Set Up Business in Italy

Italy Expansion Guide

Global Upside helps companies set up, hire, and operate in Italy. Set up a legal entity quickly and easily with our solutions for branch, subsidiary, and rep office. Looking for an alternative to permanent establishment? Hire and pay employees in Italy without a legal entity by using our PEO & employer of record services. Once your business is set up, our teams can support with recruitment and staffing, human resources, employee benefits, payroll, accounting, and tax.

Capital City



Euro (EUR)




Parliamentary Republic

Country Overview

Italy, a country with a long Mediterranean coastline, has over 60 million people and a rich, historical, and worldwide popular culture in arts, architecture, music, and food. Popular architectural sites in Italy include the Leaning Tower of Pisa, the Basilica of St. Mark, and the Coliseum. In addition, cities such as Venice, Florence, and Rome, which are among the oldest cities globally, are popular tourist destinations. 

Options for setting up a legal entity in Italy include:

Representative Office

A company or a legal entity establishes a representative office to conduct marketing and other non-transactional operations. Representative offices are not liable to taxation. 

Branch Office

A branch office represents the presence of an overseas company. There is no discrete legal existence, and the parent company is subject to all legal obligations. In a branch office setup, the costs involved are lower than the other setups. 


i) Società a responsabilità limitata (S.r.l.) – a common form of entity used by small and medium-sized businesses as extremely flexible management. It requires a minimum corporate investment of €10,000.

ii) Società per azioni (S.p.A.) – a form of entity in which the number of shareholders is unlimited. The minimum corporate investment of €50,000. 

It is permissible under Italian labor law to draw up permanent employment contracts in writing, but it is not required. 

Some of the details typically mentioned in the written contract include: 

  • The start date, length of the employment relationship, and the type of employment relationship 
  • Duration and conditions of the notice period 
  • and more 

The different types of employment relationships are: 

  • Permanent Employment – Unless specified in the employment contract, employment in Italy is deemed indefinite. 
  • Fixed-Term Contracts – Per Italian law, fixed-term contracts should not exceed 24 months, including renewal. Employers can renew fixed-term agreements up to 4 times as long as the total length does not exceed 24 months. The contract becomes permanent after five renewals. 
  • Temporary Employment – The term “temporary employment” is not defined explicitly in Italian labor law. It does, however, provide for a variety of flexible work arrangements, including:

    • Fixed-term work
    • Intermittent work
    • Solidarity contracts
    • Apprenticeships

Probationary Period 

In Italy, a probationary period lasts up to 6 months for managerial employees, and for all other employees, it could last up to 3 months. However, the maximum probationary term may vary depending on the industry or the relevant collective bargaining agreement. 

Work/Time Regulations 

A typical workday is 8 hours long, while a standard workweek is 40 hours long (based on a 5-day cycle). 


Employees in Italy are entitled to the following leaves: 

  • Annual leave – Per Italian labor law, employees are usually entitled to at least four weeks of paid annual leave. 
  • Maternity leave – Italy’s female workers are typically entitled to at least 20 weeks of paid leave under Italian labor legislation. It is usually divided into eight weeks before birth and 12 weeks following birth, with the latter two being variable. 
  • Sick leave – Employees in Italy are generally entitled to three days of paid sick leave per year. The National Institute for Social Security reimburses employers for providing a statutory sick benefit to their employees (INPS). 
  • Paternity leave – Per the Italian labor law, fathers continue to be absent from work for the duration of the maternity leave. 

Public Holidays 

The following are the statutory national holidays observed in Italy: 

  • January 1 – New Year’s Day
  • January 6 – Epiphany
  • April 4 – Easter Sunday
  • April 5 – Easter Monday
  • April 25 – Liberation Day
  • May 1 – Labor Day / May Day
  • June 2 – Republic Day
  • August 15 – Assumption of Mary
  • November 1 – All Saints’ Day
  • December 8 – Feast of the Immaculate Conception
  • December 25 – Christmas Day
  • December 26 – St. Stephen’s Day


In Italy, the Ministry of Labor and Social Security governs the National Social Security Institute (INPS), which provides different pension benefits. 

Some examples of social insurance programs are: 

  • Dependents’/Survivors Benefit – If the deceased employee made at least 780 weekly contributions or 260 weekly contributions, at least 156 of which were made in the five years preceding the date of death, then the survivors are eligible for a pension. The survivor’s benefit is calculated based on the retirement of the deceased employee. 
  • Life and Disability Insurance/Benefit – Invalidity pensions are paid to insured workers who suffer from a permanent inability to perform any work. They have contributed for at least five years, three of which were in the five years preceding the application. 
  • Unemployment Insurance – The New Social Insurance for Employment (NASpI) is a monthly payment made to those laid off involuntarily. 


The Italian Civil Code does not mandate the length of the notice period. Nonetheless, the employee’s years of service and professional level and the relevant collective bargaining agreement are usually the determining factors. 

Visa/ Work Permits 

Italy is part of the Schengen Borders Agreement, together with 25 other European countries. 

Foreigners with a Schengen sojourn permit from another Schengen country do not require a visa for stays of less than three months if they are not coming to work or study. 

There are typically three categories of visas issued by the Italian Ministry of Foreign Affairs and International Cooperation: 

  • Uniform Schengen Visas (USV) – Uniform Schengen Visas are type C visas (short-stay or travel visas) valid for up to 90 days and single or multiple entries into all Schengen countries. 
  • Limited Territorial Validity Visas (LTV) – Limited Territorial Validity Visas are only valid in the Schengen country from which they were issued and are valid for humanitarian or national interest purposes. 
  • Long Sojourn or National Visas (NV) – Long Sojourn or National Visas are type D visas valid for stays longer than 90 days for single or multiple entries. 

Different immigration rules apply to foreign workers of various nationalities. For example, the European Union (EU) and the European Economic Area (EEA) nationals can work in Italy without a work permit. However, before entering Italy, foreign nationals from non-EU/EEA countries must typically have a valid work permit from their Italian employer and obtain a work visa from the Consulate of Italy in their country of residence. 

There is no specific frequency; wages may be paid monthly or at other regular intervals. 

Companies in Italy must maintain consistent accounting records in compliance with the Italian Civil Code (ICC) and the Generally Accepted Accounting Principles (Italian GAAP/IAS – IFRS). 

Corporate Tax 

The standard corporate tax rate is 24%. 

Value Added Tax (VAT) 

The standard VAT rate in Italy is 22%. It applies to most goods and services. 

Reduced rates of 4%, 5%, and 10% are also available for certain goods and services. 

Filing Dates  

Typically, the annual corporate income tax returns (IRES and IRAP) must be filed electronically within 11 months of the end of the financial year, except for extraordinary transactions like mergers or demergers. 


The tax rules contain an all-inclusive set of penalty and interest provisions for non – payment and failed to register, with the amounts typically determined based on the specific breach (above particular thresholds, tax violations are criminal offenses). 

The Italian Data Protection Authority (Garante per la protezione dei dati personali) is an autonomous institution established to protect primary rights and freedoms related to the processing of personal data and ensure individuals’ dignity. 

Anti-Bribery & Anti-Corruption Law

The Italian Criminal Code administers bribery offenses committed by public officials, private individuals, and legal entities. The penalties include imprisonment and a monetary fine.