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Representative Office in Italy for a Foreign Company: Permitted Activities, Registration and the Difference from a Branch
For a company based in the United States, the United Kingdom or another non-EU country, the representative office is the first step into Italy: cheap, no notary, no income tax — as long as it stays within the perimeter the law assigns it. This page explains what it may do, how it is registered, when it becomes a permanent establishment, and when it is time to turn it into a branch.
A representative office is a local unit through which a foreign company carries out purely preparatory and auxiliary activities in Italy: promotion, market research, information gathering, liaison with clients and suppliers. It has no legal personality, cannot sell, produce or conclude contracts, files no accounts and, within these limits, is not a permanent establishment for tax purposes. It is registered with the Chamber of Commerce through a representative appointed by the foreign company. If it starts a commercial activity, it must become a branch or an Italian company.
What it is and what it is for
The representative office is not a legal entity distinct from the foreign company: it is the company itself present in Italy with an address, one or more people and a limited mandate. Italian law gives it no autonomous definition; its perimeter is derived, negatively, from the rules on branches (Art. 2508 of the Civil Code) and, positively, from the tax rules on permanent establishment (Art. 162 of the Income Tax Code and Art. 5 of double-taxation treaties), which list the activities that do not give rise to a taxable presence.
A foreign company uses it for three purposes: to study the market before investing; to promote its brand and products among Italian clients and distributors; and to coordinate relations with suppliers, partners and authorities ahead of a future operating activity. By nature it is a transitional structure: once the company decides to sell in Italy, the office has served its purpose.
What it may and may not do
| Permitted activities | Prohibited activities (they create a permanent establishment) |
|---|---|
| Market research, competitor analysis, information gathering for the parent | Selling goods or services, issuing invoices, collecting payment |
| Advertising and brand promotion, trade-fair attendance, events | Negotiating and concluding contracts in the company’s name, or playing the principal role in their systematic conclusion |
| Liaison with prospective clients and suppliers, without power to bind the company | Production, processing, storage for delivery to customers |
| Scientific research and information activities | After-sales support and services to Italian customers |
| Support to the parent (logistics coordination, translation, regulatory monitoring) | Any activity that is an essential and significant part of the business, even if split across several units |
The dividing line is the preparatory or auxiliary character of the activity relative to the company’s core business. An office that promotes the products of a manufacturer carries on an auxiliary activity; an office that promotes the services of an advertising agency carries on the company’s principal activity and cannot qualify as a representative office. The test is substance, not form: what the office does, not what it declares.
How to open one: registration and documents for a non-EU company
Opening one requires no notarial deed and no capital. It requires registration with the Chamber of Commerce of the province where the office is located, as a local unit of a foreign undertaking, and the issue of an Italian tax code to the foreign company by the Revenue Agency.
- Resolution of the foreign company establishing the representative office in Italy, setting its address and its object (limited to permitted activities) and appointing the representative, with the relevant powers.
- Foreign corporate documents: certificate of incorporation or good standing issued by the home-country authority, memorandum or articles of association, and signing powers of whoever passed the resolution. For non-EU companies the documents must be legalised or apostilled (Hague Convention 1961, to which the United States is a party) and accompanied by a sworn translation into Italian.
- Tax code for the foreign company and the representative, requested from the Revenue Agency. A VAT number is not needed, because the office carries out no taxable transactions.
- Chamber of Commerce registration through the Comunicazione Unica, stating the address, the representative, the activity (which must be preparatory and auxiliary) and the foreign company. The name reproduces that of the foreign company followed by the indication of the representative office.
- Subsequent steps: possible opening of an Italian bank account in the foreign company’s name for the office’s expenses; if the office hires local staff, registration with INPS and INAIL and withholding-agent duties.
Reciprocity. For companies from countries with which Italy has no treaty guaranteeing equal treatment, the exercise of rights in Italy is subject to the condition of reciprocity (Art. 16 of the preliminary provisions to the Civil Code): it must be checked that an Italian company could open an equivalent structure in that country. For the United States, the United Kingdom, Switzerland and most of Italy’s trading partners the question is settled by bilateral treaties; for other countries it must be verified case by case with the Ministry of Foreign Affairs.
Taxation: why the office pays no tax, and when it stops being genuine
The representative office is not subject to income tax in Italy because it produces no income: it is a cost centre of the parent, which bears its expenses. The basis is Article 162 of the Income Tax Code (TUIR), which at paragraph 4 excludes from the notion of permanent establishment the fixed places used for preparatory or auxiliary activities, and Article 5 of double-taxation treaties, which contains the same exclusion.
The protection falls away in three situations:
- Activity beyond the perimeter: if the office’s people negotiate or conclude contracts, collect payment, deliver or support customers, the office is a “hidden” permanent establishment. The Revenue Agency can assess the income attributable to the Italian presence for all open years, with penalties for failure to file and recovery of VAT on the transactions.
- Fragmentation: since 2018, in implementation of the BEPS project, Article 162 TUIR denies auxiliary character to a unit that, added to other presences of the same company or group in Italy, performs complementary functions of a single overall activity. A commercial cycle cannot be split across several “representative” offices.
