Italy

Currency

Euro (EUR)

Payroll Frequency

Monthly

Employer Taxes

30%

About Italy

Italy, a country with a long Mediterranean coastline, has a population of more than 60 million with a rich, historical, and globally popular culture in arts, architecture, food, and music. Its major tourist attractions include cities such as Rome, Venice, and Florence, which are amongst the oldest cities in the world. It is home to popular landmarks such as the Vatican and various architectural sites such as the Coliseum, the Leaning Tower of Pisa, and the Basilica. The political climate of the country is currently a little tense given the existence of a caretaker government as Italians await new elections. A power struggle between the populist coalition which won the March elections and the pro-EU politicians has resulted in a standoff with the government, with Italy’s president rejecting the populist choice for finance minister.

Company Formation Services in Italy

Aadmi makes company setup services in Italy easier and simpler. It is the process of incorporating a business with the Italian Business Register (Registro delle Imprese), selecting the appropriate structure (sole proprietorship, partnership, or limited company), and maintaining complete adherence to Italian business legislation. The majority of entrepreneurs choose a limited company in Italy because of its legal protection, legitimacy, and convenience in management.

Thanks to our expert advice, establishing your business in Italy is seamless, keeping you compliant and growth-focused.

Company Types

Limited Company (Società a Responsabilità Limitata – S.r.l.)

A Limited Company (S.r.l.) in Italy is a popular corporate form for small to medium-sized enterprises. It is a distinct legal entity from shareholders and provides limited liability. It must have a minimum of one director and one shareholder. The shares cannot be listed on the open market, and ownership tends to be tightly held. The minimum share capital for an S.r.l. is €1, though it is common to opt for a standard capital of €10,000 in order to ensure easy operation and credibility.

Branch (Sede Secondaria)

Foreign businesses can open a branch within Italy to carry out operations. A branch is not considered a distinct legal entity but an extension of the mother company. The foreign mother company is liable for all the debts and obligations of its Italian branch. Appoint a legal representative in Italy and register the branch at the Italian Business Register (Registro delle Imprese).

Partnership (Società di Persone)

Foreign and Italian investors can create a partnership to conduct business activities in Italy. There are various forms of partnership, such as the general partnership (S.n.c.) and limited partnership (S.a.s.). Profit, loss, and liabilities are distributed among partners in accordance with the partnership agreement. Such firms are not legally distinct from their partners, and liability can be unlimited based on the form. Alliances enable foreign firms to partner with local firms and enjoy mutual resources and networks.

Incorporation Requirements

Paid Up Capital

For an S.r.l., the minimum paid-up capital is €1. Contributions of no less than €10,000 are, however, advisable in order to prevent certain operating constraints. For an S.p.A. (public limited company), a minimum of €50,000 should be used as the minimum capital.

Foreign Percentage Ownership

Italy permits 100% foreign ownership of domestic companies. Foreigners can own a 100% S.r.l. or S.p.A. and are on an equal footing with domestic investors if incorporated under Italian law.

Local Director

Local directorship is not required in Italy. Directors may be of any nationality and live outside Italy. Having a local representative can, nonetheless, make administrative tasks and contact with Italian authorities simpler.

Corporate Secretary

Italy does not have a legal requirement to have a corporate secretary. But one or more directors must be appointed, and one of them can be assigned to carry out the secretarial functions in addition to his or her duties as director.

Local Office Address

A registered office address in Italy is required for incorporation. This must be a physical or virtual address that can accept official correspondence and legal documents, and it will be the registered place of the company in the records of the Chamber of Commerce.

Incorporation Documentation

What Are the Company Incorporation Documents to Submit?

Articles of Association (Statuto)

Memorandum of Association (Atto Costitutivo)

Identification documents and tax codes (Codice Fiscale) of shareholders and directors

Company name and purpose of business

Registered office in Italy for legal purposes

Statement of share capital

Appointment of company officers

Notarial deed of incorporation

Registration form for the Chamber of Commerce

Application for the VAT number

Incorporation Process

Register and Reserve the Company’s Name

There is no formal name reservation process in Italy. The suggested process, though, is that the proposed name be distinctive and not similar to names of already registered entities. This can be confirmed through the Business Register (Registro delle Imprese).

Choose Filing Method

In Italy, incorporation has to be carried out by a public notary. The notary prepares and signs the incorporation deed and electronically files it with the Business Register. The process would take 7–14 business days, subject to the quality of documents and translations, if necessary.

Prepare Incorporation Documents

The public notary needs:

Draft of Articles and Memorandum of Association

Tax codes of shareholders and directors

Company structure details

Shareholding and governance details

Proof of contribution of capital or bank deposit

Classification of business activity (ATECO code)

Chamber of Commerce

The Chamber of Commerce or Camera di Commercio is the central registrar for businesses in Italy. It is obligatory for all businesses to be registered with the local Chamber of Commerce and to receive a company registration number (REA), which is necessary for legal operations.

