Doing business in Italy

A Q&A guide to doing business in Italy.

This Q&A gives an overview of key recent developments affecting doing business in Italy as well as an introduction to the legal system; foreign investment, including restrictions, currency regulations and incentives; and business vehicles and their relevant restrictions and liabilities. The article also summarises the laws regulating employment relationships, including redundancies and mass layoffs, and provides short overviews on competition law; data protection; and product liability and safety. In addition, there are comprehensive summaries on taxation and tax residency; and intellectual property rights over patents, trade marks, registered and unregistered designs.

To compare answers across multiple jurisdictions, visit the Doing business In... Country Q&A Tool.

This article is part of the multi-jurisdictional guide to doing business worldwide. For a full list of contents, please visit www.practicallaw.com/about/doingbusinessin-mjg.

Filippo Modulo, Marco Di Siena and Filippo Cecchetti, Chiomenti Studio Legale (Lex Mundi Member Firm)
Contents

Overview

1. What are the key recent developments affecting doing business in your jurisdiction?

Following the recent elections which took place in February 2013, Italy is governed by a grand coalition government supported by several centre-left and centre-right parties.

Italian governments have adopted over the last few years several measures to support Italy's economic growth, and intend to adopt certain measures in the future, including:

  • The reduction of public debt through a rationalisation of public expenditure.

  • The privatisation of state owned companies and real estate portfolios.

  • The liberalisation of service, such as commerce, transport, professions and energy.

  • The implementation of pre-bankruptcy procedures for the extra-judicial settlement of insolvency situations.

 

Legal system

2. What is the legal system based on (for example, civil law, common law or a mixture of both)?

Italy has a civil law system. The sources of law are:

  • The Constitution.

  • Statutes.

  • Secondary regulations.

  • Mandatory custom.

  • EU regulations and directives.

Italy is not a federal state but the regions have an elected local government and legislative powers in relation to the matters that are not reserved to the state.

 

Foreign investment

3. Are there any restrictions on foreign investment (including authorisations required by central or local government)?

In general, foreign investment in Italy is unrestricted. However:

  • The Italian government can exercise a veto right with respect to the acquisition of companies operating in the military and defence business.

  • The Italian government can exercise a veto right with respect to the acquisition of companies operating in the energy, transportation and communications businesses by a buyer which is not an EU entity.

  • Ownership and operation of aeroplanes and ships must be under the control and management of Italian or EU citizens or companies in which Italian or EU citizens own the majority of the share capital (non-EU citizens or companies can have a minority shareholding).

Any acquisition of a considerable shareholding in certain companies (such as banks and insurance companies) must also be approved by the Bank of Italy (Banca d' Italia) and the Institute for the Regulation of Private Insurance and Reinsurance Undertakings (Istituto per la vigilanza sulle assicurazioni private e di interesse collettivo) (ISVAP).

 
4. Are there any restrictions on doing business with certain countries or jurisdictions?

Italy applies the restrictive measures on doing business determined by the European Union (EU) (autonomously and in compliance with the binding resolutions of the United Nations Security Council). The restrictive measures imposed by the EU can both:

  • Affect foreign governments and non-governmental entities, other entities and individuals.

  • Include embargoes on the sale of weapons, other specific or general trade restrictions (import or export restrictions), financial restrictions and travel restrictions.

For an updated list of the restrictions, see the website of the Ministry of Foreign Affairs (www.esteri.it/MAE/EN/Politica_Europea/Misure_Deroghe/default.htm?LANG=EN).

 
5. Are there any exchange control or currency regulations?

Generally, no government authorisation is required for foreign loans, guarantees or foreign trade transactions. Foreign investors are also allowed to repatriate their investment returns. Italy has enacted money laundering regulations.

 
6. What grants or incentives are available to investors?

Italian law does not provide grants or incentives based on the nationality of investors. However, bilateral and multilateral investment treaties may protect and favour certain foreign investments.

The law also provides economic and financial incentives available to both national and foreign investors, which vary in size and nature.

The principal incentives are:

  • Cash grants.

  • Low interest rate loans.

  • Corporate income tax exemptions with respect to certain investments.

  • Exemptions from social security contributions.

 

Business vehicles

7. What are the most common forms of business vehicle used in your jurisdiction?

Generally, a foreign investor intending to conduct business in Italy incorporates a local subsidiary in the form of either a:

  • Joint stock company (società per azioni) (SpA). The SpA is the most common business form for medium and large companies with significant investments. An SpA. can issue shares, bonds and other financial instruments of debt or risk, which can be listed on a stock-exchange market.

  • Limited liability company (società a responsabilità limitata) (Srl). The Srl is more suitable for small and medium-sized companies with a limited number of partners. An Srl cannot issue shares and therefore cannot be listed.

