Setting up and managing payroll in Italy
Italy’s economy is ranked eighth in the world in terms of nominal GDP, and made up of a diverse range of successful industries, making it an attractive destination for foreign investment.
If your organization is planning an expansion into Italy, an early part of the process is likely to be registering an official entity in the country, as well as setting up a payroll and hiring employees. However, this can regularly take longer than expected, with complex administrative procedures and unique business laws that can stall progress.
One way to bypass the process of setting up a payroll in Italy is to outsource the complex administrative work and ongoing management. At Horizons, we will establish and run your Italy payroll, ensuring full compliance with local legislation. Our outsourcing services are perfect for organizations with or without an Italy-based entity.
If you have an entity
If your organization already has an entity registered in Italy, then we can help you by setting up and managing your in-country payroll. We’ll ensure everything is in full compliance with Italian legislation and ready to go as quickly as possible, so you don’t have to worry about the complex details and can focus on your expansion.
If you don’t have an entity
If you haven’t set up an entity in Italy, our Italian subsidiary can work as your employer of record. Our team will handle all of your payroll, contracts, associated legal work, and associated administration, helping you focus solely on a successful expansion.
This service is ideal for any organization aiming for full flexibility and low risk while expanding into Italy. You will remain autonomous and have full control over your Italian workforce while not having to deal with any of the complex administration and compliance work.
The simplest way to expand into Italy
Italy payroll guide
What are payroll tax and withholdings rules in Italy?
Both employees and employers in Italy generally need to contribute toward social security funds. For employees, the contribution is roughly 10% of salary, and for employers, it is roughly 35%.
Income tax is progressively scaled in Italy, with rates ranging from 23% to 43% depending on income.
The corporate tax rate in Italy (called IRES) is 24%, but businesses are also usually required to pay a regional production tax (IRAP) of 3.9%.
Entitlements and terminations
Employers in Italy can only terminate employment contracts in specific situations, such as breaches of the employment contract or for economic reasons, and there are strict procedures to follow in most cases, so it is important to fully understand the regulations for your specific circumstances.
Workers are also entitled to a bonus payment at the end of their service, called the TFR, for which an employer must withhold 7% of pay.
How to establish an Italy payroll
One option for your payroll in Italy payroll is to establish it internally. This can be a viable choice for larger organizations looking to build a long-term presence in the country, but it can also be very expensive and can cause delays.
Alternatively, you can outsource the setup and management of your payroll to Horizons. We will ensure that your expansion into Italy is as simple as possible, helping you get started in the county faster and more efficiently. Additionally, we can offer our employer of record service, so even organizations without an in-country can benefit from our outsourcing services.