Hiring Employees in Italy as a Foreign Company (2026)

A foreign company's first Italian hire is often a salesperson, a country manager or an engineer who already lives in Italy. Italian employment law, social security and tax treat that person differently depending on who the employer is, where it is established and what the employee actually does.

This guide describes the position applicable on 12 October 2026. It covers the routes open to a foreign business, permanent establishment risk, collective agreements and employment cost, contract types, the filings due before the first day and payroll. For the corporate side see how to open an SRL in Italy as a non-resident and Italian taxes for a foreign-owned company.

Three ways to employ someone in Italy

A foreign business has three lawful structures available. They differ in who signs the employment contract, who is registered with the Italian social security institute (INPS) and who carries the tax position.

Route	Who is the legal employer	Typical use
Own Italian company (usually an SRL)	The Italian subsidiary	A permanent team, local contracts, Italian customers invoiced locally
Direct employment by the foreign company	The foreign company, registered with INPS and INAIL in Italy	One or a few employees, often remote, with no Italian entity yet
Staff leasing through an authorised agency	An Italian Agenzia per il Lavoro; the foreign company is the user	Testing the market quickly or covering a gap before setting up

The choice usually turns on how long the presence will last, how many people are involved and what they will do for the business.

Route 1: hiring through your own Italian SRL

With a subsidiary, the SRL is an ordinary Italian employer. It opens its INPS position, registers with INAIL, applies a national collective agreement, operates tax withholding on salaries as a sostituto d'imposta under article 23 of Presidential Decree 600/1973, and files the annual withholding certifications and return. The employees are part of a company that is already taxable in Italy, so the permanent establishment question largely disappears for them; transfer pricing between the SRL and the parent takes its place.

This is the cleanest route once the activity is meant to last, especially where employees negotiate or sign contracts with Italian customers. Its cost is the company itself: formation, bookkeeping, annual accounts and the tax and filing calendar an SRL must keep. INPS registration goes through the Registro delle Imprese filing (ComUnica), which is the only channel when the company starts its activity and hires at the same time; for hires made after the start of activity, the INPS "Iscrizione e Variazione azienda" procedure can be used instead, as described on the INPS employer registration page.

Route 2: employing directly as a foreign company

A foreign company with no Italian establishment can still be an employer in Italy. The worker who performs the work in Italy is normally insured under Italian social security, so the foreign company must open its own INPS contribution position (a matricola) and pay Italian contributions. In practice it obtains an Italian tax code (codice fiscale) for the company and appoints an Italian intermediary to act on the INPS and INAIL portals. INPS accepts registration filed directly by the legal representative or through intermediaries authorised under article 1 of Law 12/1979, such as consulenti del lavoro and commercialisti. Its service page for new employers sets the deadline for the registration request: after the hiring and no later than the due date of the first contribution payment, the 16th of the following month.

For an employer established in another EU Member State there is an additional option. Article 21 of Regulation (EC) 987/2009 allows an employer whose place of business is outside the competent Member State to agree with the employee that the employee pays the contributions on the employer's behalf, without discharging the employer's underlying obligations, provided the agreement is notified to the competent institution. It is a payment mechanism, not an exemption.

The tax side differs from the social security side. In Ruling 312 of 24 July 2019, the Agenzia delle Entrate confirmed that, although non-resident companies are formally included among the withholding agents of article 23 of Presidential Decree 600/1973, they act as such only for income paid through a permanent establishment or fixed base in Italy; a company without one does not have to withhold Italian income tax from the salary. The employee then declares and pays Italian income tax through their own return. The same ruling warned that, if the employee has and exercises the power to conclude contracts in the company's name, the existence of a permanent establishment must be assessed even without a physical office.

Route 3: employer of record and staff leasing

"Employer of record" is a commercial label that Italian law does not recognise as such. In Italy, the legal form for one business supplying workers who operate under another business's direction is somministrazione di lavoro (staff supply), governed by articles 30 to 40 of Legislative Decree 81/2015. It may be carried on only by an Agenzia per il Lavoro authorised under article 4 of Legislative Decree 276/2003 and listed in the national register held by the Ministry of Labour. Check the provider's own authorisation in that register, not that of a foreign partner.

