According to Italian legislation and to the OECD Tax Model Convention to avoid double taxation, if the Italian office of a foreign company performs any business activities (selling goods, providing services, etc.), it is considered a permanent establishment (branch).

The branch must apply for a VAT number, is subject to separate accountancy and bookkeeping in Italy, must draw up an annual balance sheet and is subject to taxation in Italy on the income that derives from its activities carried out in Italy.

However, a representative office does not have to apply for a VAT number and is not subject to separate accountancy and bookkeeping in Italy.

Neither the Italian branch nor the representative office of a foreign company are subject to any restriction when hiring employees or renting premises.

The establishment of a branch or a representative office by a foreign investor must be registered with the Registrar of Companies.