Without creating a corporation, Marzuna’s Employer of Record (EOR) solution for Italy aids in the expansion of your business there. Thanks to its worldwide HR platform, integrating distant employees and managing their payroll, for example, is a straightforward process.
Our worldwide network assists you in growing your company within the country by adhering to all local regulations. Italy’s skilled labor force and robust economy make it an ideal destination for businesses seeking to enter new markets. You may now establish your team in Italy more swiftly than ever before because to our understanding of the Italian market.
Navigating the Italian labor market can be challenging for employers, given its reputation for stringent laws and a strong emphasis on safeguarding employee rights. Comprehending the diverse regulatory requirements and ensuring compliance with Italian labor and employment regulations can be both intricate and costly. In response to recent economic shifts and the global economic crisis, Italian lawmakers have introduced measures aimed at enhancing labor market flexibility.
The Italian legal system operates on a hierarchy of sources that govern employee contracts and labor relations. At the top is the Italian Constitution, followed by Section III of the Civil Code (Articles 2094–2134), which pertains to the employer-employee relationship. These provisions delineate the rights and responsibilities of both employers and employees.
Additionally, the Italian parliament has enacted comprehensive labor and employment laws applicable throughout the country. This statutory framework is further complemented by various regulations issued by government authorities. Negotiated collective bargaining agreements between employers’ groups and trade unions wield significant influence in shaping labor relations in Italy.
In instances where the law or collective bargaining agreements do not address a particular issue, customs and practices are employed. It is important to note that while customs may confer additional benefits to workers, they cannot supplant specific employment contracts.
Given the intricacies of the Italian labor market, it is crucial for employers to seek professional advice and assistance to ensure compliance with all relevant rules and regulations. Collaborating with an Employer of Record (EOR) such as Marzuna can prove highly beneficial in navigating the Italian labor market and effectively managing employment agreements. An EOR like Marzuna can assist in streamlining compliance procedures, ensuring conformity with regional legislation, and providing expert guidance on labor-related matters.
| Entitlements | Explanation |
|---|---|
| Statutory Working Hours | No more than eight hours of work per day or forty hours per week should be put in. |
| Paid Public Holidays | The public holidays in Italy for 2021 are as follows:
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| Annual Leave Entitlements for overseas employees |
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| Medical Leave | In accordance with Italian labour law, employees are entitled to a pay period of three working days per year in the event of serious illness or the loss of a spouse or other close relative. |
| Maternity Leave | Employees who are female are entitled to maternity leave for two months prior to and three months following the anticipated due date; during this time, they are paid through the social security system on a daily basis equal to 80% of their prior earnings. |
| Leave Expiry | Only then is the contract eligible to be changed into an indefinite one. If employment continues for 10 days beyond the end of the leave, the employer must pay 20% more; for 20 days after the termination date, 40% more. |
| Employee protection and anti-discrimination rights | Diverse influences may be seen throughout the history of Italian laws against job discrimination. The Italian Constitution, which is the main source of law, declares that “all people have an equal social dignity before the law, regardless of their sex, race, language, religion, political ideas, personal or socioeconomic circumstances,” is the main source of law in Italy. The Constitution also states that people who perform the same type of labour are entitled to equal pay. |
| Potential Employer Liability for Violating Laws Prohibiting Discrimination and Harassment | Employers may face penalties if they are found guilty of discrimination based on protected characteristics.
Additionally, any decisions regarding employment discrimination may be required to be published in a significant newspaper by an Italian court. |
Full-time employees are individuals who are officially employed by your company and work dedicated hours exclusively for your organization. They receive a fixed salary and are typically engaged in ongoing tasks and projects. As employees, they are entitled to various legal protections and benefits, encompassing income tax deductions, social benefits, and other employment-related perks. The employer assumes responsibility for overseeing their day-to-day activities and ensuring strict adherence to labor laws. Should you contemplate ending the employment relationship, you are typically required to provide a termination notice in accordance with the applicable regulations.
