🇮🇹 EOR Guide —
Italy
Everything you need to know about using an Employer of Record in Italy — provider fees, compliance risks, hire speed, and EOR vs direct employment.
Employer SS rate
~30%
Employee SS rate
~10%
TFR (severance)
~7.4% of salary accrued annually
Notice period
Defined by CCNL contract
Annual leave
Minimum 4 weeks
Working hours max
40 hrs/week
Our Recommendation
EOR strongly recommended — Italy is one of Europe's most complex employment markets
Italy has some of the strictest employment laws in the world, with rigid CCNL collective agreements, high social security costs, mandatory severance pay (TFR), and complex termination rules. EOR is strongly recommended for all initial Italian hires. Setting up a direct entity without deep local expertise carries significant compliance risk.
EOR provider fee range for Italy
Rates vary by provider, headcount, and benefits scope. Always request itemised quotes from at least three providers.
EOR vs Direct Employment
EOR advantages in Italy
- Handles mandatory TFR (Trattamento di Fine Rapporto) severance accrual
- Manages CCNL collective agreement classification and compliance
- Handles very high employer social security contributions (~30%)
- Avoids complex INPS and INAIL registration requirements
- Manages strict Italian termination and redundancy procedures
EOR limitations in Italy
- Provider fees are among the highest in Europe due to complexity
- CCNL classification disputes can still affect employer
- Less flexibility on benefit structures
- EOR adds contractual complexity to already complex environment
Direct employment advantages
- Full control over Italian employment contracts and structures
- Direct INPS and INAIL registration provides complete visibility
- Better cost efficiency at scale (10+ employees)
- Stronger employer brand for Italian talent
Direct employment limitations
- Extremely complex CCNL collective agreement system
- TFR accounting and management requires specialist knowledge
- Termination process is heavily regulated and legally risky
- INPS/INAIL registration and ongoing compliance is administratively demanding
Local Entity Options
Setting up a legal entity in Italy.
If you outgrow EOR or prefer direct employment, these are the main legal structures available in Italy for foreign companies.
Societa a Responsabilita Limitata (SRL)
Setup time
14–30d
Est. cost
$4,000
Min. capital
None
Corp. tax
24%
Div. WHT
26%
VAT rate
22%
Annual obligations
- Annual financial statements (Camera di Commercio)
- Corporate tax return (IRES + IRAP)
- Monthly F24 payments
- Annual VAT declaration
- Libro Unico del Lavoro (LUL)
Overview
Main corporate structure in Italy. Minimum share capital EUR 10,000 (at least EUR 2,500 paid up at formation). At least 1 director (no residency requirement). Registered office in Italy required. Notarial deed required for incorporation. IRES corporate tax 24% + IRAP regional business tax 3.9% = effective ~28%. VAT 22% standard. Business registration with Camera di Commercio (CCIAA) required. Digital company formation possible via IR semplificata (SRL-S) with EUR 1 minimum capital.
Branch (Sede Secondaria)
Setup time
3000d+
Est. cost
—
Min. capital
$45
Corp. tax
24%
Div. WHT
26%
VAT rate
22%
Annual obligations
- Annual accounts of parent (Camera di Commercio)
- IRES + IRAP tax returns
- VAT registration
Overview
Foreign companies can register a branch (sede secondaria) in Italy. Registration with Camera di Commercio required. Notarial deed and apostilled parent documents required. No separate legal entity — parent fully liable. Branch profits subject to Italian IRES (24%) and IRAP. Annual parent accounts must be filed. Branch remittances may trigger Italian withholding tax.
Compliance Risks
Key EOR compliance risks in Italy.
Discuss each of these with your chosen provider before signing.
CCNL misclassification
HighItaly has hundreds of sector-specific collective agreements. Applying the wrong CCNL leads to incorrect pay, benefits, and termination procedures.
TFR miscalculation
HighSeverance pay accrues at ~7.4% of annual salary. Errors in calculation create significant retroactive liability at termination.
Wrongful termination exposure
HighItalian labour law provides very strong job security protections. Termination without just cause can result in reinstatement orders or significant compensation.
INPS underpayment
MediumItaly's employer social security rate is approximately 30%. Payroll errors trigger INPS penalties and interest charges.
Cost Estimator
Estimate your Italy EOR cost.
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