A foreign company which intends to operate in Italy can incorporate, in lieu of a subsidiary, a branch. While a subsidiary is a legal entity incorporated according to the laws of Italy and autonomous from the mother company, a branch is not a separate legal entity but only an organ of the foreign company.

Italian corporate law also contemplates partnerships, provided that they are not limited liability companies.

Italy also recognises foreign trusts in accordance with the HCCH Convention on the Law Applicable to Trusts and on their Recognition 1985 (Hague Trusts Convention). Trusts are usually used by wealthy investors for estate planning, asset protection and tax optimisation purposes.

 
8. In relation to the most common form of corporate business vehicle used by foreign companies in your jurisdiction, what are the main registration and reporting requirements?

Registration and formation

Articles of incorporation must be executed before a notary public and filed with the Companies' Register. A company cannot use another company's name as its corporate name and cannot use another company's registered trademark without its consent. The registration process takes about seven to 15 days. A company is considered incorporated when registration is completed. The Companies' Register is a public register (www.registroimprese.it).

Reporting requirements

Italian companies must file their balance sheet and a list of their shareholders annually with the Companies' Register.

Share capital

Minimum share capital requirements are:

  • EUR120,000 for an SpA.

  • EUR10,000 for an Srl.

There are no maximum amounts.

Non-cash consideration

An SpA and an Srl can issue shares/quotas for non-cash consideration. The assets contributed must be valued by an independent expert or must have a market value.

Rights attaching to shares

Restrictions on rights attaching to shares. The company can issues shares incorporating special rights in favour of the owner, with a limited voting right or subject to transfer limitations (or all of these).

Automatic rights attaching to shares. Unless differently provided in the articles of association, each share incorporates the voting right in the shareholders' meeting and economic rights (participation to profits and losses).

 
9. In relation to the most common form of corporate business vehicle used by foreign companies in your jurisdiction, outline the management structure and key liability issues.

Management structure

An SpA can be managed by a sole director, a board of directors or by a management board. The company must also appoint a board of statutory auditors and, subject to certain requirements, an auditing firm.

The corporate governance of an Srl is more flexible and the managing body can consist of a sole director, a board of directors or a number of directors acting separately or jointly. The appointment of the statutory auditors or of an auditing firm is not mandatory unless certain thresholds are met.

Management restrictions

There are no restrictions applicable to foreign managers.

Directors' and officers' liability

Directors are jointly liable to the company, shareholders, creditors and third parties, unless a single director or the executive committee performed the specific action that actually caused damage to the company and the other directors expressed their dissent.

Parent company liability

Generally, a parent company is not liable for its subsidiaries' obligations. However, a sole shareholder of an insolvent company is liable for the obligations assumed during the period in which it was that company's sole shareholder if its shares were not fully paid and certain Companies' Register filing requirements were not fulfilled.

 

Employment

Laws, contracts and permits

10. What are the main laws regulating employment relationships?

The Italian Civil Code, statutory regulations and special laws contain a very detailed regulation of employment relationships.

In addition, collective labour agreements also contain provisions relating to hiring, salary, duties, working time, accidents, illness, maternity, termination of the employment relationship, severance indemnities and other aspects of the employment relationship.

Most provisions of employment law are mandatory and can only be modified to the benefit of the employee.

Legal mandatory provisions are also applied to foreign employees working in Italy. In principle, a choice of law (different from Italian law) made by the parties in a contract of employment must not result in depriving the employee of the protection given to him under the mandatory rules of Italian law that would apply in the absence of a choice of law.

The parties can choose the law applicable to Italian employees working abroad in compliance with the mandatory provisions of the relevant foreign jurisdiction and private international law.

 
11. Is a written contract of employment required? If so, what main terms must be included in it? Do any implied terms and/or collective agreements apply to the employment relationship?

While written employment contracts are in principle not mandatory (except for certain exceptions, such as fixed-term contracts), employment relationships are usually governed by individual employment agreements, which must set out, among others, the employee's salary and other terms of employment not otherwise regulated by the law or collective labour agreements. The extensive mandatory regulation of the employment relationship contained in statutory law and collective labour agreements in practice often limits the effective scope of individual employment agreements.

 
12. Do foreign employees require work permits and/or residency permits?

Non-EU nationals must fall within the yearly quota of foreign employees set by the government and must obtain a work authorisation, work visa and residency permit before coming to Italy. Certain limited categories of non-EU employees are eligible to be granted a special work visa which is not restricted to any quota. By law, the procedure to obtain the residency permit should be completed within 20 days from the filing of the application; however, it can take much longer (six to ten months for non-EU nationals) depending on the individual office dealing with the application. In general, for the issuance of a residency permit, payment of a contribution is required which can vary from a minimum of EUR80 to a maximum of EUR200.

