sicily and Sardinia.
These incentives include reduced corporate taxes on newly acquired assets and subsidies for new hiring.

Lombardia

• Area: 23,844 km²

• Population: 10.2 million

• Major institutions: Milan Stock Exchange

• Major industries: Finance, machinery, design, fashion, media/information and communication technology, etc

• Remark: A number of Korean companies have entered the Italian financial center of finance.
  Milan is the center of the design industry, and the Fashion Week is held twice a year.

Piemonte

• Area: 25,400 km²

• Population: 442.4 million

• Provincial capital: Torino

• Major industries: automotive (FCA), industrial design, etc

• Note: The R&D center and production plant of automobile manufacturer Fiat Chrysler Automobile (FCA) is located in Turin.
  Automotive parts industry, industrial design and automation related companies are concentrated nearby

Lazio

• Area: 17,232 km²

• Population: 598.8 million

• Provincial capital: Rome

• Major institutions: Presidential Palace, the House of Representatives and the House of Representatives

• Major industries: Tourism

• Remarks: Rome is the center of Italian politics and the location of the headquarters of major public corporations (Leonardo, ENI, etc.)

A corporation can conduct independent business activities and is advantageous in terms of corporate trust in third parties.
The establishment of a local subsidiary in Italy has different jurisdictions for each related business or industry, and the registration process for each institution is complicated and time-consuming.
It is generally easy to get through a local lawyer/accountant due to strict laws and procedures.
Prior to the establishment of a local corporation, Liaison Office is often opened, but in the latter case, all financial and commercial activities cannot be carried out, so care should be taken

The types of local corporations can be largely divided into three categories: Societa' per Azioni (SpA), Societa' a Responsabilita' Limitata (Srl: Societa' in Accomandita's per Azioni), and the establishment procedure is as follows.

• Capital payment

  • 25% of statutory deposits are deposited in an interest-bearing bank account

• Confirmation and signature of the company's articles of association in the presence of a notary institution

  • Corporation needs legal representative in Italy to set up office

  • All documents related to the establishment of a company under Italian commercial law are translated into Italian and notarized by Notario

  • When all documents are notarized, it is a common procedure to appoint a notary, lawyer, or agent to act on behalf of the company's establishment.

• Documents to be prepared by corporate installation companies in Korea

  • Company articles of incorporation: The name of the representative, the status of shareholders, the company name, the duration of existence, the purpose of the company, and the capital should be included.

  • Business Registration Certificate

  • Copy of the corporate register

  • Bank Certificate: Certification (Application) for Establishment of Overseas Offices Issued by Korea's Foreign Exchange Main Bank, etc

  • Board Resolution for Incorporation: The board resolution must specify the legal representative name of the branch office and the address of the establishing branch office.
    Alternatively, a letter of appointment as a representative of the branch office issued by the head office is also possible

  • Power of attorney of legal representation of a corporation: document specifying the authority of the legal representative of a branch office guaranteed by the head office (parent company)

  • It is convenient to translate all possible documents in Korea and obtain consular confirmation from the Italian Embassy in Korea after notarization.
    Please note that the fee is very high if the translation is notarized in Italy

• Issuance of VAT Number (Partita IVA) and Tax Number (Codice Fiscale) from tax authorities

  • The value-added tax number is a kind of accounting number related to taxation, issuance of bills, etc., and is essential for opening an office bank account and accounting

  • Pay the cost of applying for the issuance of the value-added tax number to the post office and submit the payment receipt and prescribed necessary documents (company articles of association, business registration, corporate register, translation of the appointment letter, and notarization)

• Enterprise Registration with Local Chamber of Commerce

  • Report to the company registry of each local chamber of commerce where the branch is located.
    With the recent change to the electronic reporting system, this procedure is carried out at the office of a lawyer or notary appointed to perform the work of establishing a branch.

• Social security tax (INPS) and industrial accident insurance (INAIL) registration

  • If you fill out the INPS predetermined form, DM68, and submit it with the IVA number at the local INPS (National Institute for Social Security) branch, you will be registered with the INPS, which will give you a CSC and a CA code indicating the scope of the company's payment (guarantee.
    INPS finally determines the amount of social security tax paid by employers and employees using two codes, CSC and CA, and provides companies with various documents for INPS registration when they hire employees.

  • INAIL (National Institute for Work Insurance) must be completed by the time the company begins its actual operations.
    At this time, the INAIL application form states the company's industry, number of employees, salary amount, machinery and transportation equipment used in the workplace.
    Upon completion of INAIL registration, the entity is given a unique number, which must also be specified in the employee's payroll statement and in the employment contract.

