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Info about Branch Office in Italy
A Branch on a legal stand point is not company established ex novo under the Italian law, even though with the capital
entirely owned by foreign partners.
It is an entity with no legal status under the Italian legislation, belonging to the foreign subject (an office,
a store, laboratory, etc.), that continues to have its head office, registered office and
operating office abroad.
Pursuant previously mentioned point, it must disclose the surname, forename, date and place of
birth of who enduringly represents it in Italy along with the powers granted them. A branch is a permanent establishment
of a company from which business operations are carried out. Despite that the branch is subject to the Italian laws governing
the disclosure of the company deeds as well as to those ones governing the management of the company or laying down specific
conditions (see Art. 2508 Civil Code).
As a result, the company that establishes a branch in the Italy is liable for claims
incurred by actions carried out by the branch. For the branch setting up a Public Notary is necessary. Branch is obliged to
keep the accounting; generally, there is no withholding application on the profit and money transfer transfer with the parent
company.
The transaction between the branch and the parent company are without vat.
The branch taxation is the same of an Italian corporation. Tax due in Italy are basically two:
Corporate tax (IRES) 27,5% and Regional Tax (IRAP tax on the value of production) 3,9%.
These two taxes are due for business profit coming from the activity carried out in Italy.
In general a branch is subject to a taxation very similar to the corporations excepting for the following differences:
- No branch remittance tax applies, i.e., no withholding taxes or similar levies on branch's remittances of net profits
to the head office, regardless of whether it is located within the EU or some where else;
- The sale of the assets of a branch is generally subject to tax whilst the sale of the shares of a local subsidiary can
be exempted from Italian taxation in accordance with the majority of the tax treaties signed up by Italy.
According to Art. 84 D.P.R. No. 917/1986 in force since 1 January 2004 tax losses of branches can be carried forward to
reduce income over a period not exceeding the fifth subsequent tax year, for the total amount available to cover the aggregate
income of each tax year, but only for IRES purposes. Furthermore, losses incurred in the first three years of activity may be
carried forward for an unlimited number of tax years.
VAT:
The opening of a branch in Italy must be notified to the local VAT office within 30 days.
Once received the information the local VAT office will then assign the VAT code. Branch is obliged to delivery the annual Vat Return.
A branch in Italy of a foreign enterprise is subject to the value added tax on goods delivered, on services rendered as well as on imports.
The standard rate is levied at 20%.
Periodically (monthly/quarterly), the branch must pay the difference between the VAT charged to their customers in the preceding
month/quarter (depending on the annual turnover), and the VAT debited to them by their suppliers in the same period.
Should the credit exceeds the VAT liability, the balance may be carried forward so that it can be deducted in the following period (month or quarter) and
so on until the end of the calendar year.
The balance not offset in the annual VAT return can be deducted in the following months/quarters
of the subsequent year.
Generally, the refund must be claimed by filing the annual VAT return.
INCOME TAX:
the establishment of a branch in Italy must also be notified to the local Tax Office having jurisdiction within 3 months.
Once registered with the Italian Tax Authority, it will assign a tax code.
Branch is obliged to delivery the annual Revenue Return
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OUR SERVICES:
Preparing all the documents for the branch setting up;
VAT Registration;
Request of licencing;
Bank account opening;
Social Security Registration Domiciliation;
Accounting and Payroll;
Contract set up;
Furnished offices;
Domiciliation;
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Kind of Companies
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Branch Office
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Corporate Tax
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Vat
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