In contrast, contractors operate independently or on a freelance basis. They work on a project-by-project arrangement and often serve multiple clients. Contractors are typically compensated based on the specific tasks or projects they complete and may set their own rates or fee structures. Unlike full-time employees, contractors are accountable for handling their own taxes and do not receive benefits from the hiring company. They typically enjoy greater flexibility regarding their working hours and may utilize their own resources to fulfill the assigned tasks. Depending on the terms of the contract, the engagement with a contractor can be terminated at any time or with a relatively short notice period.
When faced with the decision of employing full-time employees or engaging contractors, it’s vital to assess the specific needs and nature of the work in question. Each arrangement carries its distinct advantages and considerations, encompassing cost, flexibility, legal obligations, and resource management. Seeking guidance from legal and HR professionals can be invaluable in ensuring compliance with labor laws and determining the most suitable employment arrangement tailored to your organization’s unique requirements.
| Independent Employer | Full-Time Employees |
|---|---|
| Flexibility: In general, independent contractors are adaptable and easily expanded to give your business flexibility in project planning without requiring ongoing payments at times when expenditures may be made more profitably elsewhere. | Loyalty: Full-time staff frequently don’t work for other clients and instead focus solely on growing your business. Because the success of your company directly affects their professional success, they are much more dedicated to it and more inclined to put in a lot of work. |
| Experience: Independent contractors have a wealth of experience, including working with companies from around the world and breaking into new markets. | Knowledge: While contractors could have substantial knowledge, your full-time employee’s knowledge stays within the company. This enables the organisation as a whole to gain from the skills and knowledge of your employees rather than just a contractor’s part of the shared information. |
| Independence: Contractors work with a high degree of autonomy and sacrifice management time to focus on other tasks. | Clarity: One of the biggest benefits of full-time workers is that they are not subject to legal ambiguities or misclassifications. By accurately classifying someone as an employee instead of a contractor, it greatly reduces compliance problems and eliminates the risk of fines. |
Both options offer several benefits. When choosing the best course of action for your business, individual needs must be taken into account.
If you need a quick offshore contractor to help with a temporary assignment, hiring a contractor is typically your best bet. On the other hand, you should think about hiring a full-time employee if you want long-term help for entering a certain market or keeping knowledge in-house.
The recruitment process in Italy follows a relatively straightforward approach. Once the hiring requirements are identified and the job description is published, employers can utilise either an internal team or a partnering agency to seek out suitable candidates for the position. Professional social networking platforms like LinkedIn are widely favoured by recruiters in Italy for their ability to connect with top talent across various industries.
In addition to LinkedIn, there are several other well-known websites commonly used for recruitment purposes in Italy, including:
The hiring procedure in Italy typically involves the following steps:
Hiring through employment websites, social media platforms, or advertisements in Italy offers advantages such as access to a diverse pool of candidates with various experiences. It mitigates the risk of not finding suitable candidates or facing a shortage of talent in the job market. However, it also entails the challenge of sifting through numerous applications and selecting the most suitable candidates, particularly during the initial screening phase.
While apps like LinkedIn and Monster have gained some popularity in Italy, they may not be the sole platform for talent sourcing, particularly when seeking experienced professionals.
Hiring talented employees within a short time frame can be a complex task. Partnering with an Employer of Record (EOR) in Italy can be an excellent option, as it allows organisations to focus on other aspects of international expansion, such as project management and inventory management. An EOR handles compliance and legal matters while leveraging their knowledge of domestic employment practices and virtual onboarding tools to streamline the hiring process. Leading EORs also facilitate the e-signing of documents, enabling faster onboarding.
| Information | Explanation |
|---|---|
| Probation Period | Employment contracts in Italy may include a probationary or trial period, which allows both the employer and employee to assess their suitability for the role. It is essential that the trial period is clearly stated in the employment contract and commences on the first day of employment, as mandated by Civil Code Article 2096.