EU nationals do not require any work visa or residency permit before coming to Italy. However, EU nationals who are staying in Italy for more than three months must be enrolled in the register of the residing population (the required documentation for this enrolment may vary depending on the reason for the stay).

Termination and redundancy

13. Are employees entitled to management representation and/or to be consulted in relation to corporate transactions (such as redundancies and disposals)?

Generally, employees are not entitled to management representation. However, trade unions are allowed to represent employees at the place of work and are granted certain union rights set forth in the law and collective labour agreements. Trade unions and, if any, the internal Works Council, must also be consulted in the event of collective dismissals and where there is a transfer of the company's going concern.

 
14. How is the termination of individual employment contracts regulated?

The termination of the employment relationship by the employer is strictly limited.

A non-executive level employee can only be dismissed for either:

  • Just cause, which includes, for example, the material misconduct of the employee or any other situation where the employment relationship cannot continue, even temporarily.

  • Justified reasons, which includes, for example, where there have been contractual breaches by the employee that do not constitute just cause for dismissal, or external and objective circumstances that prevent the employment relationship continuing (such as the bankruptcy of the employer or the closure of the production department where the employee works).

Executive-level employees can, in principle, be dismissed with no justification, though collective agreements mean such dismissals cannot be arbitrary and justification is required.

Statutory minimum notice periods are provided in national collective labour agreements and vary according to seniority of the employee. Notice periods do not apply for dismissal for just cause. The severance payment is payable in all cases of dismissal, termination of employment and resignation since it is considered as deferred compensation.

In the case of dismissal based on objective economic reasons, an employer who employs more than 15 employees must implement a preliminary procedure before the competent local Labour Office (Direzione Territoriale del Lavoro). This must be done before the communication of the dismissal to the employee. This procedure's aim is to verify if it is possible to reach a settlement agreement between the parties.

The dismissed employee has 60 days to challenge the dismissal in a written letter addressed to the employer. The employee then has 180 days to bring a legal action before the competent Labour Court.

If the court declares a dismissal unfair, the employer must either:

  • Reinstate the employee (only if the employer employs more than 15 employees and the court finds that the dismissal is discriminatory or completely unfounded).

  • Pay compensation (in all other cases of unfair dismissal).

No reinstatement protection is provided for executives (unless the dismissal was discriminatory). In the case of unjustified dismissal, executives are entitled to compensation for damages under the applicable national collective labour agreements.

 
15. Are redundancies and mass layoffs regulated?

Collective dismissals take place when an employer with more than 15 employees carries out at least five dismissals in the same production unit or in a number of work units in the territory of the same province within 120 days, due to either:

  • A reduction or transformation of the company's operations or activities.

  • The shutdown of the company.

Trade unions must be consulted and involved in a procedure aimed at finding alternative measures to the dismissal, if possible. Generally, the procedure takes about three months to complete. Redundancy does not affect an employee's right to severance pay.

 

Tax

Taxes on employment

16. In what circumstances is an employee taxed in your jurisdiction and what criteria are used?

Employment income earned by a non-resident employee is subject to tax in Italy only if the relevant activity is performed in Italy.

 
17. What income tax and social security contributions must be paid by the employee and the employer during the employment relationship?

Tax resident employees

The rate of personal income tax (imposta sul reddito delle persone fisiche (IRPEF)) depends on the amount of the employee's worldwide income.

Personal income tax is levied at rates ranging from a minimum of 23% up to a maximum of 43%.

The amounts of social security contributions vary according to the employment category and the employee's gross salary, but are approximately 40% of the employee's gross salary.

The tax year is the calendar year (1 January to 31 December).

Resident employees who derive taxable income in excess of certain limits must file an annual tax return between 1 May and 30 June of the year following the tax year in which the income is derived (30 September for electronic filing).

Two advance payments of IRPEF must be made by the employee during the tax year.

The balance of the tax due, based on the results shown in the annual tax return, must be paid by 16 June of the following year. Any excess tax is refundable.

Non-tax resident employees

Non-resident employees are subject to personal income taxes only on Italian source income, subject to any applicable double tax treaty.

Non-resident employees must file an annual tax return in respect of any income arising from Italian sources, other than income subject to a final withholding tax or to a substitute tax. The procedure is the same as for resident employees.

Employers

The employer must withhold income tax and social security contributions from every employee's salary. The amounts of social security contributions vary according to the employment category and the type of employment contract. Generally, the average social security rate applied to regular subordinate employees is about 40% of the employee's gross salary, charged as follows:

  • Employer: about 30%.

  • Employee: from 9% to 10%.

The employer is responsible for deducting the employee contribution at source and for the overall payment of social security contributions.

