Set up a Business in Italy - the SIMPLIFIED SRL

HANDBOOK 01.b

SET UP A BUSINESS IN ITALY – THE SIMPLIFIED SRL

Practical guide to initial compliance requirements

1. WHAT IS AN S.R.L.S.?

An S.r.l.s. is a special form of Italian limited liability company created to facilitate the start-up of new businesses by reducing incorporation costs and capital requirements. Like a traditional S.r.l., it provides limited liability protection, meaning that, in general, shareholders are liable only up to the amount invested in the company.

2. MAIN FEATURES

These are the main features of an SRLs:

• Limited liability for shareholders.
• Share capital from 1 € up to 9.999 €.
• Reduced incorporation costs compared with a traditional S.r.l.
• Use of a mandatory standard constitutional document prescribed by law.
• Suitable for entrepreneurs seeking a simple corporate structure.

3. KEY LEGAL CONSTRAINTS

a. Share Capital Rules – The share capital must be at least 1 € and less than 10.000 €. The entire capital must be paid in cash at the time of incorporation. Contributions in kind, such as equipment, intellectual property, goods, or professional services, are not permitted.

b. Mandatory Standard Articles of Association – Unlike a traditional S.r.l., the constitutional document of an S.r.l.s. must follow a standard model approved by the Italian government. The clauses of this model are mandatory and cannot be modified or customized by the shareholders.

c. Shareholder Eligibility – Only natural persons (individuals) may be shareholders of an S.r.l.s. Companies, partnerships, trusts, foundations, and other legal entities cannot hold quotas in an S.r.l.s.

d. Corporate Flexibility – Because the company must adopt the mandatory statutory model, shareholders have limited flexibility in structuring governance arrangements and shareholder rights.

4. ADVANTAGES

• Very low minimum capital requirement.
• Reduced start-up costs.
• Limited liability protection.
• Faster and simpler incorporation process.

5. LIMITATIONS

• Only individuals may participate as shareholders (generally useless for multinational groups)
• No customized articles of association.
• No non-cash contributions.
• Less suitable for businesses seeking external investors or sophisticated governance arrangements.

6. RECOMMENDATIONS

While the simplified S.r.l. (S.r.l. semplificata) was introduced as a cost-effective vehicle for straightforward domestic ventures, it is rarely the appropriate choice for entities forming part of a multinational group. The structural limitations inherent to this corporate form — including the statutory cap on share capital, restrictions on shareholder eligibility, and reduced flexibility in drafting the articles of association — create significant friction when a company must interact with foreign parent entities, holding structures, or cross-border financing arrangements. In practice, these constraints tend to generate additional legal and administrative work that quickly outweighs any initial savings on incorporation costs.

From a governance and compliance standpoint, multinational groups operate under a level of complexity that the simplified S.r.l. was simply not designed to accommodate. Transfer pricing documentation, intercompany agreements, dividend distribution mechanisms, and the requirements of foreign shareholders or institutional investors all demand a degree of structural robustness that a standard S.r.l. — or, depending on the group’s size and ambitions, an S.p.A. — provides far more reliably. Choosing the wrong vehicle at the outset often means a costly conversion down the line, along with potential disruptions to group reporting and compliance timelines. We therefore strongly recommend that clients with cross-border structures engage with us early to select the most appropriate entity type before incorporation, rather than retrofitting a simplified form that was never built for international operations.

7. REGULATORY REFERENCES AND USEFUL LINKS

• Article 2463-bis of the Italian Civil Code.
• Article 3 of Decree-Law No. 1 of 24 January 2012, converted into Law No. 27 of 24 March 2012.
• Ministerial Decree No. 138 of 23 June 2012.
• Decree-Law No. 76 of 28 June 2013, converted into Law No. 99 of 9 August 2013