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Simplified limited liability company
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In brief
A foreign entrepreneur setting up a company in Italy usually chooses between an ordinary SRL, with a tailored deed, and a simplified SRL, with a standard deed. Both require an Italian notary. BG Studio Legale assists in English, Bulgarian, Italian or Russian.
This article refers to the rules in force at the date of publication.
July 2, 2019
What are the main differences between the ordinary limited liability company and the simplified limited liability company? Question that is often asked by those who must make a strategic choice for their business. Below is a brief analysis of the two legal forms.
Ordinary SRL, i.e. società a responsabilità limitata – establishment of an ordinary SRL takes place by public deed of a notary. The initial share capital of the ordinary SRL must be at least € 10,000 and can be fully paid up or at least to the extent of at least 25%. Contributions can be different from money.
For contributions in kind such as companies, properties and other assets, a special sworn report must be presented.
SRL Simplified, i.e. società a responsabilità limitata semplificata – in the case of SRLS, a notary, at no cost by law, has the sole task of checking the requirements of the articles of association which are standard. The share capital of an SRLS has a minimum limit and a maximum limit beyond which it cannot be increased, or from € 1 to € 9,999.
Contributions must be made in cash and must be paid in full upon establishment.
Low share capital could become a limiting factor if you want to get finance and credit from banks, for example. Furthermore, the articles of statute are standard and cannot be changed over the years, except by transforming the company into an ordinary SRL with the related notarial deed.
Another significant difference is that SRLS can only be established for an indefinite period, without expiry.
Finally, it should be highlighted that the tax management of SRL and SRLS is the same:
- there are no differences in the calculation of taxes;
- same tax treatment;
- the same tax returns;
- the same annual report;
- identical asset autonomy.
We can therefore deduce that the choice of the legal form of the company is very important and must be carried out from the perspective of the company business plan, expected turnover, sector of activity and estimated investments. In addition, it should be borne in mind that the simplified form of the limited liability company does not provide for facilitations in the tax and accounting management of the company.
Frequently asked questions
What is the difference between an ordinary and a simplified SRL?
A simplified SRL has standard articles of association, which the notary checks at no cost by law and which cannot be amended: changing them means converting the company into an ordinary SRL. A simplified SRL can only be set up for an indefinite term, and contributions must be in cash.
Does a simplified SRL pay less tax than an ordinary one?
No. Tax treatment is the same for both: the same calculation of taxes, the same tax returns, the same annual accounts and the same separation of assets. The simplified form brings no easier tax or accounting management; the saving concerns the notarial costs of incorporation.
Can low share capital create problems for the business?
It can. Reduced share capital is one of the elements banks and lenders assess when a company applies for credit. The standard articles of a simplified SRL are a further limit: they cannot be adapted over time unless the company is converted into an ordinary SRL by notarial deed.
How should a foreign entrepreneur choose the legal form?
The choice should follow the business plan, the expected turnover, the sector of activity and the planned investments, not only the initial cost. BG Studio Legale reviews the project with the foreign entrepreneur and discusses its legal implications in English, Bulgarian, Italian or Russian, throughout Italy and remotely.
Boryana Gospodinova, lawyer · Pesaro Bar Association · English, Italian, Bulgarian
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