Business vehicles

18. When is a business vehicle subject to tax in your jurisdiction?

Tax resident business

Companies are deemed to be resident in Italy if, for the greater part of the tax year, they have their legal seat, place of management or main business purpose in Italy. Further, according to certain residency presumptions provided by the Italian Tax Code (Testo Unico delle Imposte sui Redditi (TUIR)), a foreign company is considered resident in Italy if it controls an Italian resident company and is either:

  • Controlled by an Italian resident person (company or individual).

  • Managed by a board of directors or other governing body composed of a majority of Italian resident persons.

Non-tax resident business

Non-resident companies are subject to tax in Italy if they realise Italian-source income.

The following types of income are deemed to be Italian-source income:

  • Income derived from immovable property located in Italy.

  • Capital income (among others, dividends and interest) paid by the state, by Italian residents or by Italian permanent establishments of non-resident persons.

  • Business income realised in Italy through a permanent establishment.

  • Capital gains on the transfer of participations in Italian companies, except for participations in listed companies not exceeding 5% of the capital or 2% of the voting rights.

  • Income attributed to a foreign shareholder of a company whose shareholders have opted for the consortium relief.

If a non-resident company or other entity does not have a permanent establishment in Italy, Italian-source income is taxed according to the rules for the relevant category of income. If the non-resident company has a permanent establishment in Italy, it is subject to the same provisions as resident companies. Therefore, all Italian-source income is considered business income and taxed accordingly.

 
19. What are the main taxes that potentially apply to a business vehicle subject to tax in your jurisdiction (including tax rates)?

According to the worldwide taxation principle, all income realised by companies deemed to be resident in Italy for fiscal purposes is taxed in Italy as business income, regardless of the source.

Corporate income tax

Italian resident companies are subject to Italian Corporate Income Tax (Imposta sul reddito delle società (IRES)), levied at the rate of 27.5%. The tax year for corporate income tax purposes is the financial year of the company, as determined by the law or its bye-laws or, if it is not specified, the calendar year.

The tax return must be filed electronically within nine months from the end of the financial year.

IRES is usually paid as two advance payments for the current tax year, based on the tax paid for the preceding tax year. The balance payment must be paid at the time the tax return is filed. Any excess tax paid can either be carried forward or refunded.

Regional tax on productive activities

Italian resident Companies are also subject to a regional tax on productive activities (imposta regionale sulle attività produttive) (IRAP)) that is levied on the net value of the production derived in each Italian region. The standard rate is currently 3%. The filing of the tax return and the payment of IRAP follow the rules applicable for corporate income tax.

Value added tax

The sale of goods and services and imports are subject to VAT, with the exception of certain activities and operations (such as financial and insurance transactions, corporate reorganisations, the sale of residential properties and health care operations). The ordinary rate is 22%.

Registration tax

Registration tax is levied on deeds and contracts subject to registration in public registers or which are voluntarily registered in public registers. Rates vary, depending on the nature of the deed or contract.

Generally, written contracts executed in Italy for the transfer of property of any kind are subject to registration. The amount of tax is limited if the transaction is also subject to VAT.

Dividends, interest and IP royalties

20. How are the following taxed:
  • Dividends paid to foreign corporate shareholders?

  • Dividends received from foreign companies?

  • Interest paid to foreign corporate shareholders?

  • Intellectual property (IP) royalties paid to foreign corporate shareholders?

Dividends paid

Generally, dividends distributed to non-resident corporate shareholders (and not attributable to a permanent establishment in Italy) are subject to a final 26% withholding tax. However, if the beneficial owner is an entity subject to corporate income tax in its state of residence and is resident in an EU or EEA country that allows an adequate exchange of information with the Italian tax authorities, a reduced rate of 1.375% applies to distributions of profits that have been realised on or after 1 January 2008. No withholding tax is levied on dividends distributed to the parent company if both the parent company and the subsidiary fulfil the requirements of Directive 90/435/EEC on the taxation of parent companies and subsidiaries (Parent-Subsidiary Directive) as implemented under Italian law. This withholding tax may be also reduced under the provisions of a tax treaty, if applicable.

Dividends received

95% of dividends paid by controlled companies resident in an EU country (or non-EU countries, if they are not tax havens) to an Italian parent company are not subject to corporate income tax. The remaining 5% are taxed at the rate set out above (see Question 19).

Interest paid

A 26% withholding tax is payable, subject to the provisions of any applicable double tax treaty.

IP royalties paid

IP royalties paid to a resident company are taxed as business income and are not subject to any withholding tax. For IP royalties paid to a non-resident company, the income is subject to a 30% withholding tax on 75% of the income received, subject to the provisions of any applicable double tax treaty.

