Currency, Euro

59.10 million


2.11 trillion



Ease of Doing Business




Payroll Cycle

Grow your team in Italy

Benefits of hiring in Italy

Italy’s economy has progressed from being one of the weakest in Europe after World War II to one of the most powerful. The country is the world’s eighth-largest economy as of 2020 and the third-largest in the European Union, after Germany and France.

Italy is one of the easiest countries in which to do business, according to the World Bank’s latest Doing Business report from 2019.

Most of the Italian economy is driven by manufacturing high-quality consumer goods produced by small- and medium-sized businesses, many of which are family-owned.

Italy’s unemployment rate sits at 9.3%, which bodes well for international companies drawing in applicants for hire.

Italy’s economy has progressed from being one of the weakest in Europe after World War II to one of the most powerful.

Challenges of hiring in Italy

Italy’s high public debt has increased steadily since 2007, rendering it vulnerable to scrutiny by financial markets.

The Corporate Income Tax rate for businesses in Italy is 24%. The Italian government gradually reduced the Corporate Income Tax rate for businesses from 31.4% in 2012 to 24% in 2017. Foreign companies must pay a limited tax liability on their source income from the country. Using an EOR in Italy ensures you’re always up to date on the most current tax rates.

The Italian government faces pressure from investors and European partners to address Italy’s structural economic problems of a slow judicial system, a weak banking sector, and a high youth unemployment rate.

Italy’s high public debt has increased steadily since 2007, rendering it vulnerable to scrutiny by financial markets.

Cultural nuances of doing business in Italy

Use formal gendered titles and last names to greet clients and during conversation. The use of professional titles is required, especially in writing. Italian professionals expect and appreciate formality.


Business introductions and meetings often begin and end with a firm handshake accompanied by an appropriate salutation. Hand gestures and personal contacts are a common feature of Italian conversations. Moving away or keeping a distance can be perceived as unfriendly.


Italians appreciate when visitors show respect for their culture and language by learning basic Italian phrases or greetings and using them whenever doing business in Italy.


English is Italy’s most used foreign language, but be wary that some English phrases may not translate correctly.


Italians appreciate passionate and deep conversations during business discussions; this is a common practice in Italy. The establishment of trust in a business relationship is often built upon discussions about personal interests and family.


Italian businesses tend to have a pyramidal hierarchy, where final decisions are centralized by management.


Refrain from forceful negotiation and understand a deal may take more time than expected to finalize. Try not to create a sense of urgency, as this can be perceived as impolite. Italians are often guided by trust, and it’s vital in establishing a positive business relationship.

English is Italy’s most used foreign language, but be wary that some English phrases may not translate correctly.

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Hiring in Italy

When employing an individual in Italy, it is not mandatory to enter into a written employment contract. An oral employee contract is valid. However, certain clauses must be in writing to be valid, such as a probationary period, a fixed-term period of employment, and a non-competition clause. 

  • Employment agreement in Italy

    Within 30 days of starting employment, the employer must inform the employee in writing of the following:

    • Identity of the parties
    • Place of work
    • Date on which the contract begins
    • Duration of the contract—specifying whether it is fixed-term or permanent employment
    • Probationary period, if applicable
    • Job title or category
    • Salary
    • Duration of paid holidays
    • Working hours
    • Length of the notice period when terminating the contract
  • Probationary period in Italy

    Probationary periods in Italy are common but not required by statute. The length of the probationary period varies depending on the terms of the applicable collective bargaining agreement. Usually, the maximum probationary period is six months.


Easily navigate payroll laws, contributions, and requirements in Italy

September 30

Tax due date in Italy

Employees file a tax return using the Redditi PF form or the 730 form, depending on their type of income. 


Payroll cycle in Italy

The payroll cycle in Italy is generally a monthly cycle, with wages paid by the 27th of each month. 


Average weekly working hours in Italy

The usual working week is 40 hours. The maximum working week is an average of 48 hours every seven days, including overtime.

  • Minimum wages and salaries in Italy

    There is no statutory minimum wage in Italy at the national or regional level. However, the courts consider minimum wage and salary set by national collective bargaining agreements for the relevant sectors. Since July 1, 2018, salaries cannot be paid in cash and can only be paid by check, bank transfer, or other electronic payment methods.

  • Bonus payments in Italy

    Bonuses in Italy are not mandatory unless it is part of a collective bargaining agreement. However, most companies offer some type of bonus pay. Many Italian employers pay their employees a bonus in December, known as the 13th-month pay. If a bonus is paid, it is specifically included in the employee’s collective bargaining agreement.

