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 firstname.lastname@example.org 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.