Italy is the world’s eighth largest and Europe’s third-largest economy. The nation is also Europe’s second-largest manufacturing country and the largest global exporter of luxury goods (clothing, cars, etc.). Other vital industries include pharmaceuticals, machinery, and electrical items. Milan is the financial and business hub and Italy’s main economic center, generating one-fifth of the GDP.
Unlock growth opportunities in Italy with Cerity Global as your trusted partner. We offer end-to-end support for establishing your legal entity, navigating Italy’s often complex regulatory landscape with clarity and efficiency.
From company registration to ongoing back-office support, including HR, payroll, benefits, accounting, tax and compliance, Cerity Global simplifies the process so you can focus on growing your business.
Need to hire quickly before your entity is set up? We offer interim EOR services in Italy, enabling you to onboard talent fast. Once your entity is established, we ensure a smooth transition of your employees from the EOR Structure to your own legal entity, without disrupting payroll or compliance.
Our experts stay ahead of regulatory changes to keep your operations aligned with Italy’s employment and tax laws, helping you scale confidently and compliantly.
Also known as a limited liability company, it is the most popular business structure for foreign investors in Italy. It provides limited liability protection and requires a minimum share capital of €10,000. The S.R.L. can have one or more shareholders and is managed by one or more administrators. A simplified version (S.R.L.S.) is also available with a minimum capital of €1.
Also known as a joint-stock company, it is suitable for larger companies planning to raise capital from investors. It requires a minimum share capital of €50,000 and is managed by a board of directors. The S.p.A. must also appoint a board of statutory auditors and may require an independent auditor depending on size thresholds.
Also known as a branch office, it is an extension of a foreign company that carries out business activities in Italy. The branch is not a separate legal entity but represents the foreign parent company and must be registered with the Italian Business Register.
Directors (administrators) are required and may be individuals or legal entities. There is no requirement for directors to be Italian residents, but at least one administrator must be appointed.
A board of directors is required with at least one director. Directors may be individuals or legal entities and do not need to be Italian residents. A board of statutory auditors must also be appointed.
A legal representative must be appointed with specific powers of attorney to represent the foreign company in Italy. The representative must be registered with the Italian Business Register.
In Italy, bank account setup follows a specific process that integrates with entity incorporation:
Bank Account Setup in Italy: What’s Possible and When
Before Incorporation:
After Incorporation:
Note:
Italian banks typically require extensive documentation and may request in-person meetings.
Required documents include the company’s certificate of incorporation, articles of association, tax identification numbers, and identification documents of directors and beneficial owners.
Cerity Global supports companies in their global expansion plans and helps in legal entity setup, registration and ongoing support services. With us, you can quickly set up a legal entity, operate compliantly, and expand globally. The process typically takes a few days to a week, depending on the bank.
Employment in Italy is primarily governed by the following laws:
In Italy, written employment contracts are strongly recommended and mandatory for specific types of employment — fixed-term employment and those with probationary periods.
Some of the standard details mentioned in the written contract include:
The different types of employment relationships are:
Permanent Employment (Contratto a Tempo Indeterminato)
Permanent employment has no fixed end date, is the standard for long-term positions, and employees receive various benefits. They are the standard form of employment in Italy and can be both full-time and part-time.
Fixed-Term Contracts (Contratto a Tempo Determinato)
These contracts have a set date and are used for projects with a specific duration or seasonal work. They can be renewed under certain conditions and have a maximum duration of 24 months.
In Italy, a probationary period typically lasts up to:
However, the maximum probationary term may depend on the relevant collective bargaining agreement or the industry.
The standard working hours per day is 8 and per week is 40 hours.
Overtime
Any hours worked beyond the standard hours is considered overtime.
The notice period in Italy usually depends on the length of service and ranges from 15 days to one month.
Employees in Italy are entitled to severance pay, also known as Trattamento di Fine Rapporto (TFR), upon termination of the employment contract, irrespective of the reason, and is usually 7% of the annual salary.
Foreign nationals can live and work in Italy by securing appropriate work authorization. With a valid job offer and employer sponsorship, qualified individuals may be eligible for various types of work permits.