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Taxes and social security in Italy


Italian residents are responsible for paying income tax on all income earned anywhere in the world. Non-residents of Italy only pay income tax on the income earned in Italy. Individuals are considered Italian residents if, for more than 183 days in the tax year, they have one of the following characteristics apply to them:

  • They are enrolled at the public residency register of the town hall council where they reside
  • They have their economic and personal interests in Italy
  • They have their habitual residence in Italy

Tax thresholds in Italy

As of November 1, 2021, the income tax rates in Italy are:

  • 23% for income up to EUR 15,000
  • 27% for income over EUR 15,000 and up to EUR 28,000
  • 38% for income over EUR 28,000 and up to EUR 55,000
  • 41% for income over EUR 55,000 and up to EUR 75,000
  • 43% for income over EUR 75,000

Social security contributions are payable on employees’ gross annual earnings. The basic rate for employer contributions is currently around 27% to 28%. The current rate for employees is 9.19%, with a ceiling of EUR 103 for 2021 for any employees who started work after December 31, 1995.

Health insurance in Italy

All workers are required to register for the National Health Service (“Servizio Sanitario Nazaionale” (SSN)) system. This system covers workers in case of injury, illness, maternity, paternity, disability, and death.

The National Health Service (“Servizio Sanitario Nazaionale” (SSN)) system provides universal health coverage. The service ensures anyone who works for an employer in Italy will have their medical expenses covered from the day they start working. A worker’s family can also benefit from this coverage. The medical expenses which are covered in full or in part include:

  • Medical and paramedical expenses
  • Prescription medication expenses
  • Hospital expenses

Pension in Italy

There are four different types of plans for pension in Italy:

  • Old-age pension
  • Early old-age pension
  • Minimum pension
  • Early retirement allowance

Employees are entitled to the old-age pension plan if they have accrued at least 20 years of contributions into the National Institute for Social Security (“Instituto Nazionale della Previdenza Social” (INPS)), they are 67 years of age, and they have stopped working.

Employees are entitled to the early old-age pension plan if they have accrued at least 42 years and 10 months of contributions into the National Institute for Social Security (“Instituto Nazionale della Previdenza Social” (INPS)) and they have stopped working. There is no age requirement.

Employees are entitled to the minimum pension plan if the amount of their pension is below the “living minimum.” Therefore, it may be combined with the “minimum income.” Employees are eligible provided their social security contributions started before January 1, 1996, and their personal or household income is not greater than certain annual limits. For 2021, the annual minimum supplement is equal to EUR 6,702.54.

For early retirement allowance eligibility, employees must:

  • Not be in receipt of a pension
  • Have been unemployed long-term with scarce chance of finding a new job after three months of unemployment benefits have expired
  • Completed at least 18 months of social security contributions in the 36 months prior to unemployment
  • Been assessed as disabled by a degree equal to or higher than 74%, or been providing caregiver assistance for at least six months to a disabled spouse, partner, or first-degree family member
  • Early retirement allowance cannot exceed EUR 1,500 gross per month

If, on December 31, 1995, employees accrued at least 18 years of social security contributions, their pensions will be calculated using the pay-based method for the contribution period up to December 2011 and the contribution-based method from January 1, 2012.

If, on December 31, 1995, employees accrued less than 18 years of social security contributions, their pensions will be calculated using the mixed system, called pro-rata, which is pay-based for the period up to December 1995 and contribution-based thereafter.

If employees started paying social security contributions after January 1, 1996, their pensions would be entirely calculated using the contribution-based calculation system.

sand dunes

Leave entitlements in Italy

  • Annual leave in Italy

    Employees are entitled to a minimum of four weeks of paid vacation time a year and 12 paid public holidays. Collective bargaining agreements and individual contracts can provide a longer period of paid holiday entitlement. Minimum paid annual leave in Italy cannot be replaced by a payment, except where the employment contract is terminated. There is no statutory unpaid holiday entitlement. However, a collective bargaining agreement can provide for unpaid leaves of absence.

  • Paternal and maternity leave in Italy

    Cash maternity allowance is 80% of an employee’s pay and is payable for the five months’ leave. Maternity leave in Italy is prolonged in the case of premature delivery. In situations of adoption or guardianship, leave begins on the date when the child enters the family. For miscarriage beyond the third month of pregnancy, the allowance is paid for a period of 30 days. Miscarriage after 180 days is considered birth.

