Joint Ventures Between U.S. and Italian Companies: How to Structure Them Correctly
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- September 3, 2026
Joint Ventures Between U.S. and Italian Companies: How to Structure Them Correctly
Commercial partnership between the United States and Italy is expanding at a pace not seen in decades, and much of it is now taking the form of joint ventures. Italy exported roughly $68 billion in goods to the United States in 2024, more than ten percent of its total exports, led by machinery, pharmaceuticals, vehicles, and food and beverage products. The 15 percent U.S. tariff applied to most European Union goods since 2025 has accelerated a trend that was already underway: Italian companies establishing production, distribution, and service operations inside the United States, frequently with an American partner, and American companies seeking Italian partners for access to European markets and manufacturing capability.
A joint venture is also one of the most commonly mishandled forms of cross-border partnership. Two companies from different legal systems, each assuming that the other’s rules work roughly like their own, negotiate a structure that neither fully understands. The problems rarely appear at signing. They appear two or three years later, when profits need to be distributed, a deadlock needs to be broken, or one party wants out. This guide covers the decisions that determine whether a U.S.-Italy joint venture holds together: where the entity sits and what form it takes, how contributions and governance are defined, how profits and exits are handled, where the two countries’ mandatory rules interact, and how intellectual property is protected across both jurisdictions.
Why U.S.-Italy Joint Ventures Are Legally Complex
The complexity is structural, not incidental. The United States operates under common law, where the contract itself is expected to state every significant obligation and courts interpret agreements on their literal language. Italy operates under civil law, where the Civil Code supplies a substantial body of rules automatically and contracts are drafted against that background. A joint venture agreement sits directly on top of this divide. Provisions that one party considers obviously implied, the other party’s legal system may not imply at all.
There is also a corporate dimension. The venture has to live inside an actual legal entity, formed in one country, governed by that country’s company law, while serving shareholders whose expectations were formed under two different systems. Getting that entity right is the first and most consequential decision.
The First Structural Decision: Where the Venture Entity Sits
The joint venture entity is normally formed in the country where the venture will primarily operate. That choice then determines which company law governs it, and the partners work within that system’s options.
If the venture will operate in the United States
The two forms that matter in practice are the limited liability company and the corporation. A limited liability company is governed by an operating agreement that the parties draft themselves, which allows governance, distributions, and transfer restrictions to be shaped around the venture with considerable freedom. A corporation is governed by statute, bylaws, and a board structure, is taxed as a separate entity at the federal corporate rate of 21 percent, and is the form U.S. institutional investors and lenders generally expect to see if outside capital is part of the plan.
For foreign-owned ventures, the choice carries consequences that a purely domestic partnership would not face, including federal reporting obligations that apply to foreign-owned entities regardless of income. The state of formation matters as well. Delaware remains the standard choice for its developed body of corporate law and specialized courts, while the venture may still need to register and comply in the states where it actually operates, California among them.
If the venture will operate in Italy
Italian company law offers its own forms, most commonly the Italian limited liability company, known by its abbreviation SRL, and the Italian joint stock company, known as the SpA. The SRL is built around quotas held by the members and gives the parties significant freedom to shape governance and transfer rules in the company’s status. The SpA is built around shares, carries a higher minimum capital requirement, and comes with a more formal governance apparatus, including mandatory supervisory functions, which is why it is the form used for larger enterprises and any company heading toward the capital markets.
Which form fits depends on the size of the venture, the governance the partners want, and how capital will move in and out. These are questions of Italian law and they should be answered within Italian law.
The two systems should not be mapped onto each other
A frequent source of confusion in U.S.-Italy ventures is the assumption that the entity types of one country are equivalents of the other’s, and that what the partners agreed about one form can simply be transposed onto the other. They are not equivalents. Each form exists inside its own legal system, with its own rules on capital, governance, member rights, and creditor protection, and the differences are precisely where cross-border ventures run into trouble. The sound approach is to select the entity for the country where the venture operates, on that country’s terms, and then build the joint venture agreement around what that entity’s law actually permits. This is one of the clearest reasons the structuring stage needs advisors who work in both systems rather than one.
Contributions, Governance, and Decision-Making Authority
The joint venture agreement has to answer three questions with precision, because these are the questions litigated more often.
First, what is each party actually contributing? Cash is simple. Contributions of equipment, technology, customer relationships, or intellectual property are not, because they require valuation, documentation of transfer or license, and agreement on what happens to the contribution if the venture ends. A contribution that was described loosely at signing becomes a dispute the moment the venture is worth something.
Second, who decides what. Board composition, appointment rights, and the list of reserved matters that require both partners’ consent, such as budgets, borrowing, admission of new members, and related-party transactions, should be written explicitly rather than left to the default rules of the entity’s home jurisdiction, because the defaults will reflect one legal system and one party’s expectations.
Third, what happens when the partners disagree. Fifty-fifty ventures deadlock. The agreement should say in advance how a deadlock is resolved, whether through escalation to senior executives, a casting mechanism, mediation, or a structured buyout. A deadlock provision drafted at the start costs a page of text. The absence of one, discovered mid-dispute, can cost the venture itself.
Profit Sharing, Loss Allocation, and Exit Provisions
Distribution rights should be stated in the governing documents rather than assumed from ownership percentages, because the default rules on when and how profits can be distributed differ between the two systems, including rules on reserves and the timing of distributions that apply to Italian companies as a matter of law.
