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Global Payroll Team
Written by Global Payroll Team
Last updated May 1, 2026
Expert Reviewed
Payroll in Italy
EOR in Italy
PEO in Italy

Italy map

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Mercans offers complete payroll, PEO and HR services in Italy

One of the key economies within the Eurozone, Italy presents a strategic gateway into Europe with its extensive transport network and strategic ports. Italy also remains one of Europe’s largest manufacturing economies and is particularly attractive for its skilled workforce, diversified industrial base, and strength in medium-tech and high-value manufacturing.

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Doing Business in Italy

Italy continues to support business investment through innovation, vocational training, competence centers and digital transformation initiatives. Industry is supported by strong regional manufacturing clusters and a broad ecosystem of small, medium and multinational enterprises.

Entity Registration and Incorporation Requirements

Setting up a new business or expanding an existing one in Italy is straightforward. Choose how your company operates from a range of entity types that suit your individual circumstance.

Banking

Banking hours vary by institution and branch, but many banks commonly operate Monday to Friday during standard daytime business hours.

Working Week

The standard working week in Italy is generally 40 hours, usually worked from Monday to Friday, although collective agreements may provide for shorter contractual hours.

Labor Law

Italian employment law is governed by the Civil Code, the Workers’ Statute, Legislative Decree No. 66/2003 on working time, and extensive national collective bargaining agreements. Collective agreements play a major role in setting pay, working time, notice and many other employment conditions.

Main Industries

Manufacturing, machinery, automotive, fashion, food and beverage, pharmaceuticals, tourism, aerospace and electronics

GDP Growth

0.7%

Dates & Numbers

dd/mm/yyyy

Official State Name

Italian Republic

Population

58.94 million

Capital

Rome

Major Languages

Italian

Currency

Euro (EUR)

Internet Domain

.it

International Dialing Code

+39

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Italy
Florence, IT
8:19 am, May 14, 2026
14°C
few clouds
87 %
Wind Gust: 0 mph
Clouds: 20%
Sunrise: 5:51 am
Sunset: 8:31 pm

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Payroll in Italy

Mercans provides a leading and comprehensive outsourced payroll service in Italy as one of the largest payroll companies in Italy. Our experienced Italy payroll team combines expertise with smart payroll technology to ensure the secure and efficient management of your payroll needs. We offer a self-service portal that allows employees to manage various HR tasks in a secure online environment, reducing the need for HR assistance and streamlining the process.

In addition to storing and accessing payslips, the portal provides a customized interface for resolving payroll inquiries, filling out data for annual tax documentation or other documents to be prepared, requesting time off, managing business trips, or settling travel expenses. As for payroll in Italy, we streamline complex and time-consuming payroll processes such as monthly payroll reporting, year-end tax and social security compliance, and statutory filings by managing the administrative aspects and the end-to-end payroll services for you.

In our role as your dedicated payroll provider, we are able to answer all your payroll questions in real-time. Our services are tailored to meet the needs of your business so you can spend more time on other business tasks.

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Payroll

Pay and work conditions for the majority of Italian employees are set by collective agreements. Italy does not have a general statutory national minimum wage, and minimum pay rates are usually determined by the applicable national collective agreement.

It is acceptable to provide employees with online payslips

Payslip

Payroll reports must be kept for 5 years

Reports

Employees are entitled to at least 4 weeks of paid annual leave

Annual Leave

Paid sick leave entitlement and employer top-up rules vary by law and applicable collective agreement

Sick Leave

5 months of paid maternity leave and 10 working days of paid paternity leave

Maternity & Paternity Leave

Notice periods vary by collective agreement, seniority and employee category

Employee Termination

13 monthly salaries; 13th paid in Dec.

13th month salary

There is no general statutory minimum rate of pay. Employers usually set minimum wages for each contractual level in the relevant national collective agreements

Minimum Wage

Overtime payment must be more than the regular rate and is set by the applicable national collective agreement

Overtime

Employees are entitled to severance payment Trattamento di Fine Rapporto (TFR), which accrues during employment and is paid on termination in accordance with the applicable rules

Severance Pay

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Employer of Record (EOR) in Italy

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Mercans’ Employer of Record (EOR) services in Italy provide a compliant and efficient solution for companies seeking to expand their global presence. By utilizing Mercans’ EOR in Italy solutions, you can expand your business’s global presence without setting up a legal entity or subsidiary. Our employer of record services simplifies the hiring, onboarding of your remote teams, managing their payroll and benefits, etc., in a compliant manner.

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Our international network simplifies the process of expanding globally for you. Mercans is also regarded as a highly trustworthy, efficient, and top EOR provider in Italy. Through Mercans, you have access to the best talent at all levels of experience.

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Mercans’ local network and global infrastructure allow it to perform activities such as hiring, managing contracts and payrolls, onboarding, and employee record management, so you can focus on your organization’s core business goals.

