Employees/Employers in Italy

Employment contracts, notifications and labor cost calculations in Italy

We deal with all the paperwork arising from hiring new workers and becoming an employer in Italy.

Do not hesitate to contact us for a non-binding and free first conversation.
Tel.: +39 0474 572900
Mail: info@graber-partner.com

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General remarks

In compliance with certain legal preconditions it is possible to hire an employee in Italy without the corresponding duty to create a permanent establishment with all the related regulations, concerning, in particular, bookkeeping, financial statements, added value tax and income tax obligations.
Regardless of the presence of a permanent establishment, every company that operates in Italy as an employer has to comply with all legal provisions governing social insurance and collective labor agreements, including the duty to pay social security contributions and wage taxes. This procedure isn’t comparable with the secondment of workers, due to the fact that Italian labor law applies, and, moreover, the company must be registered in Italy as an employer (employer status).

If an employee living in Italy is hired, the employment contract and payroll accounting are governed by Italian labor law.

The registration of the company in Italy as an employer without the duty to create a permanent establishment is only possible when the tasks of the hired employee are limited to service duties or business procurement activities. Under no circumstances can the employee can be entrusted with sales activities or the completion of business transactions (contract closures). Preparatory activities regarding contract negotiations are, however, allowed, as long as the signing of the contract takes place at the company's headquarters. 

Employment contract in Italy

Italian employment contracts must comply with current legal- and collective bargaining regulations. In Italy, every business category has to be regulated by a collective labor agreement (wage agreement). In order to the determine the applicable wage agreement, it is necessary to identify the parent company’s core business (as defined in the commercial register excerpt).
The most important elements of an Italian employment contract are:

  • type of contract (temporary or permanent)
  • job classification
  • tasks and area of activity
  • job location, working hours and probation period
  • gross annual salary
  • additional agreements (overtime arrangements, company vehicle, reimbursement of expenses)

Wages / Salary

The wage and the related labor costs play a central role in the economic world. Labor costs consist of gross salary and additional costs (health insurance, accident insurance and other specific expenses).

Experience has shown that contract negotiations have to be based on the gross salary, due to the fact that wage agreements (13 monthly salaries in craft industries/manufacturing, 14 monthly salaries in trade/services sector) and the personal factors affecting the worker (such as tax exemption status and progressive taxation burden) are likely to have a considerable influence on net salary.

Generally, the final costs for the company can be determined by raising the gross salary by 40 percent. If desired, we can provide a more detailed breakdown of gross- and net salary.

One particularity of the Italian labor law system is the payment of so-called ”severance pay“, at the moment of termination of the employment contract.. This payment, however, is not comparable with an “end-of-contract gratuity”. The amount of the severance pay equals one month’s salary for each year of service and is due to the employee in all cases, regardless of the actual reason for the termination of the contract (severance pay is also due in the event of dismissal).

Health and Safety Regulations

Furthermore, employing a worker in Italy also entails complying with health and safety regulations. One of our cooperation partners provides advice on complying with health and safety regulations.


The employment of an Italian worker without setting up a permanent establishment is a cheap and simple method for breaking into the Italian market. Moreover, it enables the company, during a kind of a test phase, to evaluate the profitability of a potential Italian affiliate.
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Working for a German company in Italy, things to know

Persons resident in Italy are often contacted directly by German companies for the purpose of penetration and expansion in the Italian market. If they wish to work in Italy for a German (or Austrian) company and, hence, for a foreign company, they will have to check if the company is duly registered in Italy. After doing so (e.g. by registration as an employer or by incorporation of a limited liability company under Italian law), an employment agreement in accordance with Italian law and payroll processing in compliance with Italian law needs to be established.

Working from home, service personnel, field staff, sales consultants? Things to consider

Besides the above-mentioned registration, remote office workers will not have to consider many other things. In fact, the place of residence will be registered as workplace (also for insurance purposes) and the remote worker, like any other employee, will have to abide by the rules laid down by the employer. The only difference is that the remote worker performs all or part of his work from home. In general, the work equipment and working materials (e.g. computer, printer, mobile phone, stationery) are provided by the employer, unless otherwise agreed. However, expressly regulated working hours apply. Moreover, a trusting relationship between both parties is obviously advantageous, as it is impossible or difficult to control the actual working time of the employee. However, the remote worker does not have to be available at any time.

