Skip to content What is International Transfer?
A stable international transfer to Italy represents a complex operation. It intertwines tax/social security and labor law aspects, requiring careful legal qualification of the process. This insight is based on a simulated real case, characterized by an inbound international transfer with aspects not yet fully defined at the time of the company’s decision.
The objective is not to provide a checklist of administrative requirements, but to outline the regulatory framework. At the same time, we will highlight:
- the criteria for qualifying the international transfer;
- the principles of coordination between legal systems;
- the risks arising from an unstructured approach to international mobility.
The case allows distinguishing a stable international transfer from other forms of global mobility, such as:
- temporary secondments under Article 30 of Legislative Decree No. 276/2003;
- international remote work; or
- international hiring.
The structural and definitive integration of the employee into the Italian company produces legal effects that are radically different from temporary arrangements: the qualification of the operation is the starting point from which all subsequent tax, social security, and labor law assessments derive.
Factual Scenario of the International Transfer
Sempronio is a Marketing Manager employed by a German technology company. As part of a European reorganization, the group decides to carry out a stable international transfer to Italy. Consequently, they place him within the Italian company’s structure with commercial coordination functions for the Southern European market.
The international transfer is conceived as definitive. The employment relationship with the German company is terminated and a new employment contract is signed with the Italian company. Italian law governs this contract, according to the connecting factors of private international law and applicable EU regulations.
The employee intends to transfer their tax residence to Italy. Moreover, they want to settle in the country together with their partner, a Swedish citizen, within the framework of the same international transfer.
Issues Still to Be Defined in the International Transfer
At the time of the company’s decision, uncertainties remain regarding:
- Determination of tax residence in Italy under Article 2 of the TUIR (Presidential Decree No. 917/1986) in the context of an international transfer;
- Coordination of social security systems between Germany and Italy under Regulation (EC) No. 883/2004, in relation to the international transfer;
- Identification of the applicable law to the new employment relationship under Regulation (EC) No. 593/2008 (Rome I);
- Residence and mobility profiles of EU/EEA citizens under Directive 2004/38/EC during the international transfer.
No formal corporate policies have been adopted regarding inbound international transfers, nor structured procedures for managing the tax and social security impacts related to the permanent integration of foreign personnel in Italy.
Legal Qualification of the International Transfer
A stable international transfer cannot be considered a mere internal organizational choice within the group. Its legal qualification directly determines the tax, social security, and labor law profiles.
Once the stable nature of the international transfer is established, the rules on cross-border secondments and related exceptions regarding applicable law and social security are excluded, with direct consequences on taxation and contributions.
Furthermore, determining tax residence in Italy is central. The alternative criteria of Article 2, paragraph 2, TUIR apply: registration in the civil registry, domicile, or residence in the state for most of the tax year.
This assessment must, however, be coordinated with the Italy-Germany Double Taxation Convention, particularly Articles 4 (residence) and 15 (employment income), and aligned with the OECD Model principles. Incorrect qualification of the international transfer may result in double taxation or tax disputes.
Social Security Profiles
Under Regulation (EC) No. 883/2004, for work carried out permanently in a single Member State, the legislation of that state applies (Article 11, paragraph 3, letter a), with consequent contribution to the Italian social security system in the case of an international transfer. Even in this context, the classification of the international transfer as stable is crucial.
It is also necessary to verify the application of the connecting factors under the Rome I Regulation and the possible operation of mandatory employee-protective rules, which may affect contractual autonomy, in the context of the international transfer.
Risks and Compliance
From the analysis above, it is clear that the absence of prior legal qualification and structured internal procedures may generate significant risks: double taxation, incorrect contributions, labor disputes, administrative liability, and compliance issues related to the international transfer.
A stable international transfer must be managed as a legally complex operation, requiring integrated analysis across national and EU regulatory levels.
Integrated Approach to Global Mobility and the International Transfer
A stable international transfer to Italy is not merely an internal organizational decision, but a complex operation involving multiple legal systems and regulatory levels.
We defina as closely interdependent:
- proper qualification of the international transfer;
- determination of tax residence, coordination of social security systems;
- identification of the applicable law to the employment relationship.
Fragmented management increases the risk of interpretative inconsistencies and operational challenges.
Engaging a specialized global mobility firm allows companies to:
- Anticipate tax and social security risks related to the international transfer;
- Ensure proper coordination between domestic legislation, EU law, and double taxation conventions;
- Prevent cases of double taxation or undue contributions arising from the international transfer;
- Guarantee employer compliance in labor and social security matters;
- Structure coherent and replicable corporate policies for future international transfer operations.
Global mobility, especially in the context of stable international transfers, requires an interdisciplinary vision integrating tax, labor law, social security, and EU law expertise. Only through specialized and coordinated advice can an international transfer be transformed from a potential source of risk into a strategic tool for the growth and internationalization of the group.
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