Acquiring a Business in Italy: Comprehensive Legal & Tax Guide for Foreign Investors
Acquiring a Business in Italy: Comprehensive Legal & Tax Guide for Foreign Investors
Published by OS Law | Updated on 29.3.2025
Introduction
For many international entrepreneurs and corporations, Italy represents an ideal entry point into the European market. With its strategic location, established industrial base, and access to the EU, acquiring a business in Italy—rather than setting up a new one—is often the most efficient and risk-controlled path to market penetration. The acquisition of an existing enterprise, known in Italian law as a cessione d’azienda, allows foreign investors to capitalize on a functioning organizational structure, trained personnel, regulatory licenses, supplier and customer relationships, and an already developed brand identity.
However, such an operation is subject to specific legal, tax, and administrative rules, and oversight is crucial. Italian law imposes strict formalities, extensive protections for employees, and tax implications that cannot be overlooked. Working with an experienced Italian lawyer specialized in business acquisitions is not just advisable—it is essential to ensure that your investment is protected and properly structured from the very first step.
Understanding What Constitutes a “Business” Under Italian Law
The Italian Civil Code, in Article 2555, defines an azienda as the organized complex of goods aimed at the exercise of an enterprise. This definition goes far beyond a simple collection of assets. It refers to a structured and functional combination of tangible and intangible elements working together to support business activity. These components typically include physical assets such as real estate, machinery, equipment, and inventory, but also intangible assets like goodwill, intellectual property rights, software, client databases, and commercial licenses.
In the context of a business transfer, this also extends to the legal relationships associated with the ongoing concern, including supplier contracts, lease agreements, and employment contracts. If only a specific division or autonomous operational unit of a company is sold, the transfer is referred to as a ramo d’azienda. This qualifies as a business transfer if the unit is independently functional and capable of continuing operations on its own.
Understanding what constitutes a business is critical for determining whether the legal and tax framework of a cessione d’azienda applies. Incorrect classification—treating an asset deal as a business transfer, or vice versa—can lead to serious compliance issues, particularly with regard to tax and employee protection.
In conclusion, the scope of a business transfer is qualitatively broader than a simple asset deal. It typically involves:
✔️ Real estate (if owned) or lease agreements
✔️ Equipment, furnishings, inventory
✔️ Commercial goodwill (avviamento)
✔️ Trademarks, domain names, licenses
✔️ Existing contracts with suppliers and customers
✔️ Employees and their accrued rights
Legal Requirements and Execution Formalities
In Italy, the transfer of a business must comply with strict formal and procedural requirements to be valid and enforceable. Article 2556 of the Civil Code mandates that such transfers must be carried out either through a public deed or a private agreement whose signatures are notarized. The agreement must then be filed with the local Chamber of Commerce, specifically with the Registro delle Imprese, within thirty days of execution. This filing is not merely administrative—it is what gives the transaction legal effects toward third parties, including creditors, tax authorities, and contractual counterparties.
Pursuant to Article 2556 of the Civil Code, a business transfer must be:
✔️ In the form of a public deed, or
✔️ A private agreement with authenticated signatures, and then
✔️ Registered with the Business Register (Registro delle Imprese) within 30 days
Only after registration the transfer become enforceable, which means that third parties are officially informed of the change in ownership. The mandatory involvement of an Italian notary (notaio) ensures that the form of the transaction complies with national legal standards and that all necessary documents, certificates, and commercial registry updates are completed in a timely and accurate manner.
Foreign investors should be aware that failure to meet these formalities may not only void the transaction but could also expose the parties to fiscal sanctions or employment disputes. For this reason, coordinating early with a legal professional experienced in Italian commercial law is fundamental.
The Transfer of Contracts, Permits, and Authorizations
One of the most complex aspects of a business acquisition in Italy is the treatment of existing contractual relationships and administrative authorizations. According to Article 2558 of the Civil Code, all contracts that are not considered “personal in nature” are automatically transferred to the buyer unless otherwise stipulated.
This includes:
✔️ Commercial supply and distribution agreements
✔️ Lease agreements
✔️ Utility and service contracts
However, contracts that are closely tied to the personal trust or characteristics of the original owner—such as specific agency or consultancy agreements—may not transfer unless the counterparty explicitly agrees.
Special attention must also be given to licenses, authorizations, and regulatory approvals. For instance, businesses in regulated sectors such as food production, pharmaceuticals, transportation, or financial services may hold operating licenses that are not automatically transferrable. In such cases, the buyer must seek approval or re-issuance of the relevant authorizations from the competent authorities. Failure to do so could render the newly acquired business inoperative, with potential legal and financial consequences.
An experienced Italian lawyer specialized in business acquisitions will analyze each contract and license to determine which are automatically transferred, which require renegotiation or notification, and which must be reapplied for entirely. This phase of the transaction is often time-sensitive and should be addressed during preliminary due diligence, not after closing.
Employee Transfers and Labor Law Implications
Under Article 2112 of the Civil Code, the acquisition of a business includes the automatic transfer of all employees linked to the operation. This rule is aimed at protecting workers’ rights and ensuring continuity of employment. The buyer inherits not only the employment contracts but also the seniority, salary levels, benefits, and all other accrued rights of each employee.
