Foreign companies that want to start doing business in Italy in 2026 may register under one of the legal entities that are available under the Italian legislation, or they may operate through a branch or a subsidiary. There are important differences between the two types of companies that should be known by businessmen, and our team of lawyers in Italy can provide in-depth legal assistance on the main characteristics of these two entities.
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What are the main characteristics of Italian branches/subsidiaries?
When opening a company in Italy that will operate through a branch, it is important to know that the parent company will decide on behalf of the branch, as this business form is dependent on the foreign company and has limited powers. In the case of a company registered as a subsidiary, its representatives will be allowed to make management decisions without the consent of the parent company, as the business form is considered an independent legal entity.
If the investors choose to open a subsidiary, this legal entity can be set up under several business forms prescribed by Italian legislation. An Italian subsidiary can be registered as a public limited company, a private limited company, or a partnership, and our team of Italian lawyers can offer more details on the advantages of each structure.
More details on the registration of a branch office or a subsidiary in Italy are available in the presentation below:
How to register a branch in Italy
Companies operating in Italy must register with the Italian authorities a set of legal documents. In the case of a branch office, the investors will need to provide information on the parent company, as well as various documents attesting to the incorporation of the branch, as follows:
- the registration certificate of the parent company that wants to set up an Italian branch office;
- the certificate of incorporation and the company’s articles of association and memorandum;
- the names of the company’s secretary and appointed directors (a minimum of one director is required);
- the proof of having a registered office through which the branch will perform its commercial activities in Italy.
Public vs. private limited liability company in Italy
The liability of the shareholders of a private limited liability company is limited to their contribution to the share capital, which is why this is the most popular business form registered by both local and foreign businessmen operating in Italy. The company is managed by a board of managers appointed by the general meeting of the shareholders.
In the case of a public limited liability company, the shares can be sold and the entity can be registered with the Stock Exchange. The company can be managed by a person who is a professional and it is not mandatory to be a member of the company.
Other relevant matters on Italian subsidiaries and branch offices in 2026
Registering a subsidiary in Italy does not represent a difficult process, and it can be accomplished in one week if the applicants provide all the necessary documents. For the incorporation of a branch or a subsidiary, it is necessary to address it to a public notary, who will notarize all the documents required by Italian law.
- In the case the foreign company does not control an Italian subsidiary, the ownership share might vary from 1% to 49%. Nonetheless, the foreign company continues to control the votes in further company decisions and changes.
- Both branch offices and subsidiaries are liable for taxation in Italy, but the manner in which taxes are applied will slightly vary. For instance, the branch office is liable for taxation only for the activities carried out in Italy; the parent company is not held accountable for its entire taxable income.
Business updates in Italy for 2026
Ready to start a branch or a subsidiary in Italy? Here are some important updates to consider:
- In 2026, branches in Italy are mainly subject on digitalization of products and services offered to customers. As such, bank branches in Italy are anticipated to reach digital development and upgrade their performance by the end of this year.
- Different types of transactions will be subject to Italian Financial Transaction Tax (IFTT), with an estimated increase of around 0.2% -0.4% in 2026
- Starting in 2026, dividends obtained by an Italian parent company that is not qualified for the 95% exception will be fully subject to the corporate income tax (IRES) of 24%.
- Subsidiaries in 2026 will be subject to rigorous accounting & documentation regulations. Moreover, the authorities underline environmental compliance in agreement with the new EU directives for 2026.
Our attorneys in Italy can help foreigners in other matters, besides opening branches or subsidiaries. For instance, we can manage the procedures of buying a house in Italy. However, for more details related to the similarities and differences between a branch and a subsidiary, foreign businessmen may contact our law firm in Italy. Our specialists will offer advice and consultancy services regarding the registration procedure in 2026.