Using an unauthorised provider is a serious matter. Article 18 of Legislative Decree 276/2003, as amended by Decree-Law 19/2024, again provides criminal penalties for unauthorised supply of workers and for the user that relies on it: arrest of up to one month or a fine of 60 euro per worker and per day of work, with each proportional fine subject to a floor of 5,000 euro and, since Decree-Law 145/2024, a ceiling of 60,000 euro. Genuine staff leasing also has its own rules. The supply contract must be in writing (article 33). Supplied workers are entitled to economic and regulatory conditions overall no less favourable than those of the user's employees at the same level, and the user is jointly liable for their pay and contributions (article 35). Supply is prohibited for a user that has not carried out its workplace risk assessment (article 32). Article 31 caps the number of supplied workers at percentages of the user's permanent headcount: 20% for open-ended supply and a combined 30% for fixed-term contracts and fixed-term supply, unless the collective agreement provides otherwise and subject to statutory exemptions. Both caps are calculated on the permanent employees the user has on 1 January, or at the date of the contract if its activity starts during the year. For a user with no permanent employees the percentages therefore leave room, in practice, only for the exempt categories, which for fixed-term supply include workers employed by the agency on an open-ended contract. Confirm in writing with the agency how this applies to your company before the contract is signed.

Staff leasing does not shift the permanent establishment analysis onto the agency. If the supplied worker negotiates and closes deals for the foreign company, the tax question is the same as if the company had hired the worker directly.

Employees and permanent establishment risk

A permanent establishment (PE) makes the foreign company taxable in Italy on the profit attributable to it and, from then on, a withholding agent for the salaries it pays. The domestic definition is in article 162 of the Italian income tax code (TUIR). Where a tax treaty applies, the treaty definition generally prevails, read in the light of the OECD Commentary.

Employees can create a PE in two ways. The first is a fixed place of business: an office, a warehouse or, in some cases, an employee's home used for the employer's business. The second is a dependent agent who habitually concludes contracts, or plays the principal role leading to their conclusion, on the company's behalf. Merely preparatory or auxiliary activities, such as market research, generally do not create a PE on their own. A country manager with signing authority or a salesperson who routinely closes deals are the typical red flags.

The 2025 update to the OECD Model Tax Convention, approved by the OECD Council on 18 November 2025, replaced the earlier home-office commentary with a more structured test. In broad terms, a home or other remote work location is generally not a fixed place of business where the person works there less than 50% of their working time over a twelve-month period; above that threshold, the question becomes whether there is a commercial reason for the activity to take place in that country, such as serving local customers. The Commentary is not Italian law, but it gives a defensible framework for documenting the assessment. Record it in writing and review it when the role changes.

Remote workers living in Italy

A frequent case is someone already resident in Italy who works from home for a foreign company. Three consequences follow, whichever route is chosen.

First, social security follows the place of work as a rule. Within the EU, Regulation (EC) 883/2004 generally subjects an employee to the legislation of the state where the work is physically performed, with specific rules for those working in more than one state. A multilateral framework agreement on cross-border telework, which Italy has applied since 1 January 2024, allows a worker who teleworks from their state of residence for less than 50% of their working time to remain, on request, under the legislation of the employer's state, provided both states have signed it. Outside the EU, a bilateral social security agreement may provide different rules; without one, Italian contributions are generally due for work performed in Italy.

Second, a foreign governing-law clause cannot deprive an employee who habitually works in Italy of the protection of mandatory Italian rules. Third, the PE assessment must be done for the specific role: a remote engineer serving a global product team is a different case from a sales lead covering Italian customers.

Individual tax incentives can matter for recruitment. Workers who move their tax residence to Italy may qualify, subject to strict conditions including high qualification, for the impatriate regime of article 5 of Legislative Decree 209/2023, under which 50% of qualifying employment income up to 600,000 euro a year is taxable (40% with a minor child).

Posting staff from abroad versus hiring locally

Sending an existing employee to Italy temporarily is a posting, not a local hire. Within the EU, the employee can remain insured in the home country for up to 24 months if the conditions of article 12 of Regulation 883/2004 are met, which is certified by the A1 portable document issued by the home institution.