Groups, affiliates and related parties

21. Are there any thin capitalisation rules (restrictions on loans from foreign affiliates)?

Italian tax laws do not provide specific thin capitalisation rules. In general terms, interest expenses exceeding interest income are deductible by up to 30% of gross operating income (EBITDA) for the amount exceeding interest income accrued.

Interests exceeding the 30% of EBITDA may be carried forward in the following tax periods (with no time limitation) up to the same limit of 30% of the annual EBITDA. Special provisions apply to financial and insurance entities.

 
22. Must the profits of a foreign subsidiary be imputed to a parent company that is tax resident in your jurisdiction (controlled foreign company rules)?

According to CFC rules, profits of a non-resident subsidiary are deemed to be profits of the Italian parent entity if the latter controls, directly or indirectly, a foreign company resident in either:

  • A tax haven as defined by the relevant tax laws.

  • Any jurisdiction in which:

    • the effective taxation of the controlled company is 50% lower than the Italian taxation on the same income; and

    • the foreign company derives more than 50% of its proceeds from passive income or intra-group services (even financial services).

In such cases, CFC rules apply unless the Italian parent company requests a tax ruling.

 
23. Are there any transfer pricing rules?

Italy has transfer pricing rules that operate by reference to arm's-length principles. Therefore, inter-company transactions must be carried out at arm's-length prices.

Customs duties

24. How are imports and exports taxed?

Within the EU, imports and exports are not subject to customs duties. However, VAT is generally applied in the destination country.

A Community-integrated tariff must be applied by EU member states to various goods imported from non-EU states. Imports from outside the EU are also subject to VAT, payable in accordance with applicable EU tariffs. Exports outside the EU are not subject to EU VAT.

Double tax treaties

25. Is there a wide network of double tax treaties?

About 80 income tax treaties are currently in force in Italy. The most important economic partners of Italy are covered by specific tax treaties. Most of them are aimed to avoid double taxation of business entities and transactions.

 

Competition

26. Are restrictive agreements and practices regulated by competition law? Is unilateral (or single-firm) conduct regulated by competition law?

Competition authority

The Italian Competition Authority (Autorità Garante della Concorrenza e del Mercato) is located in Rome. Its website is www.agcm.it, where guidance about Italian competition rules can be found in Italian and in English.

Restrictive agreements and practices

Restrictive agreements can be null and void. Competition law prohibits any restrictive horizontal and vertical agreement which may consistently limit competition. For breach, the Competition Authority can decide, depending on the seriousness and duration of the breach, to impose a fine of up to 10% of the turnover of the entities involved.

Unilateral conduct

Competition law prohibits any abuse by one undertaking of a dominant position in the national market or in a substantial part of it. For breach, the Competition Authority can decide, depending on the seriousness and duration of the breach, to impose a fine of up to 10% of the turnover of the undertaking involved.

The Italian legal system does not provide for criminal penalties for violation of competition law. Foreign entities doing business in Italy are subject to Italian competition law, if their conduct affects the Italian market or part of it.

 
27. Are mergers and acquisitions subject to merger control?

Mergers and acquisitions must be notified to the Competition Authority if both the:

  • Combined aggregate turnover in Italy of all undertakings involved (for example, the turnover of the target company plus the turnover of the purchaser group, inclusive therefore of the turnover generated by the ultimate parent company of the acquiring party and all controlled companies by the latter) exceeds EUR482 million.

  • Aggregate Italian turnover of the target entities exceeds EUR48 million.

Thresholds are updated annually.

If the turnover thresholds are reached, prior notification is mandatory. However, the transaction can be completed immediately after notification. Therefore, the Italian merger scheme does not provide any waiting period. If the parties close a transaction after notification but before clearance, there is a risk that the Competition Authority could require a de-merger.

A fine of up to 1% of the turnover of the last financial year can be imposed on an undertaking that fails to comply with the prior notification requirement.

Within 30 calendar days from the effective date of notification, the Competition Authority must either clear the transaction or open an in-depth investigation phase. The Competition Authority can suspend this time limit where necessary information has not been provided by the notifying party. Following the initial review, if the Competition Authority comes to the conclusion that the acquisition may create or strengthen a dominant position on the domestic market with the effect of eliminating or restricting competition appreciably and on a lasting basis, it commences an in-depth Phase II investigation. The review period for a Phase II investigation is 45 calendar days. This term may be extended by a further 30 days if the notifying party does not provide the information and data requested. At the conclusion of the Phase II investigation the Competition Authority can authorise, other conditions or prohibit the transaction.

Foreign to foreign transactions must be notified if the parties meet the threshold requirements, irrespective of the nationality of the companies concerned.

 

Intellectual property

28. Outline the main IP rights in your jurisdiction.

Intellectual property rights can be divided into the following categories:

  • Industrial property rights (that is, patents, trade marks, industrial designs and utility models, domain names and geographical indications of origin).