Exit deserves the same discipline. A well-structured U.S.-Italy joint venture agreement addresses transfer restrictions, rights of first refusal, tag-along and drag-along rights, and put and call options that allow one partner to buy the other out at a defined valuation method. It also addresses what happens to licensed intellectual property, customer contracts, and the venture’s name when a partner leaves. Exit provisions have a further requirement in a cross-border venture: they must actually be enforceable under the law of the country where the entity sits, which is a matter to verify at drafting, not at exit.
Where U.S. and Italian Mandatory Rules Interact
Some rules apply no matter what the contract says, and they differ sharply between the two countries. Three areas produce most of the friction.
Restrictive covenants
Non-compete and exclusivity provisions are treated very differently on each side. In California, contractual non-compete provisions are void as a matter of state policy in most circumstances, regardless of the governing law the parties selected. Italian law permits contractual restrictions on competition, but subjects them to statutory limits on duration, scope, and territory under the Civil Code. A restrictive covenant drafted for one system and applied to the other may be unenforceable precisely where it matters. These provisions need to be drafted jurisdiction by jurisdiction.
Employment and workforce rules
If the venture employs people in California, California employment law applies to those workers, including worker classification rules and wage and hour requirements, regardless of where the parent companies are based. If the venture employs people in Italy, Italian employment law applies, including protections and collective bargaining frameworks that have no U.S. counterpart. Workforce planning belongs in the structuring conversation, not after hiring has started.
Investment screening on both sides
Italy screens foreign investment in strategic sectors under the Golden Power regime, which has expanded well beyond defense to cover energy, transport, telecommunications, financial infrastructure, and advanced technology, and which was amended again by Law No. 4 of January 15, 2026, adding economic and financial security among the protected national interests. Joint venture transactions involving strategic Italian assets can trigger a mandatory filing, and the volume is not theoretical: Italian authorities reviewed 835 screening procedures in 2024. On the U.S. side, foreign participation in ventures involving critical technology, critical infrastructure, or sensitive data can fall within the jurisdiction of the Committee on Foreign Investment in the United States. Screening analysis belongs at the term sheet stage, because it affects timeline, structure, and in some sectors the viability of the transaction itself.
Protecting Intellectual Property Across Both Jurisdictions
Intellectual property is where cross-border ventures concentrate the most value and the most risk. Three principles keep it protected.
Registration is territorial. Trademarks and patents registered in Italy or with the European Union confer no rights in the United States, and U.S. registrations confer none in Europe. The venture’s brand and technology need protection filed in each market where the venture will operate, before launch rather than after.
License, do not assume. Each partner should decide deliberately whether background intellectual property is licensed to the venture or assigned to it, on what terms, and what happens to it on exit. The agreement should also state who owns improvements developed inside the venture, because the default answers differ between the two legal systems and neither default may match the partners’ intent.
Trade secrets need affirmative protection. Under U.S. law, information qualifies for trade secret protection only if its owner takes reasonable steps to keep it secret, which means confidentiality obligations in the venture agreement, in employment contracts, and in dealings with third parties. Sharing technology with a venture partner without that framework in place can compromise the protection itself.
Governing Law, Forum, and What Happens in a Dispute
Every U.S.-Italy joint venture agreement should state which law governs the contract and where disputes will be resolved, and the two choices should be made together. A governing law clause without a workable forum, or a forum whose judgments cannot be enforced where the other party’s assets sit, provides less protection than it appears to.
Arbitration is frequently the preferred mechanism in these ventures for a concrete reason: both the United States and Italy are parties to the New York Convention, under which arbitral awards issued in one country are enforceable in the other through an established procedure. That enforceability, together with the ability to select neutral arbitrators and a neutral seat, is why many bilateral ventures resolve disputes through arbitration rather than through either country’s courts. The clause still has to be drafted with care, covering seat, rules, language, and the carve-outs for urgent relief.
Why Dual-Jurisdiction Counsel Is Not Optional
Every section above ends in the same place: the venture touches two legal systems at once, and advice from within only one of them answers half the question. A U.S. attorney without Italian counterparts cannot verify what the Civil Code requires of the Italian side of the structure. An Italian advisor without U.S. counterparts cannot verify what California employment law or a Delaware operating agreement will actually do. Coordinating two unconnected firms is possible, but it makes the client the translator between them.
This is the specific value of an international business law attorney whose practice is built around the U.S.-Italy corridor. Structuring advice, drafting, and negotiation happen with both systems in view at the same time, in both languages, with the corporate and contract law work and the venture documents developed together rather than reconciled afterwards. For Italian companies entering the United States, and American companies partnering into Italy, working with an Italian corporate lawyer who also practices U.S. law, or a cross border business law attorney with genuine footing in both countries, is the difference between a structure that was translated and a structure that was designed.
Di Martino Law Group advises U.S. and Italian companies on joint venture structuring, cross-border contracts, and the corporate, immigration, and real estate matters that surround them, working in English and Italian from Los Angeles.
Structuring It Correctly From the Start
A joint venture agreement is easy to sign and expensive to unwind. The ventures that succeed are the ones where the difficult conversations, contributions, control, deadlock, exit, and intellectual property, happened during structuring, while the partners were still agreeing with each other, and where each provision was tested against the law of the country where it would actually have to work.
If your company is planning a joint venture between the United States and Italy, the right time to involve an international business lawyer is before the term sheet is signed. Contact Di Martino Law Group to discuss how your venture should be structured.