From the buyer’s perspective, this legal obligation means assuming full responsibility for all labor-related liabilities, including unpaid social security contributions, pending disputes, or hidden irregularities in past employment practices. In addition, the buyer may be required to consult with trade unions or works councils, especially if the acquisition involves a change in working conditions or a potential restructuring.
For this reason, labor law due diligence is as important as financial analysis. Reviewing payroll registers, INPS/INAIL contribution statements, existing litigation, and collective labor agreements is essential to anticipate risks and negotiate indemnities with the seller. A skilled business acquisition lawyer will also draft specific contractual clauses to allocate liabilities and limit the buyer’s exposure in this sensitive area.
Legal Responsibility for Pre-existing Debts
When acquiring a business, understanding who bears responsibility for existing debts is a matter of legal and financial survival. Article 2560 of the Civil Code provides that the seller remains liable for business debts incurred before the transfer. However, the buyer also becomes liable for those debts if they are recorded in the business’s mandatory accounting books, such as the general ledger, inventory books, or VAT registers.
This dual liability system means that transparency in bookkeeping is not just a matter of good practice—it’s a legal necessity. The buyer should never rely solely on financial statements but must review the original accounting documentation and verify the completeness and correctness of all entries. Where discrepancies arise, the buyer should negotiate contractual guarantees or consider holding back part of the purchase price through an escrow arrangement.
A well-drafted acquisition agreement should also include detailed representations and warranties, a seller indemnity clause, and a mechanism for dispute resolution in case of post-closing discoveries.
The Scope and Enforcement of Non-Compete Clauses
Italian law protects the buyer from unfair competition by imposing a statutory non-compete obligation on the seller, pursuant to Article 2557. This provision prohibits the seller from engaging in any activity that competes with the business sold for a maximum period of five years. The clause can be tailored to cover specific geographic areas or market segments, depending on the nature of the business.
Enforcing the non-compete clause is crucial when the goodwill of the business is closely linked to the seller’s reputation, relationships, or personal brand. In sectors like retail, hospitality, consulting, or healthcare, the seller’s immediate return to the same market could destroy the very value the buyer paid for.
If the clause is violated, the buyer has the right to seek damages and potentially an injunction to prevent further harm. For this reason, the scope, duration, and enforceability of the non-compete clause should be drafted with extreme care and in compliance with legal limits.
Tax Framework and Capital Gains
In Italy, the transfer of a business is excluded from VAT under Article 2(3)(b) of Presidential Decree 633/1972, provided the transaction qualifies as a going concern. This is a major benefit for the buyer, as it avoids an immediate cash outflow for VAT purposes. However, in lieu of VAT, the transaction is subject to registration tax, which varies depending on the composition of the business.
For example, goodwill and movable assets are generally taxed at 3%, credits at 0.5%, and real estate at 9% (or 15% for agricultural land). If the sale also includes real property leases, additional fixed or proportional duties may apply. A precise and transparent breakdown of the business’s components in the sale contract is essential to apply the correct tax rates and prevent disputes with the tax authorities.
On the seller’s side, capital gains realized from the sale are taxed as income. For corporate sellers, these are taxed under ordinary IRES rules. Individual sellers, if they have owned the business for more than five years, may benefit from a favorable flat tax under Article 17 of the TUIR (Italian Tax Code).
Tax Liability of the Buyer
Perhaps the most underappreciated risk in an Italian business acquisition is the buyer’s potential liability for the seller’s past tax obligations. Legislative Decree 472/1997, Article 14, establishes that the buyer is jointly liable with the seller for any taxes, penalties, and interest due for the fiscal year in which the transaction occurs and for the two preceding years. This includes income tax, VAT, and social security contributions.
However, this liability can be avoided by requesting a tax compliance certificate (certificato dei carichi pendenti) from the Revenue Agency. If the agency fails to issue the certificate within forty days, the buyer is presumed to be exempt from this liability. This certificate should be requested early in the process and always before closing. A qualified Italian lawyer specialized in business acquisitions will ensure this critical step is not missed.
The Critical Role of Due Diligence
Comprehensive due diligence is the cornerstone of any successful acquisition. This process should include legal, financial, tax, regulatory, and labor audits. It is not enough to verify balance sheets; buyers must also examine the ownership of licenses, verify compliance with industry regulations, review litigation histories, and confirm the enforceability of key contracts.
Due diligence includes:
✔️ Verifying legal ownership of all assets
✔️ Ensuring continuity of contracts and licenses
✔️ Assessing tax risks and labor litigation
✔️ Identifying off-balance sheet liabilities
A full due diligence report not only protects the buyer but also provides the legal basis for negotiating price adjustments, indemnity provisions, or warranty coverage. At OS Law, our team conducts customized audits that align with the type, size, and sector of the business being acquired.
Why Choose OS Law
With deep expertise in Italian commercial, tax, and labor law, and extensive experience supporting international clients, OS Law is uniquely positioned to guide foreign investors through the acquisition process. We offer fully integrated legal services in English, handle cross-border coordination, structure holding vehicles, and ensure every aspect of the transaction is aligned with your strategic objectives.
An experienced business acquisition lawyer:
✔️ Structures and negotiates the deal
✔️ Ensures all legal formalities are respected
✔️ Minimizes liability and tax exposure
✔️ Coordinates with notaries and tax professionals
✔️ Assists with cross-border and holding structures if needed
From the first due diligence call to the final notarial signature, we work as your local legal partner.