  • Copyrights (that is, the rights of the creators over their literary and artistic works, music, films, books, software, databases, architectural designs, paintings and advertising creations).

  • Commercial strategies (that is, trade secrets, know-how and confidential information).

Patents

Definition and legal requirements. A patent is an exclusive right granted for the invention of a new product or process capable of industrial exploitation. In general, patentable inventions can be divided in to the following categories:

  • New and original technical solution to a problem (patent for invention).

  • Solution capable of improving on something that already exists, or a detail that provides tools or objects with a better effectiveness or ease of use (utility model).

  • New plant varieties.

Under Italian patent law, the following inventions cannot be patented:

  • Discoveries, mathematical methods and scientific theories.

  • Plans, principles and methods for intellectual activities, games or commercial activities and computer programs.

  • Methods of presenting information.

  • Medical treatments.

  • New animal breeds.

To be patented, the invention must fulfil four requirements:

  • Industrial applicability.

  • Novelty.

  • Inventive step.

  • Lawfulness.

Registration. Patent applications must be filed with the Italian Patent and Trademark Office or a local Italian Chamber of Commerce directly by the inventors or through a patent and trade mark agent. Applicants can find detailed guidance on the application procedure on the Italian Patent and Trademark Office's website.

Enforcement and remedies. Patent infringements may result in the holder of the patent certificate asking the court for:

  • Damages for infringement.

  • An injunction prohibiting the use of the product or process which infringes the patented invention.

  • An attachment of goods injunction, preventing the infringer from disposing of the infringing goods.

The court can also set penalties for further violations. Patents are also protected by criminal law sanctions, which can be applied for on the public prosecutor's request.

Length of protection. Patent protection lasts for 20 years from the filing date of the application and cannot be extended. Periodical annuities are due to the Italian Patent and Trademark Office to maintain a patent in force. Lack of payment results in the lapse of the patent.

Trade marks

Definition and legal requirements. Any sign capable of both of the following can be filed for registration as a trade mark (Legislative Decree no. 30 of 2005 (Industrial Property Code)):

  • Being graphically represented (including words, names, letters, designs, figures, sounds, product shapes, packaging, colour combinations and shades of colours).

  • Distinguishing the goods and services of one company from those of another company.

To be duly registered, a trade mark must also be:

  • New.

  • Distinctive.

  • Lawful.

A sign that is merely descriptive and generic with respect to the product or service identified cannot be registered as a trade mark.

Protection. Trade mark applications must be filed with the Italian Patent and Trademark Office. The relevant website provides guidance on the application procedure, among other general information. The Italian trade mark system also grants protection to unregistered trade marks (marchi di fatto) through the application of the prior use principle. Under this principle, a new trade mark can be challenged for lack of novelty if it is identical or similar to, or it could be confused with, a prior used distinctive sign that has acquired general notoriety.

Enforcement and remedies. The registrant of a trade mark, the holder of an application for registration of a trade mark and the prior user of an unregistered trade mark can enforce, respectively, a trademark, a trademark application and an unregistered trademark. The remedies relevant to patents also apply to trade marks (see above, Patents, Enforcement and remedies).

Length of protection and renewability. Trade mark protection lasts for ten years, perpetually renewable for subsequent ten-year periods. No annual payments to the Italian Patent and Trademark Office are required.

Registered designs

Definition. A registered design is the appearance of the whole or a part of a product resulting from the features of lines, contours, colours, shape, texture or materials of the product itself and its ornamentation.

To be registered, a design must be new and must have individual character.

Registered designs are protected under the Italian Industrial Property Code and the Italian Copyright Law (l. 633/1941) if they have creative character and artistic value.

Registration. Applications for registration of a design must be filed with the Italian Patent and Trademark Office, whose website provides detailed guidance on the application procedure.

Enforcement and remedies. The registrant of a design is provided with the same enforcement measures and remedies applicable to the protection of patents (see above, Patents, Enforcement and remedies).

Length of protection and renewability. Protection lasts for five years from the filing date of the application and is renewable for following five-year periods (up to a maximum of 25 years).

Unregistered designs

Definition and legal requirements. Designs are protected through use without any registration formalities, if they fulfil the novelty and originality requirements of Regulation (EC) no. 6/2002 on Community designs. Unregistered designs can also be protected against unauthorised copies/imitations under unfair competition law.

Enforcement and remedies. Against unfair competition practices which may affect unregistered designs, the rightholder can seek any or all of the following remedies in court:

  • Damages in the case of negligence or bad faith of the competitor.

  • An injunction prohibiting the use of the infringing designs/goods.

  • An attachment of goods injunction.

  • The publication of the judgment.