In the case of service personnel/field staff (e.g. help desk personnel, programmers, maintenance staff), the employee's place of residence is normally considered for the purpose of registration of the place of work, as the German employer often does not have or need a secondary office in Italy. Since service personnel/field staff sometimes need to travel to customers/suppliers, the company often provides a company car or the employees use their own private car, charging the costs to the employer on a pro rata basis.  In Italy, vehicle regulations and laws are very complex and subject to constant change. Hence, they need to be checked carefully together with the tax consultant/payroll consultant.

One case in point is that of sales representative/sales force. In fact, their work mainly consists of sales promotion and expansion in Italy and they often get better contractual conditions. Under the OECD Model, employees who play a key role in sales, even if they do not participate in the conclusion of final contracts, constitute a personal permanent establishment. In this case, the company shall register in Italy (usually under the business name "XY Italy Srl"). Hence, the employees will carry out their work for the Italian company.

Our services for your project in Italy

Please feel free to contact us for a first meeting that does not place you under any obligation and is free of charge, or send us an email with your request and contact details. We will reply to your e-mail in the shortest possible time. Tel. +39 0474 572900  or info@graber-partner.com.

FAQ: Transfer of an employee to Italy

Especially since the Covid-19 pandemic, working from home has become an established and proven work mode. Hence, there is no longer need for a physical workplace. Consequently, more and more employees of German companies move their residence abroad (e.g. to Italy) and continue to work remotely for their employer.


Question: In case of transfer of an employee's residence to Italy, is it possible to file a posting communication?

Answer: No, if employees transfer their residence to Italy and continue to work for the German company, no posting communication in the classic sense of that term may be filed. On the one hand, the requirement of having an employer in Italy (company incorporated under Italian law) is not met. On the other hand, employees are not considered to be posted, if they are resident in the country they work in.

Instead, the company and the employee shall be registered in Italy for payroll processing purposes in accordance with Italian law and for the purposes of paying social security contributions and taxes in Italy.


Question: Which requirements shall be met for the registration of a foreign company in Italy?

Answer: As is the case in Germany, in Italy companies also act as tax withholding agent paying, in this capacity, taxes and contributions, including those payable by the employee, by means of the F24 form to public authorities or bodies.

Hence, companies need to register with the various authorities/bodies using, among others, an Italian fiscal code.

We will be glad to take care of all communications and registrations. For more details with respect to the procedures to be followed for the registration of the company in Italy as an employer please visit https://www.graber-partner.com/en/international-companies/employees-employers-in-italy.html.


Question: In the event of a transfer of residence to Italy, is it necessary to enter into an employment agreement under Italian law?

Answer: Yes, in view of payroll processing under Italian law, both the company and the employee are subject to the applicable Italian collective bargaining agreement (so-called CCNL). The CCNL regulates, inter alia, the remuneration, the number of month's pay, the holidays, the remuneration in the event of illness and accident, the probation period and the notice period.

Hence, it is in any case necessary to enter into an employment agreement under Italian law, referring to the applicable CCNL.

In Italy, both the drafting of the employment agreement and the payroll processing is carried out by accountants/labour law consultants. Hence, there is no need to refer to a law firm for the drafting of the employment agreement, since we offer an one-stop service. For further information please refer to our opinion at https://www.graber-partner.com/en/international-companies/employees-employers-in-italy.html.


Question: Is there any permanent establishment risk of the foreign company in case of an employee working from home in Italy?

Answer: Yes, the remote work does not automatically exclude the permanent establishment risk in Italy. Hence, it is necessary to verify if also other requirements are met. In this regard, please refer to our opinion on permanent establishments in Italy.


Question: Which requirements need to be met by an employee in the event of transfer of residence to Italy?

Answer: Before starting to work form home in Italy, the employee shall request an Italian fiscal code and register with the registration office. Subsequently, it will be possible to file the communications with the competent authorities and bodies.

For advice and assistance to employees with regard to the application for the fiscal code, the real estate purchase/rent, the registration with the registration office, the application of low-tax schemes for employees transferring their residence to Italy etc., the employees shall refer to the competent authority and/or a trade union organisation.


Please do not hesitate to contact us via mail at info@graber-partner.com for a non-binding and free first meeting. According to our experience, it is preferable that the responsible contact person is part of our client company.

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Hermann Andrä Graber
Chartered accountant, statutory auditor, consultancy business creation
We deal with all the paperwork arising from hiring new workers and becoming an employer in Italy.
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