The official trial periods in Italy are as follows:
The specific duration of the probationary period may vary based on the employee category and is determined by the applicable National Collective Agreements (NCAs). During the probation period, either party (employer or employee) has the right to terminate the contract without prior notice and without the obligation to provide any compensation. It is important for both employers and employees to understand and adhere to the rules and provisions regarding trial periods outlined in the applicable employment contract and relevant regulations. |
| Work contract termination | According to Italian law, an employee may be fired for the reasons listed below:
Written termination notifications that provide a thorough justification for the choice must always be given. The following rules must be followed by employers:
Both taxes and social security contributions are not required for severance pay To maintain compliance with Italian labor laws, companies must carefully follow all rules and regulations pertaining to terminations. |
Opting for the role of an Employer of Record presents the ideal avenue to access the Italian workforce without the need to establish a subsidiary business. This approach comes with a multitude of advantages, including the elimination of the necessity to set up a separate corporate entity. It also frees up valuable time and resources, allowing you to redirect your focus towards other facets of your expansion plans and simplifies the often intricate terrain of legal compliance.
Leveraging our expertise, the process of expanding your business becomes considerably faster and more cost-effective, without the requirement to create an entirely new team to manage all aspects of workforce management. Even when businesses opt to establish an organization for their workforce, the management of employees, payroll administration, and the complexities of regulatory challenges can be quite time-consuming.
So why wait? To explore how our solutions can be tailored to suit the unique needs of your business, don’t hesitate to schedule a demonstration with us today.
Outsourcing employment responsibilities through an Employer of Record (EOR) in Italy is a strategic move that significantly reduces the time and effort needed for the entire hiring process. This encompasses tasks such as tax administration and payroll processing. Additionally, partnering with a reputable EOR like Marzuna offers the advantages of customized contracts, ensuring alignment with local regulations, the ease of amending existing contracts, and the convenience of electronic document signing.
| Visa Category | Explanation |
|---|---|
| EU/EEA Nationals | In accordance with the idea of free movement of people, products, services, and money, citizens of the EU (European Union) and EEA (European Economic Area) do not need to apply for a work permit from the Italian government in order to work in Italy. Similar admission, residence, and employment rights apply to Swiss nationals as they do to citizens of other EU nations. |
| Non-EU/EEA Nationals | Non-EU/EEA nationals who want to work in Italy, whether temporarily or permanently, must first get a work visa from the Italian Consular authorities and a work permit from their intended employers. The granting of a work visa is dependent on a number of variables, including the applicant’s competency in their native tongue and particulars on the nature of the business and technology involved.
A quota system that regulates the entry and access of foreign nationals to the Italian labour market underlies the admission of non-EU migrant workers. As part of this program, the government establishes annual limits that control the number of authorised new admissions. However, certain employees could be excluded from the quota system’s limitations. Particularly, those with pertinent technological profiles may be welcomed without any quantitative restrictions placed on them, making it easier for them to enter the nation and fill the demand for specialised capabilities. To guarantee that their job in Italy is legal and allowed, it is crucial for non-EU/EEA nationals to complete the appropriate steps, receive the relevant permissions, and abide by the rules established by the Italian government. |
| Self-employment visas | The following self-employment activities are permissible for foreign nationals in Italy:
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| Schengen visas | With a Schengen visa, the applicant is allowed to remain for up to 90 days for either touristic or professional reasons. Any nation in the Schengen region is open to travellers with a Schengen visa.
Schengen visas can be obtained in a number of ways:
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| Family member visas |
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Italy is an EU member and allows citizens of other EU members to work there without a visa or permission. Citizens of countries in the European Economic Area (EEA) are also free to work in Italy. ‘Nulla Osta (invariable visa)’ working visas are required for any employees who are not nationals of the European Union or the EEA.
