In a constantly developing economy, a company must necessarily globalize, and can do it by carrying out sporadic activities outside its national borders (taking part in a trade exhibition, advertising abroad or conducting market surveys) or of a continuous nature (selling its own products and services or importing products and services from other companies, with a more or less intense contractual activity, carried out, from time to time, by means of tailor-made contracts or with "serial" contracts).
Abroad, new market outlets are sought, greater ease and lower costs in the procurement of raw materials, incentives granted for investments abroad, facilitated tax regimes, lower labour costs, proximity to strategic infrastructures, etc..
Italian Branch
In order to enter the Italian market, a foreign company usually has to set up a stable organisation on site, which the company can do in two ways:
With the branch, the rights and obligations are directly under the parent company, which must be registered in the Italian Companies' Register:
In order to register the branch of the foreign company in the Italian Company Register, the foreign company's body competent to take the decision to establish the branch office in Italy must take this decision and appoint a person (preposto) to represent the Italian branch office (usually, this is a decision of the administrative body, which arrives notarized, i.e. in the form of a resolution received directly from a foreign notary public and issued by the same in a certified copy or in the form of a copy, certified by a foreign notary public in conformity with the original document, of a resolution taken by the competent corporate body not recorded by a notary public).
The disclosure of branches of EU companies is also governed by the Eleventh Directive, 89/666/EEC of December 21, 1989. In particular, art. 2 of the aforementioned Directive regulates the subject matter of disclosure, which concerns only the following documents and information: the address of the branch; an indication of the branch's activities; the register of companies in which the company's file is kept and the number of the company's registration in that register; the name and type of the company; the name of the branch, if it does not correspond to that of the company; the appointment, termination of office, the names of the persons having the power to bind the company vis-à-vis third parties and to represent it in legal proceedings (in particular, an indication of the extent of the powers of the stable representatives of the company with regard to the branch's activities); the dissolution of the company, the appointment, general particulars and powers of the liquidators and the closure of the liquidation, in accordance with the publicity given to the company (including bankruptcy and insolvency proceedings); the accounting documents; the closure of the branch; the Member State in which the branch is established may provide for publicity of the signature of the company's representatives at the branch, as well as of the memorandum of association and the bylaws, a certificate of incorporation and a certificate from the commercial register concerning the existence of the company, the guarantees given on the company's assets situated in that Member State.
The foreign company is obliged to file its company documents in the Italian Companies Register, according to the rules established by Italian law for joint-stock companies; to this end, the company must file its financial statements (and not only the financial statements of the secondary office), formed according to the rules of the company's governing law.
In case of discrepancies between the results of the Italian and foreign company registries, the former shall prevail, also with regard to the powers of directors and representatives of the company.
The Representative Office
If the foreign company does not intend to set up a permanent establishment in Italy (e.g. because of the high costs of setting up and managing a branch or secondary office of the foreign company), it may opt for the opening of a representative office, which is the most simplified form of direct penetration of the Italian market.
The main purpose of the representative office is to prepare and support the foreign company's entry into the Italian market through promotional and advertising activities, market surveys and collection of statistical information. The representative office is not allowed to produce goods or services and commercial activities in the proper sense. It can be said that this structure represents a simple "cost centre" (among other things, generally fully deductible for the parent company) which, since it does not produce any income and does not have the characteristics of a permanent establishment, is not considered a taxable person under Italian law, and is therefore not obliged to keep books of accounts or submit VAT or income tax returns. On the contrary, it will have to keep ordinary accounts relating to costs and expenses which will then be covered by the parent company.
It should be noted that the representative office does not require the registration and filing of the deed of incorporation and annual financial statements with the Italian Companies' Register, as it is necessary to notify its institution to the Companies' Register for the purpose of registering the Directory of Economic and Administrative news, following the receipt of the tax code from the Inland Revenue.
