What are the Srl costs to budget for, between formation and ongoing management? In this guide we look at how much it costs to set up a limited liability company (Srl) in Italy, what differences exist between the Ordinary Srl, the Simplified Srl, and the Reduced-Capital Srl, and what really affects the share capital.
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The three types of Srl and the cost differences
Since the 2012 legislative reforms, the Italian Civil Code provides for two forms of limited liability company: the ordinary Srl (art. 2462 and 2463 of the Civil Code), with share capital equal to or greater than 10,000 euros, and the simplified Srl (art. 2463-bis of the Civil Code), with capital between 1 and 10,000 euros.
The substantial difference concerns the deed of incorporation: in the ordinary Srl it is possible to customize the by-laws according to the shareholders’ needs, while in the simplified Srl the deed must follow a standard ministerial template with non-modifiable clauses, which brings some practical limitations, for example on the deadlines for approving the financial statements.
How much does it cost to set up a Srl
In practice it’s worth distinguishing three categories, each with a different cost structure for formation:
- Ordinary Srl: minimum capital of 10,000 euros, customizable by-laws, higher notary costs but greater flexibility in governance.
- Simplified Srl: capital between 1 and 10,000 euros, standard by-laws with no possibility of amendments, lower formation costs (around 1,100-1,400 euros).
- Reduced-Capital Srl: capital under 10,000 euros but set up like an ordinary Srl, so with customizable by-laws and possible departures from the Civil Code.
Today, setting up a Srl can also be handled remotely, with a guided procedure assisted by a chartered accountant: if you’d like to find out about timing, required documents and costs for an online company formation, you can read our dedicated guide.
Why the Simplified Srl isn’t always the better choice
Before choosing the Simplified Srl just to save on formation costs, it’s worth understanding the limitations this model brings compared to the ordinary Srl. The by-laws are standard and allow no amendments, which in practice means:
- Non-customizable length of the first financial year: the standard by-laws don’t allow you to set a different length for the first financial year than the one provided for, while in the ordinary Srl it can be adapted to the needs of the business;
- Non-customizable shareholder agreements: it isn’t possible to set different rules from those in the standard by-laws, for example on how meetings are convened and voted on, on reinforced quorums, or on pre-emption and approval clauses for the transfer of shares;
- Less flexibility in governance: any specific needs for company organization, common when new shareholders join or extraordinary transactions are launched, remain bound to the standard scheme regardless;
- Possible additional costs later on: if the by-laws need to be customized at a later stage, a notarial deed is still required, adding to the costs already incurred at formation.
For this reason, when weighing the Srl costs of the different company forms, it’s worth looking beyond the initial expense and also considering the flexibility you’ll need over time: in many cases the savings from the Simplified Srl at formation are offset by less flexibility in the by-laws and by possible additional costs later on.
Share capital is not a cost: a common misunderstanding
A common mistake is to think that with the simplified or reduced-capital Srl you automatically save compared to the ordinary Srl. In reality, share capital is not a cost but a resource of the company: the real saving only concerns the formation expenses. It’s also worth remembering that in the ordinary Srl only 25% of the capital needs to be paid in at the time of incorporation, so the formation costs largely cover this payment.
The ongoing costs of running a Srl over time
Beyond formation costs, anyone setting up a Srl needs to consider the Srl costs linked to ongoing management, which recur every year and over time weigh more than the one-off initial expense. The main items are generally:
- Bookkeeping: the accountant’s fee for the mandatory ordinary accounting for Srls, which varies according to the volume of invoices and the complexity of the business;
- Annual Chamber of Commerce fee: the fee due every year to the Chamber of Commerce to maintain registration in the Business Register;
- Stamp duty and validation of company books: fixed costs linked to keeping the mandatory registers (the shareholders’ book, the directors’ resolutions book, and the other books required by the Civil Code);
- Filing of financial statements: the registry fees owed to the Business Register for the annual filing of the approved financial statements;
- Statutory audit: mandatory only for Srls that exceed certain size thresholds, it involves an additional cost for the auditor’s or the board of statutory auditors’ fee.
Weighing these recurring Srl costs alongside the formation costs is essential to get a realistic picture of the overall expense, not just the cost of opening the company.
Our firm has been handling the formation and management of Srls for over 35 years: we can help you choose the company form best suited to your project and accurately estimate both the initial and the ongoing costs.
How to compare Srl costs before choosing the company form
A practical way to compare Srl costs is to separate the one-off expenses from the recurring ones and to look at both over a horizon of several years. The formation expenses (notary, registration and initial assistance) are paid once, while bookkeeping, the annual Chamber of Commerce fee, the stamp duty on company books and the filing of the financial statements come back every year. Seen this way, the gap between an Ordinary Srl and a Simplified Srl at formation is only part of the picture, and the ongoing management costs tend to weigh more in the long run.
It is also useful to ask what the company will need in terms of governance. If the shareholders expect to customize the by-laws, admit new partners or regulate the transfer of shares, the Ordinary Srl or the Reduced-Capital Srl avoid a later notarial deed. If the project is simple and the standard template is sufficient, the Simplified Srl can be adequate. Estimating the Srl costs in this way, together with a chartered accountant, gives a realistic view of the total expense rather than just the price of opening the company.
Frequently asked questions about Srl costs
What are the main Srl costs to consider when setting up a company in Italy?
The Srl costs fall into two groups: the one-off formation expenses (notary, registration and assistance) and the recurring management costs, such as bookkeeping, the annual Chamber of Commerce fee, stamp duty on company books and the filing of the financial statements. Both should be estimated before choosing the company form.
Is the Simplified Srl always cheaper than the Ordinary Srl?
Not necessarily. The Simplified Srl has lower formation costs, but its by-laws follow a standard template that cannot be amended. If the shareholders later need customized clauses, a notarial deed is still required, which can offset the initial saving.
Does the share capital count as part of the Srl costs?
No. Share capital is a resource of the company, not an expense: the real saving between the different company forms only concerns the formation expenses. In the Ordinary Srl, moreover, only 25% of the capital needs to be paid in at incorporation.
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