Italy offers a deep talent pool and dynamic market that’s ripe with opportunities—but only if you know how to navigate its complexities. Besides the nuances of hiring and labor law compliance, you’ll have to deal with some language barriers, as most Italians are more comfortable speaking in their native tongue.
You must decide first whether to hire employees or contractors. But generally, if you only need a few workers, then contractors is the way to go—whereas setting up a legal entity is your go-to if you want to establish a presence within the country. In Italy’s complex legal landscape, making an informed decision between these two options is crucial to ensure compliance and avoid potential pitfalls.
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When hiring employees in Italy, consider using an employer of record (EOR). You’ll pay them a fee for the service, but they’ll handle the complex Italian taxes and compliance with Italy’s labor laws. The right service provider can go a long way to keeping your administrative burden low.
See our recommended employer of record services below or check out our guide to the best EORs to learn more about their features.
Monthly pricing (per employee) | Plan for Contract Employees ($/Month) | Set up Fee | Number of Countries | |
|---|---|---|---|---|
 | $699 | $29 per worker | None | 170+ |
 | $599** (call for quote) | $20 per worker** (call for quote) | None | 150+ |
 | Starts at $650 | $2/worker | ✓ | 160+ |
 | Starts at $599 | $49 per worker | None | 90+ |
 | Starts at $400 | $40 per worker | None | 150+ |
 | Custom pricing (call for quote) | Included in quote | Custom pricing (call for quote) | 185+ |
 | Custom pricing (call for quote) | Included in quote | Custom pricing (call for quote) | 185+ |
 | $599 | $29/worker | None | 130+ |
Hiring Contractors in Italy
If your company only needs a worker or two, partnering with an independent contractor is your best bet. While you’ll have less control over when and how the work gets done and you’ll face stiff fines and penalties for misclassification if the worker should really be an employee, this can be a cost-effective way to secure high-quality talent in Italy.
Partnering with contractors in Italy will follow the same general process as hiring any international independent contractor. Here, we’ll discuss the steps specific to Italy.
Step 1: Review Italian Labor Laws
Compliance with foreign labor laws can be a major hurdle for small businesses, especially if you misclassify your workers. Even innocent mistakes can result in costly fines. To be an independent contractor in Italy, a worker must:
- Have control over their work schedule
- Decide when and how to work
- Set their own rates
- Pay full Italian social contributions
While Italian labor laws generally favor workers, there is no entitlement to statutory employment rights for independent contractors, except for parental leave. This means that they’re not entitled to paid time off or benefits you may offer, except to take time off as a new parent.
Misclassifying Independent Contractors in Italy
Employee misclassification is an area of significant concern. Misclassification occurs when businesses categorize employees as independent contractors when they should be employees, subject to certain labor rights and benefits. This can lead to a multitude of problems, including legal consequences, back taxes, and potential reputation problems.
Italy has stringent labor laws. If a worker is misclassified, businesses could face penalties, including owing back pay and benefits and potential legal action from the employee and state. Companies could also be on the hook for their back taxes, plus those of the employee.
Step 2: Post a Job Ad on Relevant Italian Job Boards
It’s important to create an effective job ad to ensure that your ideal Italian candidate can see and apply for it. It’s essential to keep the job ad focused on project work rather than daily tasks, emphasizing the independent nature of the contractor’s role.
The magic lies in emphasizing the project work. Here’s what your ad should include:
- Project Overview: Give a snapshot of the project, its goals, and what success looks like.
- Scope of Work: Detail the tasks and responsibilities the contractor will shoulder.
- Qualifications and Skills: Highlight the skills, expertise, certifications, and any niche training or degrees required.
- Project Timeline: Share the project duration, including essential milestones and deadlines.
- Compensation: Be clear about payment terms—is it fixed price, hourly, or milestone-based? Never pay an independent contractor a regular salary.
- Communication and Collaboration: Explain how the contractor will interact with your company and your preferred communication methods.
Though not as crucial as when hiring an employee, share your company’s mission statement, company core values, and industry standing to help attract contractors that resonate with your brand ethos and company culture.
To reach Italian independent contractors, US employers can utilize various websites and platforms, including:
- Upwork: A popular freelancing platform that connects businesses with independent professionals worldwide, including Italy.
- Freelancer: Another global freelancing marketplace that allows businesses to post projects and receive bids from qualified contractors.
- LinkedIn: A professional networking platform where businesses can post job ads and search for suitable independent contractors in Italy.
- Italian-specific job portals: Websites like Adzuna and Cliccalavoro cater specifically to the Italian job market, allowing employers to target local talent effectively.