The court can also set penalties for further violations.

Length of protection. Unregistered Community designs are protected for three years from the date on which they are first made available to the public in the EU.

Copyright

Definition and legal requirements. The author of an original creative intellectual work in the field of literature, music, visual arts, architecture, theatre and cinema owns copyrights in its work automatically from the moment the work is created. The author has the exclusive right to:

  • Exploit the work and the moral right to be recognised as the author of the work.

  • Oppose any use or mutilation of the work that may damage his reputation.

The economic exploitation rights can be purchased, sold or transferred in any way permitted by law, but moral rights are not transferable (except to the heirs of the author after the author's death).

Protection. Creative works do not need to be registered to be protected. However, works can be registered to fix their date of creation and the identity of the author, with either the Italian Performing Society Register or the Works Register at the Italian Presidency of the Council of Ministers.

Enforcement and remedies. The author of a copyrighted work, or the transferee of the economic exploitation rights, is entitled to the following protections:

  • Damages for infringement.

  • Assessment of the ownership of the rights.

  • Injunction prohibiting the infringing activities.

  • Injunction aimed at the destruction or removal of the infringing works.

Copyrighted works are also protected by criminal law sanctions.

Further, the author can prohibit the publication of the unpublished work, as well as any modifications or use of the work, which may violate his moral rights (indemnifying the possible purchaser of the copyright).

Length of protection and renewability. The economic exploitation rights last for the life of the author plus 70 years following his death. After this period, the work falls into the public domain and can be freely used without need of any authorisation.

Other

The other main IP rights are:

  • Geographical indications and denominations of origin. The Industrial Property Code grants protection to geographical indications and denominations of origin identifying a country, a region or a place, if they are used to identify an agricultural product both:

    • which comes from that country, region or place; and

    • whose qualities, characteristics and reputation are exclusively or significantly determined by the geographical environment, including natural, human and traditional factors.

  • Domain names. Domain names are distinctive signs that can be registered in the relevant Internet registers at a national and international level. Domain names similar or identical to trade marks can be registered only by the relevant trade mark owners.

  • Trade secrets and confidential information. Trade secrets are measures for protecting technologies, know-how and other confidential information regarding a company's business activity. The information concerned must be all of the following:

    • secret;

    • valuable because it is secret;

    • submitted to special measures to be kept secret (for example, by means of confidentiality agreements).

 

Marketing agreements

29. Are marketing agreements regulated?

Agency

Agency agreements are regulated by the Civil Code, with several mandatory rules aimed at protecting the agent, such as:

  • The right to receive, subject to certain conditions, compensation on termination of the agreement.

  • A minimum notice period to withdraw from the agreement.

  • Limits on non-compete clauses.

Distribution

A distribution agreement is not subject to any specific legislation. However, the legal system regulates certain contractual forms that are often used for this purpose, including:

  • The supply agreement (somministrazione), under which a party undertakes to supply the other party with goods on a continuous or periodical basis.

  • The contratto estimatorio, where a party delivers goods to another party which is obliged to pay the relevant consideration, unless it returns the goods to the supplier within a certain time limit.

Commercial practice has also developed "atypical" distribution agreements subject to the mandatory provisions of law and regulated by the provisions of law concerning similar contracts (such as supply agreements), which are applied by way of analogy.

Franchising

On 6 May 2004, Law No. 129 on the regulation of franchising was enacted. It clarifies what the content of franchising agreements must be and introduces new measures regarding the:

  • Minimum term of franchising contracts (three years).

  • Mandatory formalisation of the contract.

  • Express indication of the expenses and investments the affiliate is required to make before the start of the contract.

 

E-commerce

30. Are there any laws regulating e-commerce (such as electronic signatures and distance selling)?

There are several laws relating to e-commerce. In particular, the main statutes are the:

  • E-commerce law (Legislative Decree No. 70/03), which establishes a set of mandatory rules governing e-commerce in order to protect consumers (in particular, it provides for the express indication of all terms and conditions).

  • Digital Administration Code (Legislative Decree No. 82/05), which sets out the necessary requirements for digital signatures to be valid.

  • Consumer Code (Legislative Decree No. 206/05), which, on distance selling, provides for the right of the purchaser to withdraw from the agreement without giving any reason and without being liable to penalties.

 

Advertising

31. Outline the regulation of advertising in your jurisdiction.

Legislative Decree no. 145/2007 both:

  • Protects traders from misleading advertising used by other traders.

  • Sets the conditions under which comparative advertising broadcast through any medium is considered lawful.

Consumers are protected by the Consumer Code (Legislative Decree no. 206/2005).

Advertising is considered misleading if it is likely to distort the economic behaviour of the trader/consumer it is addressed to or if it could harm competitors. The misleading nature of advertising can relate to the characteristics of goods and services, such as, among other things, their availability, price or supply terms.

