Do I Need a Local Entity to Hire in Italy?

In Italy, a "local entity" typically refers to a recognized presence that allows you to act as an employer; this can be a subsidiary, branch office, or a registered permanent establishment. This setup enables you (or a provider acting on your behalf) to be recognized locally and take on the payroll and employment obligations required by Italian law.

Without establishing a local entity, you generally cannot register as an employer, manage mandatory social security processes, run local payroll with the necessary withholdings, or issue compliant employment terms. Italy's National Social Security Institute (INPS) outlines the responsibilities for paying social security contributions, which are fundamental to being an employer in Italy.

What is Required to Employ Someone in Italy?

• Local employing entity required to directly employ? Yes (you need a local entity to register as an employer)
• Payroll registration required? Yes (must register with the Agenzia delle Entrate)
• Withholding/tax remittance required? Yes (mandatory payroll withholding applies)
• Social contributions required? Yes (employer must pay contributions to INPS)
• Local employment agreement required? Yes (written contracts are standard in Italy)
• Mandatory benefits to budget? Yes (statutory leave, social security, and other entitlements)
• Works council/collective agreements considerations? Often (many sectors are influenced by collective agreements)

Best Options If You're Hiring in Italy

Can I Hire Contractors Instead of Setting Up an Entity?

Yes, but you should proceed with caution.

Hiring contractors in Italy can be a viable option, but misclassification risks exist if the contractor's work resembles that of an employee. Italian labor laws provide strong protections for workers, and authorities may scrutinize the nature of the relationship.

• Ensure the contractor operates independently and is not integrated into your business.
• Be cautious if the contractor works exclusively for you or if you control their work hours and methods.

How Long Does Entity Setup Take And What Does It Cost?

Typical entity setup timeline: It often takes 4–8 weeks to set up an entity in Italy, depending on the type of entity and required registrations.

Ongoing cost categories (entity route):

• Accounting, bookkeeping, and statutory filings: Estimated €300–€800 per month ($320–$850)
• Payroll provider: Estimated €20–€60 per employee per month ($22–$64)
• Employer registrations and recurring compliance: Varies by complexity
• Corporate tax filings and annual reporting: Estimated €1,500–€4,000 per year ($1,600–$4,300)

EOR cost components (no-entity route):

• A per-employee EOR service fee (from $399 p/month with Playroll)
• Pass-through statutory costs (e.g., employer social security contributions)
• Any optional benefits you choose to provide beyond statutory minimums

How an Employer of Record Can Help You Hire in Italy

Hiring in Italy can be complex, but it doesn’t have to require setting up a local entity or taking on long-term overhead. With an Employer of Record like Playroll, you get a simple, predictable way to hire compliantly while keeping costs transparent and under control. We help you:

• Hire employees in Italy quickly without establishing a local entity, eliminating incorporation costs and ongoing administration.
• Stay fully compliant with local payroll, tax, and employment regulations with Playroll’s managed payroll services.
• Control your total employment costs, with a clear monthly EOR service fee (from $399 per employee).
• Focus on growing your business, while we manage contracts, payroll, compliance, and labor law obligations end to end.
• Scale up or exit the market easily, without the financial or legal burden of closing a local entity.