When applications start rolling in, it’s time to screen candidate resumes and portfolios. Keep in mind, many independent contractors may run their own businesses, so traditional resumes might be replaced with portfolios or project details.
Step 3: Make an Offer Using an Independent Contractor Agreement
When you’re ready to seal the deal with an Italian independent contractor, don’t send them a traditional offer. You need to use an independent contractor agreement, unless the worker is already covered by a binding collective bargaining agreement.
This legal document is a roadmap for your working relationship, ensuring both parties know their roles, responsibilities, and expectations. Here’s why it’s a must-have:
- Legal Compliance: It aligns with Italian labor laws, shielding both you and the contractor from potential legal disputes and penalties.
- Risk Management: The agreement outlines the project’s scope, deliverables, and timeline, reducing the chances of miscommunications.
- Payment Terms: It sets out the compensation structure, payment schedule, and invoicing process, ensuring financial transparency.
- Intellectual Property Rights: The agreement defines the ownership of intellectual property, safeguarding your rights to the work produced during the project.
- Confidentiality: The agreement can include confidentiality clauses to protect sensitive information exchanged between you and the contractor.
To create a comprehensive and legally robust contract, consider including:
- Parties Involved: Clearly state the contractor and client details, including names, addresses, and contact information.
- Scope of Work: Define the project tasks, responsibilities, and objectives as discussed during the quoting and interview process.
- Project Timeline: Detail the project duration, including any milestones or deadlines the contractor must meet.
- Compensation: Specify the agreed payment terms (fixed price, hourly rate, or milestone-based payments), along with the payment schedule and invoicing process.
- Termination: Outline the conditions under which the agreement can be terminated, including notice requirements and potential penalties for early termination.
- Dispute Resolution: Define how disputes will be resolved (negotiation, mediation, arbitration) and the governing law and jurisdiction for any legal proceedings.
- Indemnification and Liability: Clarify each party’s responsibilities regarding indemnification and liability for damages, losses, or claims arising from the project.
Remember, a well-crafted Independent Contractor Agreement is your safety net in this global hiring adventure. Take your time and make sure it’s right.
Step 4: Complete & Retain the Right Forms
Taxes initially seem like a big headache but, when dealing with an Italian independent contractor, the Italian tax liability falls squarely on them. However, if the independent contractor ever comes to the US and does work for your company, the compensation for the work done while in the US will be taxed. That’s why you’ll need to have them complete Form W-8BEN or W-8BEN-E.
These forms must be completed by your Italian independent contractor and retained by your business. You don’t file these forms with the government—they’re used to determine whether you need to withhold US taxes and, if so, how much.
Hiring Employees in Italy
The process of hiring employees in Italy differs significantly from independent contractors due to the distinct nature of each working relationship, besides being slightly different based on the type of employee you’re hiring.
Learn more about the general process in our hiring international employees guide.
Step 1: Setting Up a Legal Entity in Italy
There are two main ways to hire employees in Italy: set up a legal entity or partner with an EOR. If you choose to set up your own entity in Italy, be prepared for a long and expensive process. Depending on the type of entity you create, you’ll face slightly different steps to what’s outlined here:
- Establish minimum investment capital requirements
- Create a management structure (board of directors, sole director)
- Ensure compliance with accounting and auditing standards
- Execute a public deed of incorporation and pay a fee
- Pay government grant taxes and register the company
- Notify the labor office of employment of workers
Conversely, an EOR is a legal entity registered in Italy that your business partners with to hire, pay, and manage your workforce abroad. Because an EOR would already have registrations in Italy, it would be a much faster process for you to hire employees. Unless you’re looking to open a location in Italy, it’s probably best to partner with a couple of independent contractors or use an EOR to hire and manage your Italian employees on your behalf.
Step 2: Review Italian Labor Laws & Understand Compliance Issues
There are a couple of regulations to keep in mind when hiring in Italy.
There is no national minimum wage in Italy. However, many industries and workers are governed by collective bargaining agreements, which often include minimum wage requirements that you’ll need to know.
The normal workweek in Italy is 40 hours, and the most anyone can work is 48 hours over seven days, including overtime. Italian law also limits the number of hours a person can work as overtime to 250 per year.
Noncompete agreements are common in Italy, though not as common as in the US. Noncompete agreements must be limited in both duration and scope. It must also include financial compensation to the employee, on top of their normal salary. While this amount is done on a case-by-case basis, it generally ranges from 20% to 40% of the worker’s annual compensation.
All employees in Italy are entitled to at least four weeks of paid time off per year. Companies can and often go beyond this minimum to attract high-quality talent.