Comparative advertising is any advertising through which a trader promotes its goods or services by comparing them with goods or services offered by another competitor. This kind of advertising is only allowed if all of the following apply:

  • It is not misleading.

  • It objectively compares goods or services meeting the same needs or intended for the same purpose.

  • It does not create confusion among traders.

  • It does not discredit competitors.

The Italian Competition Authority applies these provisions and can start an investigation on its own initiative or following a complaint. If misleading or unlawful comparative advertising is identified, the Italian Competition Authority can impose a fine ranging from EUR5,000 to EUR5 million. In specific urgent cases, the Italian Competition Authority can suspend the misleading advertising on an interim basis. In addition to fines, it can also publish the decision itself or an amending declaration at the trader's expense. In case of practices that are manifestly not serious or unfair, traders can present suitable commitments to end the infringement.

 

Data protection

32. Are there specific statutory data protection laws? If not, are there laws providing equivalent protection?

On 1 January 2004, the new Data Protection Act (Legislative Decree No. 196/03) came into force. The general principle is that the processing of personal data can only take place with the consent of the data subject.

The unauthorised accessing of databases is punished by civil and criminal sanctions.

 

Product liability

33. How is product liability and product safety regulated?

Product liability is regulated by the Consumer Code (Legislative Decree No. 206/05). Under this law, if a person is injured or his property is damaged due to a defective product, the manufacturer and, in some circumstances, the distributor is liable for the damage caused. However, if the state of scientific knowledge at the time when the product was marketed meant that the defect in the product could not have been foreseen, the manufacturer or distributor is not liable.

The claimant can claim damages and the consumers' associations can ask the court for an injunction prohibiting the sale of the unsafe goods.

 

Main business organisations

Ministry of Economic Development - Department of International Trade (Ministero dello Sviluppo Economico – Dipartimento per l'impresa e l'internazionalizzazione)

W www.sviluppoeconomico.gov.it

Main activities. The purpose of the department is the promotion of the international trade of Italian operators.

Stock-Exchange security agency (Commissione Nazionale per le Società e la Borsa) (CONSOB)

W www.consob.it

Main activities. CONSOB is the public authority responsible for regulating the Italian securities market.

Bank of Italy (Banca d'Italia)

W www.bancaditalia.it

Main activities. The Bank of Italy is the central bank of Italy and part of the European System of Central Banks. It is the supervisory entity of banks and other financial operators.

Insurance companies security agency (Istituto per la Vigilanza sulle Assicurazioni) (IVASS)

W www.consob.it

Main activities. IVASS is the public authority responsible for regulating and monitoring the insurance companies operating in Italy.

Employers' Union (Confindustria)

W www.confindustria.it

Main activities. Confindustria is the main representative organisation of Italian manufacturing and services companies.



Online resources

W www.normattiva.it

Description. This website was created and is managed by a department of the Italian government. It contains Italian legislation currently in force, in Italian and unofficial (only the Official Gazette (Gazzetta Ufficiale), also published by the Italian government, contains official text of Italian laws).



Contributor profiles

Filippo Modulo, Managing Partner

Chiomenti Studio Legale

T +39 06 4662 2264
F +39 06 4662 1
E filippo.modulo@chiomenti.com
W www.chiomenti.net

Professional qualifications. Member of the Rome Bar, Italy

Areas of practice. Corporate; M&A; Private Equity; Real Estate; Energy.

Languages. Italian, English, French

Marco Di Siena, Partner

Chiomenti Studio Legale

T +39 06 4662 2201
F +39 06 4662 1
E marco.disiena@chiomenti.net
W www.chiomenti.net

Professional qualifications. Member of the Rome Bar, Italy

Areas of practice. Tax.

Languages. Italian, English, French, Spanish

Filippo Cecchetti, Associate

Chiomenti Studio Legale

T +39 06 4662 2281
F +39 06 4662 1
E filippo.cecchetti@chiomenti.net
W www.chiomenti.net

Professional qualifications. Member of the Rome Bar, Italy

Areas of practice. Corporate; M&A.

Languages. Italian, English


{ "siteName" : "PLC", "objType" : "PLC_Doc_C", "objID" : "1247303110313", "objName" : "Doing business in Italy", "userID" : "2", "objUrl" : "http://us.practicallaw.com/cs/Satellite/us/resource/9-500-7799?null", "pageType" : "Resource", "academicUserID" : "", "contentAccessed" : "true", "analyticsPermCookie" : "223c8752:15b1c8f8233:489e", "analyticsSessionCookie" : "223c8752:15b1c8f8233:489f", "statisticSensorPath" : "http://analytics.practicallaw.com/sensor/statistic" }