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PEO in Italy

Mercans’ Professional Employer Organization (PEO) services in Italy offer a flexible and cost-effective solution for companies seeking to establish a local presence and manage their workforce without the need for legal entities or subsidiaries. By outsourcing HR responsibilities to Mercans’ PEO in Italy, companies can reduce the burden of administrative tasks and focus on what they do best. With a team of experts and cutting-edge technology, Mercans is leading the way in revolutionizing HR management in Italy.

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Tax and Social Security

Individuals are subject to national income tax, regional income tax and municipal income tax. Social security contributions are due from both employers and employees. The employer is required to register with the Italian Social Security Administration.

Tax

Tax liability is computed on a progressive basis and both Italian residents and non-resident individuals may be subject to tax in Italy on different bases. Tax residents are generally liable to pay income tax on worldwide income, while non-residents are generally taxed on Italian-source income.

24%

Corporate Income Tax

43%

Personal Income Tax

N/A

Sales Tax

22%

VAT

Social Security

Social security contributions in Italy vary by sector, employee category and applicable scheme. For many employees, the total burden is broadly around 40% of gross compensation, split between employer and employee contributions, with the employer typically bearing the larger share.

40%

Social Security Rate

30%

Social Security Rate for Employers

9% to 10%

Social Security Rate for Employees

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Employment Law

Probation periods are generally determined by the employment contract and applicable collective agreement rather than by a single statutory six-month rule. Employers above certain thresholds are also subject to obligations regarding the hiring of workers belonging to protected categories, including persons with disabilities.

Employment Agreement

Employees may work under indefinite-term or fixed-term contracts, as well as other forms of employment permitted by Italian law and collective agreements. Contract terms, renewals and specific conditions are subject to statutory rules and the applicable collective agreement.

Working condition

Employees should not work more than the legal maximum average working time and are generally entitled to a rest break after six hours of work. Employers also have extensive obligations in relation to health and safety at work.

Leaves

Employees are entitled to at least four weeks of paid annual leave per year. There are also additional leave and permit entitlements for family, care and other protected circumstances under law and collective agreements.

Employment termination

Employers must not dismiss or discriminate against employees because of protected rights such as trade union membership or activities. Termination rules in Italy are formal and depend on the reason for dismissal, the employee’s status and the applicable collective agreement.

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Varies

Minimum notice period for terminating an employee

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11

Total number of public holidays

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40

Working hours per week

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3 days

Total number of days for Compassionate & Bereavement Leave

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Immigration

Foreign nationals who wish to renew their residence permit should file the renewal application before the permit expires, in line with the rules applicable to their permit category. Non-EU nationals coming to work in Italy generally need a work visa and, once in Italy, a residence permit for work purposes.

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Residency permits

Individuals who enter Italy for work are generally required to obtain a residence permit for work purposes after arrival. For salaried work, the visa process usually depends on a prior Nulla Osta issued through the competent immigration authorities. Permit duration depends on the type and duration of the work relationship.

Work Permit Validity

Up to 2 years, depending on the type and duration of employment

Required Documents

signed employment contract, where applicable

the relevant Nulla Osta and supporting copy, where required

passport with sufficient validity and blank pages

passport photographs

completed Italian long-stay visa application form

proof of accommodation in Italy, where requested

proof of financial means and payment of the visa fee, where applicable

diplomas and other qualifying certificates, where relevant

Compliant, reliable, error-free and touchless payroll in Italy

Build the best team and hire top talent compliantly in Italy. Get in touch with Italy payroll outsourcing & PEO specialists for a free consultation!

This document was prepared for informational purposes only. As local laws & regulations keeps on changing. Please consult your tax & legal advisors as well.
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    FAQs

    What is an Employer of Record (EOR) in Italy and how does it work for foreign companies?

    An Employer of Record in Italy legally hires staff on behalf of a foreign business. It manages employment contracts, payroll, taxes, social security contributions and compliance with Italian labour law, allowing the foreign company to engage talent without setting up its own local entity.

    Why should businesses use an EOR instead of establishing a local entity in Italy?

    Using an EOR removes the need to establish a legal entity, which can be time-consuming and costly. It enables quicker market entry, simplifies administration, and ensures that employment, payroll and tax obligations are handled by local-law experts.

    How does payroll outsourcing in Italy ensure compliance with tax and labor laws?

    Payroll outsourcing ensures salaries are calculated correctly, tax and social security contributions are withheld and reported, and all statutory filings are handled in line with Italian law. This reduces the risk of penalties, non-compliance or unexpected liabilities.

    Can an Employer of Record in Italy hire employees and manage work permits for international companies?

    Yes. An EOR in Italy can hire employees for a foreign company and assist with work and residence permit requirements for non-EU nationals. It oversees HR, payroll and immigration-related tasks so the business can concentrate on operations.

    What are the key benefits of using EOR and payroll services in Italy for global expansion?

    Key benefits include fast access to the Italian workforce without entity setup, full compliance with employment and tax regulations, reduced administrative and legal risk, access to local HR and payroll expertise, and flexibility to scale operations while focusing on core business growth.

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