According to the Italian Companies Act (Civil Code 2508), foreign companies can establish branches for conducting business in Italian territory at any time.
Since the branch is not obligated to register official capital and is not regarded as an independent entity from the parent company, it does not have a separate official operator and management structure other than the branch manager representing the parent company of the country. The advantage of operating a branch is that there is no requirement to invest capital, and the establishment process is simple.
However, a significant disadvantage is that the branch is not recognized as an independent legal entity in the event of legal and economic problems caused by the branch.
When a foreign company establishes a branch office, it must be notified in the publication gazette of the award in accordance with statutes 516/92 under EU Directive 89/666.

The Governor shall submit and register the following documents to the local Chamber of Commerce and Industry within 30 days of its establishment:

• Notarized translation of the articles of incorporation into Italian by the parent company of the country

• Notarized Italian translation of parent company registration certificate issued by the home country's corporate registration authority

• a notarized translation of the articles of incorporation into Italian by the parent company of the country

• Notarized Italian translation of the minutes of the board of directors or shareholders' meeting of the parent company of the country where the resolution on the establishment of the branch office is recorded

• Power of attorney of legal representation

Liaison offices are limited to activities such as public relations, information collection, and marketing.
They are not permitted to engage in sales activities that generate profits.

The establishment of a liaison office requires submission of a prescribed form to the local Chamber of Commerce and Industry, similar to other types of establishments.
The required documents for registration are as follows:

Italian notarized translation of official records related to the establishment and operation of the Italian Liaison Office Notarized Italian translation of the parent company's registration certificate issued by the country's corporate registration authority.

When registering the company with a local chamber of commerce (the registration is processed through the corporate registration office after notarization by a notary agency), it must be reported to each local chamber of commerce where the office is located.

Corporation

The characteristic of a stock company is that all investors have limited liability, and capital is divided into stocks.
It presupposes a relatively larger scale than a limited liability company, and the board of directors should be required.
The board of directors shall consist of at least three members and may grant the management committee the right to operate.
In addition, the board of directors has freedom of stock transfer as a basic principle.
The minimum paid-in capital is 50,000 euros or more, and at the time of incorporation, at least 25% of the capital must be deposited in the bank, and the remaining 75% can be invested at the request of the manager.
The form of paid-in capital and bank account evaluation is conducted by experts, and companies are obligated to register with the Chamber of Commerce and Industry and the National Tax Service.
They cannot start business until registration is completed.
The establishment agent has unlimited responsibility for the commencement of business before the completion of registration.

The company's articles of incorporation required to report the establishment of a corporation include the company name, location, size of capital, minimum cost of stocks, total number of issued stocks, type of stocks, type of stock issuance, and type of public announcement.
Stock companies have the advantage of guaranteeing corporate survival regardless of changes in shareholders.
However, compared to limited companies, the establishment process is difficult and has the disadvantage of being followed by various complex restrictions

Limited Liability Company

It is the most common form for small and medium-sized companies due to its low paid-in capital and the highest degree of autonomy under Italian company law.
The founder bears responsibility only within the amount of investment he or she has made.
Limited liability companies include one-person limited liability companies and companies with two or more partners.
The number of promoters and registration procedures are the same as those of a corporation.
The paid-in capital is 10,000 euros or more, and at least 25% of the capital must be deposited in the bank at the time of incorporation. A one-person limited liability company is a case where there is one investor, and the company's responsibility is limited to the initial promoter.
The company's decision to operate must be recorded in a document.
A single-person limited liability company can enjoy the advantages of a private company, especially since the company's assets and personal assets are separated, allowing it to avoid the progressive tax applied to individual income.
A limited liability company with two or more partners is a private company established with multiple partners.
Each partner is responsible within the limit of their investment, and the partners' authority can be transferred only under certain conditions.

Among limited liability companies, there is a simple liability company introduced in 2013 to encourage start-ups.
The minimum capital is 1 euro, which must be paid in full at the time of establishment.
The stakeholders are limited to individuals.
The articles of incorporation for this type of limited liability company are prepared according to the standard model determined by law, and there is no notarization fee for the establishment of the company.

In the case of private companies, the establishment process is simple and can be done with little capital.
However, unlike a limited liability company, since personal assets and the company's assets are not distinguished, the operator is fully and unlimitedly responsible for the company's debts.
Accordingly, when a company goes bankrupt, there is a disadvantage: not only the individual business operator but also the family assets of the business operator are used to pay the company's debts.
Additionally, it is not suitable for foreign investment companies that want to expand their business scope due to the lack of financial liquidity, such as bond issuance or listing.