- Dependent agent: if the office’s representative habitually has and uses the power to conclude contracts for the company, or plays the principal role leading to their conclusion without material change by the parent, the permanent establishment arises through the person, regardless of the office’s declared activity.
For foreign companies the most common risk is not the initial set-up error but drift: the office starts out correct and, over time, begins to do what a branch should do. The moment the first Italian client is serviced by the office is the moment the structure must change. Company tax-residence criteria and the risks of foreign-company shielding are covered in our guide to Italian corporate law for law firms and foreign investors.
Representative office, branch or Italian company
| Representative office | Branch (sede secondaria) | Italian company (S.r.l.) | |
|---|---|---|---|
| Legal personality | No: it is the foreign company | No: the foreign company with a permanent establishment | Yes: a separate entity |
| Activity | Preparatory and auxiliary only | Full commercial activity | Full commercial activity |
| Set-up | Foreign resolution and Chamber of Commerce registration, no notary | Notarial deed and Companies Register registration (Art. 2508); for EU companies, a digital procedure | Notarial deed, share capital, Companies Register registration |
| Representative | Manager with powers limited to permitted activities | Permanent representative with management powers | Director |
| Italian income tax | No, while it stays within the perimeter | Yes, on the income attributable to the permanent establishment | Yes, on all income |
| VAT number | No | Yes | Yes |
| Accounts | None filed | Filing of the parent’s accounts and separate bookkeeping | Own financial statements |
| Liability | Of the foreign company | Of the foreign company, unlimited | Limited to the S.r.l.’s assets |
| Can host ICT staff | Yes | Yes | Yes, as a group company |
| When it fits | Exploratory and promotional phase | Operating activity without asset separation, with tax coordination with the parent | Operating activity with asset separation and credibility toward banks and clients |
For companies established in an EU Member State, incorporating the branch is done by digital public deed: digital incorporation of secondary offices of companies in Italy; on branches and reporting to the central bank, see foreign branches and the Bank of Italy. To set up a company from scratch, see company formation in Italy.
Moving from office to branch
The change is not technically a conversion: a branch is incorporated by notarial deed and the local unit closed, or the office is kept for promotional activities only while the branch is opened for commercial ones, with the caution that the two structures do not perform complementary functions of a single activity. It must be planned before the commercial activity starts, not after: the permanent establishment, if it arises, arises from the first act, not from registration.
Representative office and foreign staff
A representative office may host employees of the parent seconded to Italy under an intra-corporate transfer permit (ICT), provided the office carries on a real activity and was not established mainly to facilitate their entry: the Consolidated Immigration Act makes this an express ground for refusal and withdrawal of the authorization. Requirements, duration and procedure are in the guide to the Italy ICT permit for intra-corporate transfers. The office is not, however, a vehicle for a visa for the owner or director of the foreign company, who are not subordinate employees: why that is, and what the alternatives are, is explained in our article on the representative office visa and the legitimate routes.
Frequently asked questions
Can a representative office invoice in Italy?
No. It cannot sell goods or services, issue invoices or collect payment. If it does, it is an undeclared permanent establishment and the foreign company becomes taxable in Italy on the attributable income, with penalties.
Do I need a notary to open a representative office?
No. A resolution of the foreign company, the corporate documents legalised or apostilled with a sworn translation, a tax code and Chamber of Commerce registration are enough. A notary is needed for a branch and for an Italian company.
Can a representative office hire employees in Italy?
Yes, for permitted activities. The foreign company registers with INPS and INAIL and complies with withholding-agent duties for Italian employees. The staff cannot carry on commercial activity, however, or a permanent establishment arises.
How long can a representative office last?
The law sets no fixed term. But its nature is preparatory: an office that stays open for years while the company sells in Italy through other channels draws the attention of the tax authorities, who look at the substance of the activity, not its formal label.
Can a US company open a representative office in Italy?
Yes. The reciprocity condition is satisfied by the treaties between Italy and the United States. The corporate documents must be apostilled and accompanied by a sworn translation; the company obtains an Italian tax code and registers with the Chamber of Commerce through a representative.
Representative office or branch: how to choose?
If in Italy you only want to promote and study the market, the representative office is enough and generates no income tax. If you sell, invoice or service clients, you need a branch or an Italian company from the first contract.
Assistance to open and run a representative office in Italy
Damiani & Damiani assists foreign companies in choosing the structure, registering the representative office, legalising and translating documents, assessing the activity perimeter for tax purposes with the firm’s specialists and, as the business grows, incorporating a branch or an Italian company. Offices in Palermo, Turin, Athens and Barcelona; assistance in English, Italian and Spanish. This page is also available in Italian: ufficio di rappresentanza di società estera in Italia.
Page updated 11 September 2026. This information is general in nature and does not replace advice on a specific case.
Sources: Italian Civil Code, Arts. 2508 and 2508-bis; Preliminary provisions to the Civil Code, Art. 16; Presidential Decree 917/1986 (TUIR), Art. 162; OECD Model Tax Convention, Art. 5; Legislative Decree 286/1998, Art. 27-quinquies; Hague Convention of 5 October 1961 on apostille.
