Skip to content As businesses increasingly operate across borders, hiring talent in foreign jurisdictions has become a strategic necessity rather than an exception.
Italy is an attractive market for international employers, offering a highly skilled workforce and access to the broader European market. However, many foreign companies prefer not to establish an Italian subsidiary or branch solely to employ one or a limited number of employees.
Italian law offers several different pathways that may allow foreign employers to hire personnel in Italy without immediately setting up a local entity. Each option involves distinct legal, tax, social security, and operational implications that must be assessed on a case-by-case basis.
At Arletti & Partners, we support international businesses in identifying and implementing the most suitable employment structure for their Italian operations through an integrated legal, tax, payroll, social security, and immigration approach.
This guide provides an overview of the main options available to foreign employers hiring in Italy without establishing a local company.
Social Security representative
One available solution is the appointment of a Social Security Representative in Italy.
The Social Security Representative acts as an intermediary between the foreign employer and the Italian social security authorities (primarily INPS), allowing the management of Italian contribution obligations without the need to establish a local entity.
When it is required
This solution is primarily required where a foreign employer without an Italian establishment (no branch or subsidiary) sends or employs workers in Italy and no applicable bilateral or EU social security agreement applies that would otherwise determine the applicable social security regime.
In such cases, Italian social security obligations cannot be directly managed through an Italian entity or through an exemption mechanism under international agreements, making the appointment of a Social Security Representative necessary to ensure compliance.
This typically depends on:
- the absence of an Italian legal entity;
- the lack of applicable bilateral or international social security agreements;
- the employer’s country of establishment;
- the employee’s nationality and assignment structure;
- the duration and nature of the employment.
This framework is mainly governed by Law No. 398/1987 and Law No. 317/1987, together with relevant international coordination rules where applicable.
A preliminary assessment is always necessary to confirm whether this mechanism is required in the specific case.
Implementation
Although operationally structured, the process involves several legal and administrative steps, including document collection and review, tax identification setup, legalization and translation of corporate documents, drafting of powers of attorney, execution of the mandate, registration with authorities, and activation of payroll and contribution management.
We provide end-to-end support across the entire process, ensuring full compliance and administrative management on behalf of the foreign employer.
Direct hiring by a foreign employer
In certain cases, a foreign company may directly employ personnel in Italy without establishing a local entity.
However, this does not exempt the employer from full compliance with Italian employment, tax, payroll, and social security regulations.
Applicable framework
Employees working in Italy are protected by mandatory Italian labour law provisions, including:
- Collective Labour Agreements (CCNL);
- minimum wage rules;
- working time regulations;
- holiday entitlements;
- termination protections;
- health and safety obligations;
- mandatory social security contributions.
Employer obligations
Foreign employers must ensure compliance with Italian labour, tax, and social security rules, including payroll processing aligned with Italian regulations and CCNLs, IRPEF withholding, INPS contributions, mandatory reporting, and proper employment documentation.
Given the complexity of the framework, a preliminary legal and tax assessment is typically required before implementing a direct hiring structure.
We assist foreign employers in evaluating feasibility and implementing fully compliant direct employment solutions tailored to their operational needs.
Employer of Record (EOR)
Employer of Record (EOR) solutions are widely used by international companies seeking to hire in Italy quickly without establishing a local entity.
Under this model, a local provider acts as the formal employer, while the foreign company retains operational control over the employee’s activities. Employment, payroll, and compliance obligations are largely managed by the EOR provider.
EOR solutions offer advantages such as fast market entry, reduced administrative burden, simplified payroll management, and local compliance support. However, they may also involve higher ongoing costs, contractual limitations, and reduced flexibility depending on the provider.
Although Arletti & Partners does not directly provide EOR services, we support clients in evaluating EOR structures and coordinating with trusted partners to ensure full compliance with Italian legal, tax, and social security requirements.
Permanent Establishment risk
Hiring employees in Italy may, in certain circumstances, trigger the creation of a Permanent Establishment (PE), resulting in corporate tax obligations in Italy.
Key considerations
The assessment is based on Italian domestic law and international tax principles, including the OECD Model Tax Convention, and typically considers:
- the employee’s role and responsibilities;
- authority to negotiate or conclude contracts;
- existence of a fixed place of business;
- duration and continuity of activities;
- overall economic substance in Italy.
Each case must be assessed individually, as similar structures may lead to different tax outcomes.
We provide preventive PE risk assessments and, where needed, support clients with structuring, compliance setup, and ongoing management.
Tax and compliance risks
Hiring employees in Italy entails a wide range of mandatory legal, tax, and social security obligations under Italian regulations.
Employers must ensure full compliance with employment contracts, applicable CCNLs, working time provisions, remuneration standards, and employee protection rules.
From a payroll perspective, obligations include salary processing, annual reporting requirements, and the issuance of employee tax certifications. Social security compliance further requires the correct calculation and payment of contributions to INPS and other applicable funds, together with ongoing reporting obligations.
Given the complexity of the regulatory framework, a structured and coordinated compliance approach is essential to ensure full alignment with applicable requirements and to mitigate operational risk.
Therefore, a proactive compliance strategy is essential to safeguard business continuity and reduce legal and reputational exposure.
At Arletti & Partners, we support foreign employers in managing and ensuring full compliance with all Italian employment, payroll, tax, and social security obligations.
Choosing the right solution
There is no one-size-fits-all solution for hiring employees in Italy.
The optimal structure depends on factors such as number of employees, assignment duration, role, tax implications, operational requirements, and overall business strategy.
At A&P we provide a tailored assessment of each case, integrating expertise in employment law, tax, social security, payroll, immigration, and international mobility.
This allows foreign employers to identify and implement the most suitable and compliant hiring structure in Italy, ensuring both regulatory compliance and operational efficiency in the long term.