Posting into Italy also triggers Italian labour-law obligations under Legislative Decree 136/2016. The foreign employer must send the electronic posting declaration (UNI_DISTACCO_UE) to the Ministry of Labour by midnight of the day before the posting starts, appoint a contact person in Italy, and keep the employment contract, payslips, working-time records, evidence of salary payments and the A1 certificate, with Italian translations, during the posting and for two years after it ends. Tax is a separate test: many treaties leave salaries taxable only in the home country if the employee stays less than 183 days in the tax year and the cost is not borne by an Italian employer or PE, as explained on the Agenzia delle Entrate page on posted workers.

The collective agreement decides most of the package

Italian pay and working conditions are set largely by the national collective agreement (contratto collettivo nazionale di lavoro, CCNL) that the employer applies, chosen according to its sector. The CCNL fixes the job classification levels and the minimum pay for each level, working hours, overtime rates, holidays, notice periods, the maximum length of probation and many allowances. Courts use the CCNL pay tables as the benchmark for the fair pay required by article 36 of the Constitution, so choosing the agreement is a real decision, not a payroll detail.

Two features surprise foreign employers. The first is the number of monthly salaries. A thirteenth month (tredicesima), normally paid in December, is provided by practically all CCNLs; a fourteenth month (quattordicesima), normally paid in summer, exists only in some, for example those for commerce and tourism. When negotiating, quote annual gross salary (RAL) and state how many instalments it is paid in.

The second is severance pay accrued during employment, the trattamento di fine rapporto (TFR). Under article 2120 of the Civil Code, every year the employer sets aside an amount equal to the year's pay divided by 13.5, revalued each 31 December at 1.5% plus 75% of the increase in the ISTAT consumer price index. The TFR is paid whenever the employment ends, for whatever reason, unless the employee directs it to a supplementary pension fund. Larger employers must pay the TFR not directed to pension funds into the INPS Treasury Fund; under the 2026 Budget Law the threshold is an annual average of at least 60 employees for 2026 and 2027, returning to 50 for 2028 to 2031 and falling to 40 from 2032, as summarised in the INPS notice on the new thresholds.

What an employee actually costs

There is no single reliable "employer cost percentage". The cost is a set of components, each depending on facts the employer must supply.

Cost component	What determines it
Gross pay	CCNL minimum for the level, plus any individual supplement; 13 or 14 instalments
INPS contributions, employer share	Sector, company size, worker category; the pension component alone is 33% of pay, part withheld from the employee
INAIL premium	Tariff rate for the risk of the work performed; low for office work, higher for manual work
TFR accrual	About one-thirteen-and-a-half of the year's pay
CCNL-specific items	Supplementary health funds, pension contributions, meal vouchers and similar items where the agreement provides them

On social security, INPS explains that the overall rate is the sum of several insurances (pension, unemployment, sickness, wage-guarantee funds) and varies by economic activity, size and legal form. The pension contribution is 33% of pay; the employee's share is normally 9.19 percentage points (a little over a quarter), withheld from the salary, and the employer bears the rest together with the other insurances. Payroll rate tables for ordinary employers in industry and commerce typically put the total employer share somewhere between the high twenties and just over 30% of gross pay, but the exact figure depends on the INPS classification. Ask the payroll adviser for an annual cost simulation on the chosen CCNL level, once the INPS classification is known, before making an offer.

Contract types: permanent, fixed-term, part-time and probation

The open-ended contract (tempo indeterminato) is the default form of employment in Italy. Fixed-term contracts are allowed but closely regulated by articles 19 to 29 of Legislative Decree 81/2015. A fixed term of up to 12 months needs no justification. Beyond 12 months, and up to 24 months in total with the same worker, a reason (causale) is required: one provided by the applicable collective agreements, the substitution of other workers, or, until 31 December 2026, technical, organisational or production needs identified by the parties themselves where the collective agreement is silent. That last option expires at the end of 2026 unless it is extended again, so contracts running beyond twelve months into 2027 should be planned around the CCNL causali.

A fixed-term contract can be extended (proroga) up to four times within 24 months, freely in the first 12 months and only with a causale afterwards; a fifth extension converts the contract into an open-ended one (article 21). A new fixed-term contract with the same person must respect a minimum gap of 10 days after a contract of up to six months and 20 days after a longer one. Under article 23, fixed-term workers may not exceed 20% of the permanent staff employed on 1 January, unless the collective agreement provides otherwise, but an employer with up to five employees may always conclude a fixed-term contract. The Ministry of Labour's summary is a useful plain-language reference.

