What is it?
One of the preparatory phases for the international expansion process definitely includes the corporate presence abroad: namely, the opening of a Representative Office.
A representative office represents a physical space within which an Italian company can be present abroad and which is dedicated purely and exclusively to promotion, advertising, networking and collection of information on the target market.
Since the activities to which the representative office is dedicated do not include the direct production or sale object of the business, the office is not subject to any fiscal obligation. The costs related to the representative office can be recorded in the financial statements of the parent company.
What’s the representative office for?
The main purpose of this tool can be considered making oneself known. To make known the company and the brand (of the product or service offered) on the target market and to be present on this through a progressive and gradual effort, so as to spread the brand, test the interest of consumers/customers and learning to know the market, are all essential phases for an adequate expansion plan directed to the foreign market.
Another purpose to which the Representative Office can fulfil, is purely the preparatory one, necessary for the correct and gradual integration into the actual commercial activity in the reference market.
Warning: foreign companies that have established a representative office must be very careful to avoid that it can be considered as a stable organization on the target market (that is, a hidden business reality, so to speak, and as such subject to taxation even on that market).