A separate Italian legal entity: the foreign parent is not exposed
What we do, and what is included
An Italian subsidiary is a società controllata, incorporated here and owned by a foreign parent. The general procedure sits on Italian company formation. Pricing is on request.
Foreign document review
The parent's certificate, board resolution and power of attorney, checked for apostille and sworn translation before they reach the notary.
S.r.l. or S.p.A. incorporation
We take a foreign corporate parent through the notarial deed and the filing that gives the company its legal personality.
Notary and register coordination
We work with the notary who draws the atto costitutivo and with the Register of Companies office.
VAT registration referral
Once the subsidiary is registered, we refer the Italian VAT registration that follows.
Subsidiary or branch: where liability sits
Italy's investment portal draws the line plainly: a subsidiary is an independent legal entity, a branch only an extension of the parent (Invest in Italy). Branch mechanics sit on branch office in Italy, the lightest option on a representative office.
| Feature | Subsidiary (S.r.l. or S.p.A.) | Branch (sede secondaria) |
|---|---|---|
| Legal personality | On entry in the Register, not on signature (Art. 2331 c.c.) | None. An extension of the foreign parent |
| The parent's exposure | Limited to what the subsidiary owns (Art. 2462(1) c.c.); the sole-member exceptions are narrow | Not shielded. The S.p.A. liability rules apply (Art. 2509 c.c.) |
| Minimum capital | EUR 10,000 for an S.r.l., EUR 50,000 for an S.p.A. (Artt. 2463(2)(4), 2327 c.c.) | None: nothing is incorporated |
| Register formality | Notarial deed, then incorporation | Publicity only: the representatives and their powers (Art. 2508(1) c.c.) |
| Annual chamber fee, 2026 | EUR 100.00, or EUR 120.00 with a regional surcharge | EUR 66.00 (CCIAA Marche 2026) |
Column A, Subsidiary (S.r.l. or S.p.A.): legal personality yes, a separate entity. Liability of the parent limited to what the subsidiary itself owns. Register formality full incorporation. Annual chamber fee EUR 100 to 120. Column B, Branch: legal personality no, an extension of the parent. Liability of the parent not shielded, the S.p.A. liability rules apply directly. Register formality publicity only, no incorporation. Annual chamber fee EUR 66.
How the process works
- Confirm reciprocity. Art. 16 disp. prel. c.c. reaches foreign legal persons, not only the individuals signing for them.
- Legalise and translate the parent's documents. An apostille under Law 1253/1966 replaces consular legalisation where the country of origin is a party too. Before the deed
- Send a signatory, or grant a power of attorney. Filing a company's procura costs EUR 30.00 of MUI stamp duty plus EUR 59.00 to 65.00 at the Register.
- Sign the deed before an Italian notary. A single foreign parent incorporates by unilateral deed and pays the whole cash contribution in then, not the 25% that applies with more founders (Art. 2464(4) c.c.).
- File with the Register of Companies. The deed goes in within 10 days (Art. 2330 c.c.), and the company exists as a legal person from the entry. Within 10 days
- Register for VAT, and keep the register current. We refer the Italian VAT registration. A later change of sole-member status is filed separately (Art. 2470(4)-(7) c.c.). Within 30 days
Next step
Not sure whether a subsidiary or a branch fits?
Describe the Italian operation and we will tell you which form carries it.
Tell us about your case
Documents you will need
No official checklist exists. These are the pieces that recur.
- The parent's certificate of incorporation, apostilled
- The board resolution authorising the signatory, apostilled too
- An extract from the parent's own foreign register
- A sworn translation for an act filed in another EU language (Art. 2250(5)-(6) c.c.)
- A notarised, apostilled power of attorney if the signatory cannot attend
- Confirmation that reciprocity is satisfied for the company itself
- The cash contribution paid in full, where one parent incorporates alone
Dividends to the foreign parent: relief and rates
A qualifying EU parent can have the dividend withholding refunded, or not applied at source, under Art. 27-bis D.P.R. 600/1973.
10% and one year, not 20% and two
The printed article still reads 20%, cut to 15% from 2007 and 10% from 2009 (D.Lgs. 49/2007, Art. 2(2)). Two years is the directive's optional backstop; Italy set one (Art. 27-bis(1)(d)).
Four conditions, all at once
A listed company form, EU tax residence with no third-country treaty residence, a listed corporate tax, and the stake held a year.
The proof, and its deadline
A certification from the parent's tax authority covers the first three conditions, the company's own declaration the fourth. Obtained by the payment date, it becomes relief at source.
The baseline where no relief applies
A final 26% withholding on dividends to non-residents, refund up to 11/26 for EU and EEA residents. Comma 3's printed 27% is a relic; the operative rate is Art. 3 D.L. 66/2014's 26%.
PEX through an Italian holding layer
Where an Italian holding company sits in between, the dividends it receives are 95% excluded from its income and qualifying gains 95% exempt (Artt. 89(2), 87(1) TUIR).
| Payment or scenario | Rate | Article |
|---|---|---|
| Dividends to a non-resident, no relief applied | 26%, refund up to 11/26 | Art. 27(1) and 27(3) D.P.R. 600/1973 |
| Dividends, EU relief: 10% held one year, plus the form, residence and tax conditions | Refund, or no withholding at source | Art. 27-bis D.P.R. 600/1973 |
| Dividends to an EU/EEA parent outside that relief | 1.20% flat, from 1 January 2026 | Art. 27(3-ter) D.P.R. 600/1973 |
| Royalties, outside a treaty or the EU interest-royalties regime | 30% final | Art. 25(4) D.P.R. 600/1973 |
| The subsidiary's own profit (IRAP sits on corporate tax in Italy) | 24% (IRES) | Agenzia delle Entrate |
Node 1, Italian subsidiary: pays IRES at 24% on its own profit, then distributes what remains. Node 2, optional, Italian holding layer: if profit passes through here before reaching the foreign parent, 95% of the dividend is excluded from this company's own taxable income. Node 3, Foreign parent: the ultimate recipient. Direct leg, subsidiary to foreign parent: withholding applies here, at 26% baseline with an 11/26 refund, or at the Article 27-bis rate once the 10% and one-year conditions are met, or at the flat 1.20% for an EU/EEA parent outside Article 27-bis. Indirect leg, through the Italian holding layer: the 95% PEX exclusion applies inside Italy, on the way into the holding company, a different point in the flow from the withholding on the direct leg.