Work Visa & Permit Options in Italy
1. EU Blue Card
A standardized EU-wide permit for skilled non-EU workers.
2. Work Visa for Employed Work (Visto per Dimora)
For standard employment relationships with Italian companies.
3. Self-Employment Visa (Visto per Lavoro Autonomo)
For entrepreneurs and self-employed individuals.
4. Intra-Company Transfer Visa
For multinational companies transferring employees to Italian offices.
5. Investor Visa
For significant investors in Italian businesses or startups.
Key Notes:
Employees in Italy receive 20 working days (4 weeks) of annual paid leave.
Female employees are entitled to 5 months of maternity leave:
Male employees receive 10 days of paid paternity leave, which can be taken within five months of the childbirth.
Employees usually receive 180 days of paid sick leave. Employers cover the costs at 100% for the first 3 days, thereafter the government pays at 50% from day 4 to 20, and 66.66% from day 21 to 180.
The following statutory national holidays are observed in Italy:
The most common length of the pay period is usually monthly, and payment is usually made on the 27th of each month.
The 13th-month bonus, also known as tredicesima is paid around December.
Some National Collective Agreements (NCAs) also stipulate a 14th-month salary, known as Quattordicesima usually paid in June.
The National Social Security Institute, also known as Istituto Nazionale della Previdenza Sociale is a comprehensive Social Security system that provides statutory benefits to employees through employer and employee contributions.
The mandatory benefits in Italy are:
Accounting standards must adhere to the Italian Generally Accepted Accounting Principles (GAAP) overseen by the Italian Civil Code (ICC) and accounting standards issued by the Italian Accounting Organization (OIC). EU-adopted IFRS (International Financial Reporting Standards) apply to companies whose securities are traded on regulated markets.
Companies in Italy must file annual financial statements with the Business Register (Registro delle Imprese).
Statutory audit is required if a company exceeds two of the following three thresholds for two consecutive years:
Listed companies and certain regulated entities must always have statutory audits regardless of size.
The standard corporate tax rate, also known as, Imposta sul Reddito sulle Società (IRES) is 24%. There is a regional production tax, known as Imposta Regionale sulle Attività Produttive (IRAP) which is 3.9%.
The VAT rate in Italy is 22% and applies to most goods and services.
Certain goods and services qualify for reduced rates of 10%, 5%, and 4%.
Typically, the IRES and IRAP returns must be filed electronically by 30 September of the following year.
Penalties for late filing or failure to file a tax result in a fixed penalty of 120% of the taxes due. If no tax liability emerges in the return, minimum penalties (ranging from EUR 250 to EUR 1,000) are applicable.
Italy follows OECD Transfer Pricing Guidelines and requires arm’s length pricing for intercompany transactions.
Italy has implemented CbC reporting in line with OECD BEPS Action 13.
Transfer pricing documentation is required for companies meeting certain thresholds:
Master File
Local File
Deadline: Documentation must be available upon request and submitted within 10 days of tax authority request.
As a member of the European Union (EU), the General Data Protection Regulation (GDPR) regulates data privacy in Italy, implemented through Legislative Decree 196/2003 as amended. The Italian Data Protection Authority (Garante) oversees compliance and enforcement.
Italy’s AML framework is governed by Legislative Decree 231/2007, which implements EU Anti-Money Laundering Directives.
Obligated entities: Banks, financial institutions, accountants, lawyers, notaries, real estate agents, and other designated professionals.
Key requirements:
Penalties: Administrative fines ranging from €5,000 to €5 million, and criminal penalties including imprisonment.
Reasons you should setup legal entity in Italy:
Cerity Global ensures your business expansion in Italy is fast, compliant, and future-ready, so you can focus on growth while we manage the back-office tasks.
Economic figures are subject to change based on quarterly reports and market conditions.
Cerity Global combines deep local knowledge with proven expertise to make your Italy business establishment effortless and compliant. Whether you’re looking for legal entity setup and registration or ongoing support, we’re your trusted partner for sustainable global expansion in Italy.
Disclaimer – The information provided is for informational purposes only and does not constitute legal, business, or tax advice. Entity setup requirements, tax rates, and economic data are subject to change and may vary by location.
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