A working visa, commonly referred to as a national or D-Visa in Italy, is classified as belonging to the “long-stay category.” It should be noted that an Italian work visa only permits employees to enter the nation. To stay in Italy, they will require a residence permit when they arrive.
You must be aware of the regional regulations and the acts that govern those laws in order to set up payroll in Italy. Knowing your personal profile is crucial since it will enable you to determine which regulations are relevant and must be followed.
Another crucial activity that requires your attention is taxation. You may concentrate on growing your business operations by using the time and money you would have otherwise spent on hiring an EOR.
| Information | Explanation |
|---|---|
| Remote Payroll | Using a completely outsourced service like a GEO or PEO, which would hire and pay the employees on their behalf, is one alternative for a non-resident firm to pay its workers in Italy (both local and international). |
| Local Payroll Administration | In some circumstances, a corporation may file in Italy using one of the forms offered but may decide to use a different company to manage its payroll. You may accomplish this with the aid of a payroll provider.
It is crucial to keep in mind that the business, as the Employer of Record, is also totally responsible for ensuring compliance with all tax, immigration, payroll, and housing rules. On the other hand, a payroll business will handle all payroll computations, costs, and forms. |
| Internal Payroll | International businesses have the option of managing the local payroll for all staff members, domestic and international. |
| Fully Outsourced Payroll and Employment | Employers should use an EOR to handle the recruiting and pay of their employees in Italy. The simplest and shortest method for paying salaries to both Italian and international workers is this.
For Italian employees, EOR manages all aspects of payroll, including taxes, withholding taxes, social security payments, and other legal requirements. Our EOR recruits workers on behalf of the customer and becomes the Employer of Record. Payroll and social security deductions are made at the source from employees’ yearly paychecks and are invoiced to the local governments. Before the paycheck date, our EOR sends the customer a yearly charge. |
Employer Taxation
| Tax | Explanation |
|---|---|
| Corporate Taxes | Corporate income tax (IRES), a municipal tax on economic activities (IRAP), withholding tax, VAT, identity tax, social security taxes, transaction tax, and stamp duty are just a few of the taxes that businesses operating in Italy are required to pay.
The current corporation tax rate in Italy is 27.5%. |
| Sales Tax | Before conducting business, everyone who makes taxable deliveries of goods and services under the Italian Value Added Tax (VAT) regime must register for an Italian VAT number, regardless of whether they are a person, partnership, corporation with share capital, or an institution.
In 2016, 25% in 2017, and 25.5% in 2018, the new VAT rates went up. |
| Payroll Tax | No Payroll Tax |
| Withholding Tax |
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| Other Tax | Non-residents are only eligible for the International Road Assessment Program (IRAP) if their operations are carried out over a period of three months via a permanent location. Both resident and non-resident enterprises are liable to a regional tax on income obtained from economic activity in Italy. |
| Time to prepare and pay taxes | It takes approximately 240 hours. |
| Time required to start a business | It takes approximately 6.5 days. |
Employee Taxation
| Information | Explanation | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Income Tax |
It should be noted that beginning with the fiscal year ending in 2016, an additional 3% tax will be applied to salaries over EUR 300,000. |
As a 13th month wage at Christmas, bonuses are often granted at the employer’s discretion, although they are occasionally required by contracts or collective bargaining agreements as well, such as a summer vacation pay.
To secure work permits for employees of a foreign company in Italy, the initial step necessitates the establishment of an Italian subsidiary, branch, or representative office. Once this local entity is set up, it can initiate the work permit application process on behalf of its employees.
The entire procedure typically entails three main steps:
Effectively navigating these steps demands a comprehensive understanding of the entire process and a sound familiarity with the workings of the local authorities. In such situations, companies specializing in providing Employer of Record (EOR) solutions can offer invaluable assistance. EOR service providers possess the knowledge and expertise required to guide foreign companies through the application process, minimizing the likelihood of rework or delays and ensuring strict compliance with local requirements.
