Opening Representative Office (RO) in Italy
A foreign company who plans to do business in the Italian market, as first step, in order to do public relations and develop business contacts and a phased approach before the opening of a company or a branch, may open a Representative Office (RO) (Ufficio di Rappresentanza).
The law in Italy gives a legal definition of representative office in the art. 162 of TUIR (Testo Unico Imposte sui Redditi) which is the uniform income tax code in Italy; the RO is an business entity which has been introduced by the standard practice with reference to the OECD Model Convention for avoidance of double taxation.
In the standard practice, there are two kinds of RO:
- The “mere representative office” and
- The representative office, which does not perform only public relations activities.
The “mere RO” in Italy is a business fixed place (i.e. on office for rent) of a foreign company whose activities are performed only and exclusively for:
- Developing of public relations with potential partners and clients
- Marketing and promotional activities, or
- Scientific research or
- Market research or
- Activities of collection of other information.
The mere RO performs preparatory and auxiliary activities for the foreign company in order to enter into the Italian market.
The mere RO cannot perform trade or production activities, so that it cannot issue invoices for sold goods or services.
Under tax considerations the mere RO is not considered a Permanent Establishment in Italy (Stabile Organizzazione Fiscale) of a foreign company, so that, it is not subject to taxation in Italy.
The mere RO is not required to keep accountancy books, draft yearly financial statements, file income tax, or VAT returns.
The mere RO in Italy has to keep all documents and accounts concerning the expenses (i.e. for personnel costs, office equipment, rent. etc.) which will be bear by the mother foreign company abroad.
For setting up a mere RO in Italy it is necessary to do a registration at the competent office called REA (Repertorio Economico Amministrativo) based on the location where the RO is to be started.
The legal representative of the RO in Italy of the foreign company has to submit a file for getting release of personal ID tax code (codice fiscale) to the Italian embassy or consulate abroad in the country of the mother company or in Italy at the Agenzia delle Entrate (the Italian tax authority).
After that step, the legal representative will ask for release of the ID tax code for the mere RO (also by power of attorney given to a designated third party, usually a lawyer in Italy) through submission of Single Notification (Comunicazione Unica).
The features of the RO, which does not perform only public relations activities, are as follows:
- Displaying of goods
- Purchasing and storing goods
- Gathering information
- Performing market research
- Other ancillary or preparatory activities
- It is a permanent establishment subject to taxation in Italy
- It has to get the release of a VAT code from the Agenzia delle Entrate (Revenue Agency Office) (the legal representative will submit the request personally or also by power of attorney given to a designated third party, usually a consultant in Italy) through submission of Single Notification (Comunicazione Unica)
- Keeping of accountancy books
- Drafting yearly financial statements
- Payment of income tax or VAT returns
- Annual report with the relevant Chamber of Commerce.
For incorporating a RO in Italy, it is necessary to enroll it at the office of the “Repertorio Economico Amministrativo” at the competent territorial Chamber of Commerce (CCIAA) where RO is going to be established.
For incorporation of the RO is necessary to submit to the territorial CCIAA the following documents:
1) Proxy to an attorney in Italy released by the legal representative of the company
2) Certificate released by competent company register in the state where the incorporating company has the legal seat indicating the personal data of the legal representative of the company, translated in Italian by a sworn translator and authenticated with Apostille procedure by a notary in the state of the mother company or by Italian consulate or embassy
3) Photocopy of the passport of the legal representative
4) ID tax code of the individual person who will be appointed as legal representative of the RO Italy, released by the Italian consulate or embassy in the state abroad or by the Agenzia delle Entrate in Italy
5) The “sample R” will be filled and submitted by an Italian accountant
6) The “sample UL” indicating the address in Italy of the RO, will be filled and submitted by an Italian accountant
7) The “sample P” will be filled and submitted by an Italian accountant
The proxy as per point 1) will be released to the Italian lawyer for filling the electronic submission to the competent CCIAA.
The RO must not be enrolled at Company Register.
The RO must not submit any yearly balance sheet.
Timing for opening of the RO is not less than 1 week since all submitted documents are considered fit.
The contents of this page should not be taken as an authoritative statement of Italian law and practice. Neither the author nor the publisher are responsible for the results of actions taken on the basis of information contained in this summary, nor for any errors or omissions. This text is not intended to render legal, accounting or tax advice. Readers are encouraged to seek professional advice concerning specific matters before making any decision.