How to Open a Branch in Italy

What is a Branch Office in Italy

A branch office in Italy (sede secondaria) is a permanent extension of a foreign company that operates in the Italian market. Unlike a subsidiary, a branch does not have its own legal personality — it is legally part of the parent company.

The branch is registered with the Italian Companies Register (Registro delle Imprese) and can carry out all commercial activities authorised by the parent company, including signing contracts, issuing invoices and employing staff.

Legal Definition of a Branch (Sede Secondaria)

Under Italian law (Articles 2506 and 2508 of the Civil Code), a branch is defined as a secondary establishment of a foreign company with a stable organisational structure, its own representation and the capacity to enter into transactions.

From a tax perspective, an Italian branch is treated as a permanent establishment (stabile organizzazione) under Article 162 of the Italian Income Tax Code (TUIR), meaning profits attributable to the branch are subject to Italian corporate taxation.

Branch vs Subsidiary: When to Choose a Branch

The choice between a branch and a subsidiary depends on several factors including liability preference, tax planning goals and operational requirements.

A branch is typically preferred when the parent company wants direct control over Italian operations, when the activity is project-based or time-limited, or when the parent company wishes to consolidate profits and losses internationally.

Common scenarios where a branch is preferred include: project-based operations with a defined timeline, Italian activities where the parent company wishes to consolidate profits and losses internationally, and situations where the parent requires direct operational control without creating a separate Italian legal entity.

For a detailed comparison, see our Branch vs Subsidiary guide.

Tax Obligations of Italian Branches (IRES, IRAP, VAT)

Italian branches are subject to:

• IRES (corporate income tax) at 24% on profits attributable to Italian operations
• IRAP (regional production tax) at approximately 3.9%
• VAT on sales of goods and services in Italy
• Withholding taxes on certain payments (dividends, royalties, interest) where applicable
• Intrastat declarations for intra-EU transactions (where applicable)

For ongoing VAT obligations, see our VAT registration guide.

Accounting Requirements for Italian Branches

Italian branches keep full Italian accounting records for tax purposes, including the journal, VAT registers and fixed asset register, and file income tax returns on the profit attributable to the branch.

Each year, the foreign company's own financial statements must also be filed with the Italian Companies Register.

VAT Obligations

Once registered, the branch must charge Italian VAT on domestic sales, file periodic VAT returns (monthly or quarterly), submit the annual VAT declaration and comply with electronic invoicing (fatturazione elettronica) requirements. Italy's standard VAT rate is 22%, with reduced rates of 10%, 5% and 4% for specific goods and services.

Timeline for Opening a Branch

The timeline depends on how quickly the foreign company's documents are obtained, legalised where required and translated into Italian, on the notarial deed and on the Companies Register filing. Once the documents are complete, the notary prepares the deed and the registrations follow within days. Because a branch needs more documents from abroad than an Italian S.r.l., it usually takes longer; see our branch vs subsidiary comparison.

Costs of Opening a Branch in Italy

Costs include notarial fees, government registration taxes, certified translation costs, professional fees for the accountant and lawyer, and ongoing annual costs for accounting, tax compliance and registered office maintenance.

For a detailed breakdown, see Cost of opening a branch in Italy.