Parental leave is also a requirement—you’re required to provide 10 working days off minimum or 20, if there are multiple live births. Maternity leave is also required, and spans five months. Typically, these are taken for two months before and three months after childbirth. This leave is paid at 80% of the employees regular wage.
Tax in Italy is a big one. Italy has a three-tiered tax system, levying taxes at the national, regional, and municipal level. Income tax for your employees reaches up to 43% federally and is calculated on a progressive basis, as well as the location where your employee lives and works. Some municipalities have additional taxes you’ll need to withhold. There’s also a tax on any productivity bonus paid to an employee.
There are also employer costs and taxes you’ll need to pay, like retirement and disability insurance, accident insurance, pension fund, mandatory benefits like paid time off, and more. To learn all about Italian payroll, review our comprehensive guide.
Step 3: Determine Salary
Italy is an expensive country, but not the most expensive in Europe. The average Italian salary is just over $62,000 USD annually. Depending on the work you need done, the skills required for the job, and the experience you need, you may need to pay even more.
Besides paying for mandated benefits, you should also consider expanding your benefits package to include additional benefits, like flexible work hours. These can help attract and retain top talent in Italy. Learn more about benefits you can provide in our ultimate guide to global employee benefits.
It’s important to note that at the end of an employment contract, whether for just cause or resignation, employers in Italy must pay trattamento di fine rapporte (severance). This is calculated as the employee’s all-time salary received divided by 13.5. Employers cover this through a tax of about 7% per month. Employers in Italy can only terminate an employee for two reasons:
- Breach of contract
- An objective reason like economic downturn
Step 4: Post the Job Ad
Crafting an effective job ad is crucial to finding the right Italian employee. Just as you would for an independent contractor, ensure your job ad for an employee precisely outlines the role’s requirements, including work hours. If you’re expecting someone in Italy to work US hours, then that’s fine—but be upfront about it. This level of transparency will help sift through applicants who may not align with your scheduling needs.
Remember, a job ad isn’t just about listing duties and requirements. It’s your chance to showcase what makes your company unique. Do you have a vibrant, collaborative culture? Perhaps you offer the luxury of flexible working hours or boast special benefits that set you apart from the rest. These details can be the deciding factor for potential candidates, helping them determine if they’re not just right for the job, but also for your company culture.
Once your job ad is polished and ready, it’s time to get it out there. You can post it on the same major job boards you’d use with domestic workers—but also check out some Italian-specific job boards, like:
Step 5: Review Applications & Conduct Interviews With International Details in Mind
When reviewing Italian worker applications, there are several factors you need to consider to ensure a smooth and effective hiring process. Have your list of must-haves nearby when reviewing resumes but remember that no candidate will match perfectly to your entire list. Strive to refine your stack of resumes to a select few that truly pique your interest.
The time difference between the US and Italy can be a tricky hurdle, but with a dash of flexibility, it’s nothing you can’t handle. Your job ad should have clearly stated the work hours, but be prepared to adjust your interview times when scheduling interviews.
Embrace the power of video interviews. They offer a personal touch and insight into a candidate’s internet capabilities—vital for seamless remote collaboration. It’s also an excellent way to gauge their personality and build rapport.
A structured interview process is your best friend here. Asking consistent questions allows fair evaluation and helps you hone in on the most suitable candidates. Given the unique dynamics of international hiring, consider including these questions:
- How do you navigate time zone differences to maintain timely communication?
- What strategies aid you in prioritizing tasks and staying productive remotely?
- Could you share a project where you successfully collaborated across different time zones? What hurdles did you face, and how did you overcome them?
- Are you comfortable using video conferencing and remote collaboration tools? Can you discuss your experiences?
- Considering the time difference, do you have any preferences or limitations regarding working hours and meeting flexibility? How do you manage scheduling conflicts?
Step 6: Check References
After you’ve completed your interviews, you should be able to narrow down your candidate preference to just one or two. At this point, it’s a good idea to speak with past supervisors to get an idea of how the employee works, their skills, and what it’s like to manage this person.
While we generally recommend all reference checks should be done via video conference or phone call, sometimes that’s not always possible given the time difference. In this case, it may be acceptable to communicate with a reference via email.
Step 7: Make a Job Offer
Employment contracts are not required in Italy, but they are extremely common. Many jobs are also under a collective bargaining agreement, which will set out the terms and conditions of the employee’s work.