Bank Account

After the company is formed, it is also necessary to open an Italian business bank account. Banks can ask for:

Incorporation documents

Company tax code

Document of registered office

Directors’ and shareholders’ identification

KYC compliance documents

Opening a corporate bank account in Italy may take time, with many banks needing to be visited in person and documentation to be translated. Some major banks are UniCredit, Intesa Sanpaolo, BNL, and Banco BPM.

Statutory Registrations

Agenzia delle Entrate (Revenue Agency)

This is the Italian tax office. All companies are required to register with the Agenzia delle Entrate in order to receive a VAT number (Partita IVA), tax code (Codice Fiscale), and meet all direct and indirect taxes.

Value Added Tax (VAT)

The company must be registered for VAT prior to initiating business activities. There is no minimum; registration must be done upon incorporation. The normal VAT rate in Italy is 22%.

INPS (National Social Security Institute)

Registration at INPS is compulsory for every company that hires staff. It deals with pensions, unemployment allowance, maternity, and other social security benefits.

INAIL (National Institute for Insurance against Work Accidents)

Companies have to register with INAIL to include occupational damage and disease coverage for the employees.

Workplace Pensions (Trattamento di Fine Rapporto – TFR)

Italy lacks mandatory workplace pension plans such as those in some nations. But employers are required to offer severance pay (TFR), which is accumulated during an employee’s tenure. The employees can opt to transfer these funds to a complementary pension plan (Previdenza Complementare).

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Employment Relationship

• Permanent Employment

Employment contracts for an indefinite period are the most common type of employment relationship allowed by the labor legislation of Italy. Unless explicitly stated otherwise, labor agreements are considered to be for an indefinite period. Such contracts continue until either the employer or the employee lawfully terminates them. Such contracts are protected against unfair dismissals.

• Fixed-Term or Specific-Purpose Contracts

The labor law of Italy stipulates that permanent employment contracts may be drawn in writing, but it is not mandatory. Permanent contracts are the default form of employment relationships. There is, however, certain information (specified by statute) regarding the employment relationship that the employer must provide to the employee in writing within 7 days of the beginning of the employment relationship. Employers may fulfill the written information requirement by providing the prospective or onboarding employee with the applicable regulatory references, collective bargaining agreement, or corporate agreement. Fixed-term and part-time employment contracts must be concluded in writing. Employers can include a non-compete clause in employment contracts to prevent former employees from disclosing information acquired during their tenure or engaging in competitive activities after the employment relationship has concluded. This must be in writing, and must be limited to specific purposes, time, and location. The duration of this restriction must not exceed 5 years in case of managers, and 3 years in case of other employees. Employers must pay compensation to employees for the duration.

• Temporary Employment Contratcs

Italian labor law permits employers to hire temporary workers through registered employment agencies under a temporary work supply contract. These contracts are allowed when permitted by the applicable national collective agreement, for temporary roles outside the company’s usual activities, or to replace absent employees. However, hiring temporary workers is prohibited to replace striking employees, during suspensions or reduced hours of permanent staff, or for roles requiring special medical supervision or involving particularly hazardous work. The user company is jointly and severally liable for the obligation to provide remuneration and the corresponding contribution obligations not fulfilled by the supplier company The temporary work supply agency hires its workers under an employment contract for temporary work, either for a fixed-term or indefinitely. The temporary work contract is stipulated in writing, and a copy is provided to the worker within 5 days of starting work at the user company, with the following information: Reasons for using the provision of temporary work services Name of the employer Duties to which the worker will be assigned and the relative classification Probationary period and its duration Place, time, and economic and regulatory treatment due Start date and the end of the work activity Any security measures necessary in relation to the type of activity Temporary workers are paid a salary no less than that to which employees of the same level of the user company are entitled.

Probationary Period

Employment relationships in Italy may begin with a probationary period. Per the Italian Civil Code, any probationary period must be stipulated in the written contract or letter of employment. Once the probationary period has been completed, the contract is considered to be for an indefinite period, and the probationary period counts toward the employee's seniority. The probationary period can last for a maximum of 6 months for managerial employees and 3 months for all other employees. Maximum probationary period lengths may differ depending on the industry or the applicable collective bargaining agreement. Effective January 2025, new rules apply for probation in fixed-term contracts where the duration of probationary period is set to 1 day of probation for performance of 15 days of work. In any case, the duration of the probationary period cannot be less than 2 days nor more than 15 days for employment relationships lasting no more than 6 months, and 30 days for those lasting more than 6 months and less than 12 months. During the probationary period, either of the parties may end the employment relationship without notice or severance.

Working Hours

Working time is defined by the labor law of Italy as "any period during which the worker is at work, available to the employer, and in the exercise of their activity or duties." The law sets a standard workday at 8 hours, and, based on a 5-day work week, a full work week is 40 hours. Collective agreements can set shorter duration. Any hours over 40 per week are considered to be overtime. Employees have the right to a rest period of at least 24 consecutive hours every 7 days, usually coinciding with Sunday, but numerous exceptions apply, for example, with regard to seasonal activities, manufacturing operations with continuous cycles, and hospitals. Most collective agreements provide for a premium rate of pay for employees who work on Sunday, as well as a day off in lieu during the week.

