Foundation or Society in Italy 2025: What's right?

A Foundation in Italy is a legal entity that is created to manage assets destined for a specific purpose —usually cultural, social, educational or charitable— and is not for profit. Unlike a partnership, it is not designed to distribute profits among partners or owners.

The foundation controls and manages assets independently. Once the assets are transferred to the foundation, they no longer belong to the founder, but are the property of the entity itself, those who manage them must follow the purpose of the foundation and its registered statutes.

Key features of creating a foundation in Italy:

• Control and separation of assets: By transferring assets to a foundation, they are protected from third parties and from future personal or business problems.
• Specific purpose: Every foundation must have a defined purpose (public benefit or common interest).
• Durability: The foundation exists independently of the founder and can last indefinitely in accordance with its statute.
• Official recognition: You must register in the Register of Legal Entities and, in some cases, obtain prior authorization.

From the point of view of the tax residence in Italy, foundations have very specific rules. For the most part, they are exempt from some corporate taxes, but they can be taxed on income produced by business activities or investments if they exceed certain limits. This is key for those looking for tax advantages when residing in Italy while protecting their heritage.

The process of How to form a foundation in Italy involves:

1. Drafting an act of constitution and statutes.
2. Provide initial assets (there is no general minimum, but it must be sufficient for the stated purpose).
3. Formally register in the appropriate register.

Thus, the foundation becomes a solid mechanism for those who want to separate assets from personal or business risk, ideal for families, high-net-worth individuals and foreign residents seeking long-term stability.

A society in Italy is an entity created primarily to carry out commercial or business activities. Unlike foundations, their main objective is the generation and division of profits between partners. There are several types — such as S.r.l. (Società a) and S.p.a. (Società per azioni) — and each one adapts to different business needs.

Creating a company is a very popular option for both Italians and expatriates looking to formalize their business in the country and enjoy a limited liability structure.

Main uses of a company in Italy:

• Business Operations: The company makes it possible to sell products, provide services or manage investments in a structured manner.
• Personal Protection: Partners are generally not personally responsible for the company's debts; their liability is limited to the contribution made.
• Tax planning: Well-managed, a company makes it easy to optimize the tax burden within the Italian legal framework.
• Flexibility in control: Depending on the type of company, partners have different degrees of participation and administrative commitment.

For those who have legal and fiscal residence in Italy or do they plan to obtain it, having a company can become an excellent business or investment tool, especially in sectors such as real estate, international trade or consulting.

The process of create a company in Italy as a foreigner follows steps similar to the foundation but varies in practical experience:

1. Define the right type of company according to the business objective.
2. Incorporate the company by means of a public document in front of an Italian notary.
3. Register the company with the Italian Companies Register (Camera di Commercio).
4. Request the VAT number and other necessary tax records.

In addition, the company allows for more active management of assets compared to foundations. While foundations are limited by their corporate purpose, society can dynamically adapt to market changes or growth strategies. This is important for residents in Italy who need flexible structures for their business or investment plans.

Structural differences and legal objectives

One of the first distinctions between a Foundation in Italy And a society lies in its legal purpose. La society (SRL, SPA, etc.) has a commercial purpose: it seeks to generate profits for its partners or shareholders. Instead, the founding has a non-profit purpose; it is constituted to manage assets for a specific cause and does not distribute benefits.

This implies that, legally, the company has clearly defined owners (partners or shareholders) who exercise control through share capital. Meanwhile, in a foundation, there are no partners, but rather a founder who transfers control to a governing body (such as a board of directors) that must respect the foundational purpose established in its statutes.

Control and governance

If what you are looking for is have full control over a structure, a company offers greater management flexibility. The administrator or director is appointed by the partners, and decisions are made according to their will. In general, control can be redistributed or sold if partners so wish.

Instead, a foundation is subject to a more rigid framework. Control is not based on participation or actions, but on the fulfillment of the foundational objective. Although the founder can influence or even be part of the administration, once created, the foundation becomes an autonomous entity: the estate no longer belongs to the founder, but to the foundation itself.

• Society: dynamic control, oriented to the distribution of benefits.
• Foundation: more institutional control, aimed at preserving and managing heritage for a specific purpose.

Flexibility and modifications

In terms of adaptability, society is much more flexible. You can easily modify social objects, internal structures, and even sell or close it. This makes it ideal for those looking to adapt quickly to new opportunities or markets.

Conversely, a foundation requires more complex authorizations to change its object, merge or dissolve. This is because it has a stated purpose before the competent authority (such as the Prefecture or the Region), which oversees its activity in accordance with Italian law.