We recommend using an employment contract since they’re so common in Italy. The employment contract must be signed by both parties and include at least the following information:
- The employee’s name
- The employer’s name
- The start date of the employment relationship
- The employee’s job duties
- Salary and pay frequency
- Weekly working hours
Before putting all these terms together in the employment contract, however, we recommend making a soft offer to the candidate by calling them or hopping on a video call. This gives you the ability to gauge the candidate’s excitement and hammer out any final details, like start date and salary.
What to Consider Before Hiring in Italy
Venturing into the international hiring arena can be an exciting prospect for a US-based small business owner. However, before hiring an employee or an independent contractor in Italy, there are several considerations to keep in mind, many of which we’ve addressed in more detail above:
- Legal Compliance: Understanding Italian labor laws and regulations is crucial. This includes aspects like contracts, working hours, benefits, taxes, and termination procedures.
- Visa Requirements: If you’re considering hiring an employee who will relocate to Italy, understanding visa requirements is essential. For independent contractors, this may not apply as they could potentially work remotely.
- Cultural Differences: Recognize and respect cultural differences and norms which could impact work styles, communication, and holidays.
- Language Barriers: While many Italians speak English, consider potential language barriers in communication.
- Time Zone Differences: Italy operates in a different time zone than the US, six hours ahead of the US east coast. Consider how this might affect collaboration, meeting times, and deadlines.
- Compensation Expectations: Research standard pay rates and expectations for the role in Italy. Keep in mind currency exchange rates and transaction fees.
- Tax Implications: Understand the tax obligations in Italy and how they might impact your business. For independent contractors, ensure they handle their own tax liabilities.
- Intellectual Property Rights: Be clear about who owns the rights to the work produced during the project, particularly when dealing with independent contractors.
- Privacy Laws: Familiarize yourself with Italy’s privacy laws, especially when handling personal data of employees or contractors.
Common Types of Work Outsourced to Italy
Italy is known for a diverse range of sectors that attract outsourcing from different parts of the world. Here are some of the most common types of work outsourced to Italy:
- Information Technology (IT): Many global companies outsource IT services to Italy, including software development, system management, and technical support.
- Mechanics, Mechatronics, and Energy: These technical fields see a lot of jobs outsourced to Italy, thanks to the country’s strong expertise in these areas.
- Electronics and Electrical Engineering: Italy has a robust electronics and electrical engineering sector, attracting businesses looking for specialized skills in these fields.
- Marketing: With its creative flair and deep understanding of European markets, Italy is a popular choice for companies outsourcing marketing tasks.
- Manufacturing and Engineering: Italy’s rich history in manufacturing, particularly in sectors like automotive and fashion, makes it a top choice for businesses looking to outsource production or engineering tasks.
- Telecommunications: The telecommunications sector in Italy is advanced and reliable, attracting outsourcing for related services.
Remember, the success of outsourcing depends not just on the industry, but also on factors like clear communication, cultural understanding, and effective management of the outsourcing relationship.
Hiring in Italy Frequently Asked Questions (FAQs)
Navigating the time difference between the US and Italy can be a bit like conducting an orchestra. But with modern technology, it’s easier than ever. Consider using project management tools that allow for asynchronous communication, where tasks and updates can be shared and viewed at any time. Schedule meetings well in advance and try to find a time that works reasonably well for both parties. And remember, clear and concise communication is key to avoiding misunderstandings.
Italians value relationships and courtesy in business dealings. A warm, professional approach can go a long way. It’s also worth noting that Italians appreciate quality and detail—whether it’s in a piece of design or a well-executed project. Understanding these cultural nuances can help you build a strong, respectful working relationship with your Italian counterpart.
Start by setting clear expectations and standards from the get-go. Regular check-ins and progress reports can help monitor the quality of work. Utilize technology tools that allow you to track progress and collaborate effectively. And don’t shy away from giving constructive feedback—it’s essential for continuous improvement and maintaining high-quality output.
Language barriers, differences in business practices, and varying holidays or work schedules are common. Overcoming these obstacles often boils down to open communication, flexibility, and a dash of patience. You might consider basic language lessons for key phrases or hire a translator for critical communications. Familiarizing yourself with Italian business culture and public holidays can also be helpful. Remember, every challenge is an opportunity to learn and grow.
Bottom Line
As a US-based small business owner, venturing into the realm of international hiring might seem like a daunting journey, but it’s one that can bring immense rewards. Outsourcing to Italy offers a wealth of opportunities, from tapping into a pool of talented professionals to expanding your business’s global footprint. With careful planning, understanding of cultural nuances, and a focus on communication and quality control, you’ll be well on your way to building fruitful collaborations that can take your business to new heights.
If you’re considering hiring employees in Italy, check out the best EOR options. This route can get you a new hire on the ground in Italy fast and cost-effectively.