Part-time work must be agreed in writing for evidentiary purposes, specifying the hours and how they are scheduled by day, week, month and year (article 5). Flexible and elastic clauses that let the employer change the schedule are allowed within the limits of article 6 and the CCNL.

A probationary period must be agreed in writing under article 2096 of the Civil Code; during probation either party may terminate without notice or indemnity. Article 7 of Legislative Decree 104/2022 caps probation at six months, or less where the CCNL sets a shorter period for the job level. For fixed-term contracts, the 2024 labour law (Law 203/2024) introduced a formula: one day of actual work for every 15 calendar days of the contract, with a minimum of two days and a maximum of 15 days for contracts of up to six months and 30 days for contracts longer than six months and shorter than twelve.

The same decree requires the employer to give the employee written information on the essential terms of employment, mostly at the start of the relationship and the rest within short deadlines after it. The Ministry of Labour's page on Legislative Decree 104/2022 lists the required content.

Before day one: registrations and the UNILAV

The pivotal filing is the comunicazione obbligatoria of hiring, the UNILAV form. Under article 9-bis of Decree-Law 510/1996, a private employer must send it electronically to the employment services competent for the place of work by the day before the employment starts. It states the worker's details, the start date, the end date for a fixed-term contract, the contract type, the job title and the pay and conditions applied. Failure to file, or late filing, is punished with an administrative fine of 100 to 500 euro per worker under article 19(3) of Legislative Decree 276/2003. The UNILAV also replaces the separate notification of the individual worker to INAIL.

INAIL registration of the employer itself is a distinct step. An employer starting an activity with insured workers must file the denuncia di esercizio at the time the activity starts, and then pays premiums every year through the self-assessment (autoliquidazione) due by 16 February, as explained on the INAIL self-assessment page. Workplace health and safety duties under Legislative Decree 81/2008 apply from the first employee, including a written risk assessment, mandatory training and, where the risks require it, health surveillance by a company doctor. They also apply, in an adapted form, to employees working from home.

Payroll: who runs it and what it involves

Italian payroll is a monthly compliance cycle, not just a salary transfer. Each month the employer issues the payslip, records it in the Libro Unico del Lavoro, files the UniEmens return to INPS and pays contributions, and income tax withheld where the employer is a withholding agent, by the 16th of the following month using form F24, as shown on the INPS page on paying contributions. Every year it issues the employee's income certification (Certificazione Unica), files the withholding agent's return where applicable and runs the INAIL self-assessment.

Under article 1 of Law 12/1979, when these employment and social security obligations are not handled by the employer itself or its own staff, they may be carried out only by registered consulenti del lavoro or by lawyers and commercialisti who notify the labour inspectorate. In practice a foreign company therefore needs an Italian adviser even if it uses a global payroll platform, to hold the delegations on the INPS and INAIL portals and prepare the filings. Our article on choosing an English-speaking accountant in Italy explains how to check professional registers.

A practical timeline

The sequence below assumes a start date about two months away; the order depends on the route.

When	Step
8 weeks before start	Choose the route, write down the permanent establishment assessment for the role, identify the applicable CCNL and job level
6 weeks before	Obtain the company's codice fiscale (direct route) or start SRL formation; appoint the payroll adviser; for staff leasing, check the agency in the Ministry register
4 weeks before	Run the annual cost simulation; draft the contract with probation, hours, CCNL reference and the required information
2 weeks before	Prepare the risk assessment and plan safety training; collect the employee's data and tax code
By the day before start	File the UNILAV (or the UNI_DISTACCO_UE declaration for a posting)
On the start date	File the INAIL denuncia di esercizio if the employer is not yet registered; deliver the written information to the employee
By the 16th of the next month	INPS registration completed; first payslip, UniEmens and F24 payment
Every year	INAIL self-assessment by 16 February; annual certifications and returns

How we can help

The route chosen for the first employee usually shapes the next steps, from whether to open an SRL to how Italian customers are invoiced. Our team works with a registered consulente del lavoro and can review the route, the PE position, the CCNL choice and the cost simulation before you make an offer, then run the registrations and monthly payroll. See our services for what is included, or request a quote describing the role, the start date and where your company is established.