These differences mean that the most convenient legal structure in Italy depends on your priorities: are you looking for business control or long-term asset protection?

Foundation in Italy: limited but controlled taxation

Las tax implications of having a foundation in Italy depend on their purpose and activity. In general, a foundation does not pursue commercial purposes and, therefore, enjoys certain tax benefits. You are not subject to corporate tax if you do not carry out lucrative activities, and your income may be exempt or subject to favorable tax treatment if it is reinvested for the foundational purpose.

However, if a foundation carries out economic activities or generates passive income, it may be required to declare and pay taxes like any other legal entity, applying the IRES (Corporate Income Tax) at 24%. In addition, you must submit detailed documentation about your transactions to the Italian Tax Agency.

This means that a Foundation in Italy it is useful for protecting assets, but it should not be used for purely commercial purposes or to avoid taxes, since it is under strict administrative and fiscal control.

Company in Italy: subject to the full tax system

Una Italian society is fully included in the tax system. This involves:

• IRES (Corporate Tax): 24% of net income.
• IRAP (Regional Tax on Productive Activities): between 3.9% and 5%, depending on the region.
• VAT: applies to goods and services invoiced, generally at 22%.

In addition, the resident tax partners in Italy are taxed on the dividends they receive (normally 26%) and must declare their shares and profits on their personal income tax return. This can increase the tax burden if there is no adequate planning.

Tax residency: where you pay taxes makes a difference

Como tax resident in Italy, you are required to pay taxes on your worldwide income. This includes income generated by foundations or companies, whether inside or outside Italy. If you have a structure such as Panamanian Foundation or a foreign company, Italy may require you to declare and tax those assets, depending on effective control and the type of income generated.

That's why it's important to understand how a structure affects your tax residency. In some cases, it may be more convenient to have direct ownership or through an entity with lower taxation, but in full compliance with Italian and European standards.

In short

Society generates higher taxes but offers control and flexibility. The foundation has tax benefits, but a more rigid and supervised framework. For those who come from structures such as foundations in Panama, adapt to the frame legal and fiscal law in Italy in 2025 requires clear advice and planning that minimizes risks without losing efficiency.

All of this naturally leads us to the following question:Which one is more convenient for a resident in Italy or who comes from Panama? We explore this in the next section.

Choosing between a foundation or a company in Italy as a resident — whether fiscally established in Italy or a newcomer from Panama — will depend on the type of assets, capital objectives and level of control you seek. There is no single valid answer, but there are key criteria that help to decide with logic and projection.

If you live in Italy: tax protection and efficiency

For Italian tax residents (who spend more than 183 days a year in the country), the choice between foundation or society in Italy you must consider the impact on the tax burden and on the long-term legal structure. In this case, a Foundation can be very useful if your goal is protect personal or family assets not for commercial purposes.

For example, a person with real estate, inherited shares, or collections of value can use a private foundation to separate these assets from their personal wealth. This provides not only protection against legal or personal risks, but also a clearer organization for succession purposes.

However, if your priority is to generate revenue, scale operations, or actively participate in businesses—as an entrepreneur, investor, or professional—then a society in Italy (such as an SRL or SPA) is probably your best option. This structure allows greater operational flexibility, deduction of expenses and commercial formalization before third parties.

If you come from Panama or have dual residence

For many people with residence in Panama who are obtaining citizenship or legal residence in Italy, the analysis also includes how the two tax regimes interact. Panama does not tax foreign income, while Italy does, once you are a tax resident.

In those cases, use a Panamanian Foundation for managing personal assets it can continue to be useful, as long as it is well structured and properly declared in Italy. But if you start to generate income within Italian territory or are looking for access to the European banking and business system, create a company in Italy may be practically mandatory.

Key things to consider:

• Nature of the heritage: For passive assets, the foundation can work; for active businesses, the corporation is suitable.
• Control: The foundation involves giving up control; the company keeps you as an administrator or active partner.
• Taxation: Corporations allow deductions and active accounting; foundations are not taxed like companies, but they require transparency and clarity for non-profit purposes.
• Heritability: Foundations facilitate structured succession planning.

In short, if your primary interest is in preserve, organize or transmit your heritage familiar in Italy — and you're willing to give up some control — foundation is your path. But if you're going to doing business, receiving income actively and you need a structure with more operating margin, then an Italian company makes more sense. Sometimes, combining both structures can be the strongest strategy, especially if there are connections with other jurisdictions such as Panama.