Holidays / PTO

• Statutory Holidays

2026

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

2027

January 1 - New Year's Day
January 6 - Epiphany
March 28 - Easter Sunday
March 29 - Easter Monday
April 25 - Liberation Day
May 1 - Labor Day / May Day
June 2 - Republic Day
August 15 - Assumption of Mary
October 4 - Feast of St Francis of Assisi
November 1 - All Saints' Day
December 8 - Feast of the Immaculate Conception
December 25 - Christmas Day
December 26 - St. Stephen's Day

• Paid Annual Leave

Under the Constitution, employees in Italy are entitled to paid annual leave from the first day of their job, and this entitlement cannot be waived. The labor law stipulates that employees are entitled to at least 4 weeks of paid annual leave. At least 2 weeks must be taken in the year the leave was accumulated, and the other 2 weeks can be accumulated and used in the next 18 months after the year of accumulation ends.

• Sick Leave

In Italy, during an absence from work resulting from illness or accident, employees are generally entitled to 3 days of paid sick leave. Employers pay for the first 3 days of leave. From day 4 of sick leave, employees are eligible to a statutory sick benefit amounting to 50% of regular net pay for the first 20 days and 66.66% from the 21st to the 180th day, up to a maximum continuous absence of 180 days in a calendar year. There are different conditions for different categories of employees. For example, employees of public establishments and pastry shops are entitled to 80% of their remuneration for the entire duration of sickness. Employers pay a statutory sick benefit to their employees and are reimbursed by the National Institute for Social Security (INPS). Effective March 2026, private sector employers are required to report illness start dates, absences, benefits, and related events via Uniemens system to the INPS. Any changes in sickness benefit amounts or duration must be reported. Effective August 9, 2025, employees with oncological diseases, or disabling or chronic diseases, including rare ones, resulting in a degree of disability equal to or greater than 74%, have the right to request unpaid leave for 24 months. This leave can be taken continuously or in installments. Employees must provide a medical certificate issued by a general practitioner or specialist doctor working in an accredited public or private healthcare facility who is treating them.

• Maternity Leave

Female employees in Italy are entitled to at least 20 weeks of compulsory maternity leave. Typically, it is split into 8 weeks before birth and 12 weeks after. In addition to paid leave, a mother can choose to take up to 6 months of unpaid leave. Single mothers are eligible for up to 10 months of unpaid maternity leave following the 20 weeks of paid leave. If an employee decides to forgo maternity leave, her working hours may be reduced to 6 hours per day. Maternity leave is paid at a rate of 80% of their average monthly wage established annually by law for the type of activity carried out and is supported by the National Institute of Social Security (INPS). Employers pay the allowance to employees and then get refunded from the INPS. In the event of termination of pregnancy beyond the third month, an allowance is paid for a period of 30 days.

• Paternity Leave

Compulsory paid leave for fathers and intentional mothers is 10 days. Paternity leave must be used within 5 months of the child's delivery date. Compulsory leaves are paid at a rate of 100% of the worker's remuneration for that time. A daily allowance is paid by the Italian National Institute of Social Security (INPS). Adoptive or custodial fathers and intentional mothers are also entitled to paternity leave benefits. Both the compulsory paid leave and the optional leave can now be used in the case of perinatal death of the child. The labor law of Italy allows fathers or intentional mothers to be absent from work for the entire maternity leave period (3 months after the birth or for the amount of unused maternity leave remaining) in the following circumstances: Cases of serious illness or death of the mother Abandonment of the child by the mother When the male worker has exclusive custody In these cases, a father or intentional mother will be granted the same benefits as a mother on maternity leave.

Termination of Employment

• Notice Period

In Italy, upon the termination of an open-ended employment contract, both the employer and the employee are entitled to a notice period unless the agreement is terminated for just cause (a reason that does not allow the continuation of the employment relationship). The duration of the notice period typically varies according to the employee’s length of service and professional level and is established in the applicable collective bargaining agreement. If the decision to terminate a labor agreement comes from employers, they can exempt employees from working during the notice period by providing a corresponding payment in lieu of notice.

• Severance Benefits

When an employment contract is terminated, even for just cause, the employer must pay the following: TFR calculated as the employee's annual salary divided by 13.5 to determine the annual accrual, then the accumulated balance is revalued each year by 1.5% plus 75% of the ISTAT cost-of-living index increase. The TFR must be transferred to the supplementary pension fund chosen by the employee. If the employee has not indicated a supplementary pension fund, the TFR must be transferred to the INPS Treasury Fund. For the years 2026-27, the obligation to transfer the TFR to the INPS Treasury fund applies to employers with 60 or more employees, reducing to 50 or more in the years 2028 to 2031, and to 40 or more starting in 2032 Pro-rata supplementary monthly payments if the employer made such payments during the employment relationship Payment in lieu of unused holidays