Italy has the 3rd largest economy in Europe and strong sectors in the business, agriculture, and manufacturing industries. Companies have many opportunities for starting a business or expanding in Italy, but managing payroll can pose challenges. It’s important to identify statutory payroll requirements and benefits before hiring employees in Italy.
The corporate tax rate in Italy is 24%, but Italy also collects a regional tax known as IRAP at a varying rate based on region and industry. Foreign companies being managed by Italian residents are taxed on income originating in Italy. The calendar and tax year ends on December 31st, but corporations may request alternative fiscal years to match their global operations calendar.
There is no minimum wage required by the government currently, but collective bargaining is used in various employment sectors to determine minimum pay for workers around the country. There are pension, social security, healthcare, and disability requirements that employers must provide, along with specific vacation and leave policies depending on length of service and collective bargaining agreements. There are also termination policies that must be adhered to in order to maintain compliance.
Due to the ongoing COVID-19 crisis, Italy has revised their sick leave policies:
In case of sickness related to COVID-19 at home or in the hospital, Social Security is treating sick leave based on standard regulations. For the first 3 days of sick leave, the employee is entitled to full pay from the employer. After 3 days, sick leave benefits are paid out by the National Health Service as follows:
• The employee is entitled to 50% of their regular pay for the first 20 days
• After the 20 days, the employee is entitled to 66.6% of their regular pay
New anti-COVID protocol as of April 2021 include the following measures to contain the spread of COVID-19 in the workplace:
- Order closure of all departments whose operation is possible through remote work
- Adjust production levels
- Creating groups for production to minimize contacts
- Use remote work for all business activities possible
- Contingency plans to cover the operations of the entire company structure with rotating personnel if necessary
- Workers must show negative test result when returning to work after being infected
- Vaccines in the workplace if possible
Foreign worker requirements:
- EU citizens and employees from Norway, Iceland, or Liechtenstein do not require work visas, but need to apply for residency in the town they are residing if staying longer than 90 days
- All other foreign workers must get a visa, residence permit, and worker permit in order to gain employment
- The type of visa varies depending on nationality, home country, duration of stay, and more
Funding options for payroll in Italy are flexible. Blue Marble provides money movement services in Italy so you can fund payroll in USD and we settle in the local currency (Euros). If you have a local bank account, you can pay employees directly, or use the in-country provider to make payments. If you do not have a local bank account you must transfer funds in Euros to the in-country provider to make payments to employees. Social security and salary (F24 model) payments are processed through the Entratel system, which is the government system for filing tax and social security payments.
If you are managing employees in Italy, or thinking about expansion, we can help. Blue Marble has one platform to manage employee payroll in 150+ countries. With cloud-based technology and customized monthly reporting, you can easily manage payroll in real-time across all countries and currencies. Talk to us today about simplifying your payroll and compliance in Italy – click here to get started