Problems we solve
The document nobody apostilled
Rarely the certificate of incorporation. Far more often the board resolution authorising the signatory, asked for once it is too late to fix quickly.
A threshold read off the wrong text
Groups plan around 20% and two years, because that is what most English-language explainers of the directive say. Italy's figures are 10% and one year.
The remote-signing assumption
Italy's online platform lets an individual founder sign an S.r.l. by video conference. A foreign corporate founder still needs presence or a power of attorney.
Transfer pricing raised after the invoices
Prices with the parent are tested against arm's length wherever that raises Italian taxable income (Art. 110 TUIR).
Group reporting nobody costed
Consolidation is tested at the group parent's level, over two years, on assets, revenue and headcount together. One small Italian subsidiary does not create it.
Next step
Already know it is a subsidiary?
Send us the parent's documents and we will tell you what is missing.
Tell us about your caseWhy work with us
From our practice. A power of attorney is often faster than travel, once flight timing is weighed against the notary's own calendar.
Neither the author nor the reviewer of this page is a notary. The work here is coordination with the notary who takes the deed.
Prepared by Giulia Mancini, Head of Corporate Formation, Milan office, who started out preparing incorporation deeds in a Milan notary practice.
Reviewed by Alessandro Ferri, Tax and Accounting Lead, Rome office. Updated 13 September 2026.
Tell us about your case
Tell us what the parent is and where it sits, and we will say what the subsidiary needs from it.
Frequently Asked Questions
What is the difference between a subsidiary and a branch in Italy?
A subsidiary is an independent Italian legal entity, normally an S.r.l. or S.p.A., that the foreign company owns. A branch is not a separate legal entity: it is an extension of the parent, registered only for publicity, under the S.p.A. rules on liability.
Does a subsidiary protect the foreign parent from the Italian company's debts?
Yes, as a general rule. An Italian S.r.l. answers for its own obligations only with its own assets, with narrow sole-member exceptions. A branch offers no equivalent shield: the foreign parent itself carries the exposure for what the branch does in Italy.
Which Italian company form does a subsidiary normally take?
Usually an S.r.l., minimum capital EUR 10,000. An S.p.A., minimum capital EUR 50,000, is used only where its governance regime, a board of statutory auditors or access to bond finance, is specifically needed. The mechanics of each form are covered on their own pages.
Do foreign corporate documents need an apostille to be used in Italy?
Italy ratified the 1961 Hague Apostille Convention through a dedicated statute, Law 1253/1966. An apostille placed on the foreign parent's corporate documents replaces consular legalisation, wherever the document's country of origin is also a party to that Convention, before the document reaches the Italian notary.
Do foreign-language corporate documents need translation for the Italian Register?
The Register of Companies has a dedicated multilingual channel: an S.r.l. or S.p.A. act subject to mandatory filing may be published in another official EU language with a sworn translation. A discrepancy in that version cannot be relied on against third parties.
Can the foreign parent sign by power of attorney instead of attending in Italy?
Yes. Filing a company's power of attorney with the Register costs EUR 30.00 of stamp duty through the MUI, plus EUR 59.00 to 65.00 of Register stamp duty, the practical route where the parent's own signatory cannot attend in Italy in person.
What withholding relief exists for a qualifying EU parent?
A refund, or relief at source on request, under Article 27-bis of D.P.R. 600/1973: the parent must hold at least 10% of the subsidiary's capital, uninterruptedly, for at least one year, and meet the form, residence and tax conditions of that article.
Is the EU parent-subsidiary withholding threshold 20%?
No. The article's printed text still reads 20%, but an amending provision cut that to 15% for profits distributed from 2007 and to 10% for profits distributed from 2009 onward. The 10% figure is what applies to a distribution made today.
Is the minimum holding period for the EU relief two years?
No. The two-year figure belongs to the optional backstop that the EU parent-subsidiary directive allows member states to set in their own domestic law. Italy's own implementing text, Article 27-bis(1)(d) of D.P.R. 600/1973, sets the holding period at one year, held uninterruptedly by the parent.
Does transfer pricing apply between an Italian subsidiary and its foreign parent?
Yes. Cross-border transactions with a company that controls the subsidiary, is controlled by it, or is controlled by the same parent, such as management fees, loans and royalties, are priced at arm's length wherever this increases the subsidiary's taxable income.
Can a transfer-pricing penalty be avoided on an adjustment?
Yes. Adequate, contemporaneous transfer-pricing documentation, prepared in the form the Agenzia delle Entrate prescribes by its own measure, exempts the taxpayer from the ordinary penalty for an incorrect return, provided it is handed over during a tax audit, access or inspection.
Does an Italian subsidiary have to be included in a consolidated financial statement?
Only where the group, tested at the level of the parent preparing the accounts, exceeds for two consecutive years EUR 25,000,000 in assets, EUR 50,000,000 in revenue and 250 average employees. A single small Italian subsidiary does not by itself create that duty.