Yes you have to transfer the shares, however the process could be a small nightmare, and requires all the parties to physically meet in front of a notary public. Good news: the procedure to buy or sell a company was so complex, that in 2008 the Government was forced to add a faster and alternative process. Not the best, but better. In this post I am going to brief them both: the traditional route and the new one.
The traditional procedure in front of a notary public.
A share transfer in Italy has to be made in person, on paper, in front of a notary public. You have to pay the notary public for his service, and a series of fixed and proportional taxes. This is annoying for any sales, and particularly unacceptable for small transfer. For instance selling shares for Eur 100 (about US$125) could cost easily ten times the revenue, more than Eur 1,000 in notary services and taxes.
The new procedure by chartered accountants and corporate secretaries
The old procedure is still valid, and it could be useful for massive sales. If you buy or sell a company for millions, you probably want to be in Italy yourself and have the comfort of a notary public.
However, from 2008 you can manage the sales also trough a chartered accountants and chartered secretaries. You still have to sign an agreement, however you can send the agreement as a PDF file. You need to ship the original agreement at one point, but the PDF trough email definitely speed up the process.
The rest of the procedure is online and through electronic signature. A video conference is often used to close the deal, but the parties could meet the accountant in different moments. I have found this feature particularly useful when the Italian owner of a company sale to Chinese, Indian and in general Asian buyer (nowadays more common than US buyers in Italy). Nobody has to wake up at 3 a.m. in the night just to sign the document in the same very moment. Everything could be managed on distance and in 24 hours.
Taxes unfortunately are the same in the old and new procedures, although the new procedure costs slightly less because the notary public is not involved. It’s not the solution I wish, however it shows an unprecedented will of the Government to reduce the bureaucracy and make the country more welcoming to foreign investors.
The third way: cheaper and faster
From 2005 – the year I setup my own firm – I have seen more and more foreign clients using a third procedure that I find really smart. The first ones were two ladies from China.
These clients don’t incorporate the Italian company directly but trough a UK Limited Company. To use an example:
- If Mr A and Mr B setup together the Italian limited company “X SRL”, every time they want to sell their shares they should pay a notary public (old procedure) or an accountant (new procedure) and quite some taxes (both procedures);
- To avoid this cost, Mr A and Mr B setup together a UK limited company “X LIMITED”, and this UK company setup the Italian “X SRL”. If they need to sell shares, they can do it in England, where the process is fast and almost free.
If I was not completely clear, just add a note in the comments or contact me. I am happy to help.
And if sharing this information sounds against my interest (after all I can make money providing share transfer in Italy) re-think. The more Italy is simple and cost effective, the more foreigners invest in Italy, the more lawyers and other professionals will find a job. This is what we want, don’t you think?
Image source: backpocketcoo.com
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