    Paternity leave includes seven days’ leave at 100% of an employee’s pay. The leave can be taken separately and can be claimed within five months of the child’s birth. In the presence of serious conditions that prevent the mother from taking care of the baby, the right to absence from work and the relative allowance is granted to the father. In the five months after the child’s birth, the father is entitled to one more day of unpaid leave, which is paid if the mother agrees to transfer it from her own maternity leave.

    A one-time voucher of EUR 800 can be claimed after either completing the seventh month of pregnancy, being in the process of adopting or fostering a child, and within a year from the birth, adoption, or foster.

  • Sick leave in Italy

    Collective bargaining agreements and individual contracts usually provide for paid time off for illness and injury. The employee is entitled to keep their job and receive their salary in proportion to the period set out in the collective bargaining agreement or individual employment contract. If no agreement exists, statutory sick pay is a benefit that replaces pay, starting from the fourth day of absence from work. The first three days are “waiting days” unless the illness relapses. If stated in the employment contract, the “waiting days” are paid in full by the employer. Entitlement to the benefit ends at the end of illness. Statutory sick pay is paid for a maximum of 180 days per calendar year.

  • Regional and national holidays in Italy

    Italy has the following 12 public holidays, which are not included in the minimum holiday entitlement. However, employers generally give their employees all of Italy’s public holidays off of work. Collective bargaining agreements may dictate that employees get these regional and national holidays off of work:

    • New Year’s Day (January 1)
    • Epiphany (January 6)
    • Easter Sunday (April, the specific day fluctuates each year)
    • Easter Monday (April, the specific day fluctuates each year)
    • Liberation Day (April 25)
    • Labor Day (May 1)
    • Republic Day (June 2)
    • Ferragosto (August 15)
    • All Saints’ Day (November 1)
    • Feast of the Immaculate Conception (December 8)
    • Christmas Day (December 25)
    • Boxing Day (December 26)

Employment benefits in Italy

The National Institute for Social Security (“Instituto Nazionale della Previdenza Social” (INPS)) and the National Health Service (“Servizio Sanitario Nazaionale” (SSN)) are the Italian public social security system and public health insurance system which covers all life risks for residents of Italy. Employees and their families are fully eligible for Italy’s comprehensive systems, which include:

  • Health, maternity, paternity, disability, and death insurance
  • Occupational accident and illness insurance
  • Government pension contributions
  • Family allowances
  • Unemployment benefits

Termination and notice period in Italy

An employer can terminate an employment contract in two ways:

  • Dismissal without a notice period for just cause, where there is a serious breach of the employment contract, such as gross misconduct.
  • Ordinary dismissal with notice based on either a breach of the employee’s legal and contractual duties or economic factors related to production, the proper functioning of the business, and the organization of work.

The relevant notice period required to dismiss an employee for either reason is defined in the employee’s applicable collective bargaining agreement. It is based on the employee’s length of service, position, and level. The notice period required for resignation is usually shorter than for dismissal. In dismissal cases, the employer can choose to make a payment instead of the notice period on which social security contributions must be paid.

In all cases where an employment contract is terminated, the employer must pay the dismissed employee the following:

  • Severance pay: The employer must pay severance in all cases, even if there is a resignation or just cause for dismissal. The amount payable is equal to the sum of each annual salary divided by 13.5. These amounts are index-linked annually.
  • Pro-rata supplementary monthly payments: The employer must pay these if they have done so during the employment contract. In these cases, the employer must pay the amount due up to the date the employment contract is terminated.
  • Payment in place of holidays not taken: If dismissed employees have not used all of their holiday allowances before the employment contract is terminated, they are entitled to a payment in place of any unused, accrued holiday allowance.


  • What is an employer of record in Italy?

    An employer of record (EOR) in Italy is a third-party organization that becomes the full legal employer of your in-country workforce. The EOR compliantly handles employer-related responsibilities like onboarding, pay, and benefits while enabling you to continue managing the day-to-day operations of your team.

  • How does an employer or record in Italy help hire talent?

    An EOR enables you to hire in Italy without going through the complexities and restrictions of setting up a legal entity. As an EOR, Velocity Global acts as the legal employer, hiring your new team members through local, compliant employment contracts—you get back the time and flexibility to focus on your growing business.

  • Can an employer of record run payroll in Italy?

    When you work with Velocity Global’s EOR solution in Italy, our experts compliantly handle all payroll and benefits for your team members in the country.

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Rome, Italy - The Consulta Palace, home of the Constitutional Court of the Italian Republic. In Piazza del Quirinale, Roma, Italy. Architect: Ferdinando Fuga

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