Italy Payroll Solutions

Contractors in Italy can be set up in 2 ways, Employed and Self Employed.

The employed solution is the preferred model for Italy, but this needs to be carefully structured under a service provision and not simple supply of personnel.

Self-employment is allowed under some rules, meaning the individual is clearly and truly independent, with contractual
terms being a true representation of what is done in practice.

Tax year – The tax year is the calendar year for individuals

Immigration – Nationals of other EU/EEA and Switzerland can live and work in Italy must report their presence to a
police office and then register with the Anagrafe (Register Office of the municipality of residence or comune).

Workr Fees – €575 per month plus €350 set up fee. This applied to both the employed and self-employed solutions

Employment Summary

Registration – We ensure the worker is registered with the Revenue (for tax, PRSI and USC deductions)

Contract – A contract or at least a written statement of the particulars of the terms of employment must be provided not later than two months after the date the employment commenced.

Registration – An employee must be registered with the social security system, with the relevant pension scheme and
covered by the occupational accident insurance.

Contract – A contract must be issued, in accordance with the sector, profession, applicable CBA and grade/spinal point
applicable to the worker. Indefinite term contracts are the norm. If a Fixed-term contracts is used it can only be for a
maximum of 36 months.

Social security:

Employers social security, due to the complexities of the local SS system, we estimate an average of 30-32% as the
employer’s SS total contributions. This rate covers contributions towards pension, INPS (which covers sickness,
unemployment and maternity insurance) and INAIL (which covers occupation accident and illness insurance).

Employees social security, again, due to the complexity of the SS system, an estimate rate of 10% to be applied to the
worker’s gross salary (up to a ceiling of €101,427) to cover pension insurance and INPS contributions can be suggested.

Tax – Progressive rates from 23% to 43%

Regional and municipal tax average: 3% (varies from 1% to 4.33% combined)

Benefits – Holidays: at least four weeks of paid holiday per year.

Up to 11 public holidays to be paid if they fall on a day when the worker would have usually worked.

Sick leave is paid by the social security system amounting to 50% net pay from the fourth day.

Notice periods (stipulated not by law but by CBA) vary from one to six months.

An amount equivalent to approximately 13.5% of the employee’s annual pay should be set aside for severance payment (trattamento di fine rapport).

Self-Employment Summary

Registration – Self-employed contractors will register for a VAT number – partita IVA, as well as social security and tax.

Contract – A fixed-term and open-ended contracts can be used in Italy as self-employed.

Social Security – Social security will vary depending exactly on what type of registration the person has, their profession, etc, an average figure of 25.72% is the estimate.

Tax – Progressive rates from 23% to 43%
Regional and municipal tax average: 3% (varies from 1% to 4.33%)

Benefits – Most expenses incurred in relation to income-earning activities will be eligible for a tax deduction, such as social security payments, car costs (restrictions apply), entertainment expenses (restrictions apply) as well as food and
accommodation expenses.

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