Hiring in Italy as a US Company: What You Need to Know
US companies can hire employees in Italy in one of three ways: setting up a local entity (such as an SRL), using an Employer of Record (EOR), or using Non-Residential Payroll (NRP). Setting up an entity typically takes 4-6 weeks and adds ongoing compliance overhead. An EOR lets a US company hire in days without opening an entity, while NRP lets the US company remain the legal employer while a local partner handles payroll compliance. Italian employment law is shaped heavily by national collective bargaining agreements (CCNL), and total hiring costs typically run 28-32% above gross salary in employer social security contributions, on top of a mandatory severance accrual (TFR) that most US employers have never budgeted for.
Italy offers US companies access to a skilled, well-established talent pool and a strategic base for reaching Southern Europe. It’s also a market where employment terms are shaped as much by industry-wide collective agreements as by national law. It is something that has no real US equivalent and consistently catches American HR and finance teams off guard. This blog covers what US companies actually need to know before hiring their first employee in Italy.
Three ways to hire employees in Italy from the USA
Set up a local entity
Registering an Italian entity, most commonly an SRL (Società a Responsabilità Limitata), gives a US company full control over hiring, banking, and operations in Italy. It’s the right long-term choice for companies planning a significant, permanent Italian presence. The trade-offs: entity setup typically takes 4-6 weeks and requires a minimum share capital (as low as €1 for a simplified SRL, though €10,000 is standard for a full SRL). Beyond setup, an entity brings ongoing obligations, Italian corporate tax filings, statutory accounting, and a registered local address, regardless of how many people you employ.
Use an Employer of Record (EOR)
An Employer of Record solution in Italy lets a US company hire employees without opening any entity at all. The EOR becomes the legal employer on paper, handling the employment contract, payroll, tax withholding, and statutory benefits, while the employee works exclusively for the US company day to day. This is by far the fastest route into the Italian market. Most EOR hires can be up and running within days, not weeks or months. For a first hire, a small team, or a company still validating the Italian market, this is typically the lowest-risk and lowest-cost path.
Use NRP (Non-Residential Payroll)
Non-Residential Payroll lets a US company register as a foreign employer and run fully compliant Italian payroll without opening a local entity. Unlike an EOR, NRP doesn’t replace the US company as the legal employer. The company keeps full control of the employment relationship while a local partner manages payroll and compliance. This is a strong fit for companies that want to remain the direct employer of record themselves, without taking on the administrative weight of Italian payroll and tax filings in-house.
Italian employment law essentials for American employers
Italian employment law starts from a very different baseline than US at-will employment, and much of what governs a hire comes from outside the national labour code itself. A few essentials every American employer needs to know:
- CCNL collective bargaining agreements: Nearly every industry in Italy is covered by a national collective bargaining agreement (Contratto Collettivo Nazionale di Lavoro) that sets minimum salary levels, working hours, notice periods, probationary periods and job classifications. These apply automatically based on the company’s business activity, whether or not the employer negotiated them directly, and often override or supplement general statutory minimums.
- 13th (and often 14th) month salary: Most Italian employment contracts include a mandatory 13th-month payment (tredicesima), typically paid before Christmas, and many CCNLs also require a 14th-month payment (quattordicesima) in the summer.
- TFR (severance accrual): Employers must accrue a portion of each employee’s salary annually into a severance fund (Trattamento di Fine Rapporto), paid out when the employment relationship ends for any reason. This can include resignation, termination, or retirement. It has no direct US equivalent and needs to be factored into total employment cost from day one.
- No at-will termination: Dismissing an employee requires a valid justified reason and adherence to procedural requirements set by law and by the applicable CCNL. Missteps can expose the employers to compensate claims and, in certain circumstances, reinstatement remedies.
- Minimum 4 weeks of paid vacation: Employees are entitled to at least 4 weeks of paid annual leave, with many CCNLs providing additional paid leave and leave allowances beyond the statutory minimum.
- Probationary period: Employment contracts commonly include a probationary period, the maximal duration of which is generally determined by the applicable CCNL and employee classification. During probation, either party may terminate the employment relationship more easily than after successful completion of it.
- Fixed-term employment: Fixed-term contracts are permitted but are subject to specific statutory rules, duration limits, and renewal requirements. Employers should carefully assess whether a permanent or fixed-term arrangement is appropriate before hiring.
Hiring costs in Italy for American employers
Budgeting for an Italian hire means going well beyond employee’s gross salary. On top of the offered salary, American employers should plan for:
| Cost component | Typical range |
| Employer social security contributions | 28-32% of gross salary |
| TFR severance accrual | around 7% of annual gross salary (accrued throughout employment and generally paid upon termination of employment) |
| 13th/14th month salary | Built into annual compensation, per CCNL |
| Entity setup (if applicable) | From €1-€10,000 minimum capital, plus legal/admin fees |
| Payroll and compliance management | Varies, bundled into EOR/NRP fees or handled in-house |
The combination of employer social security contributions and the TFR accrual is what most consistently throws off US cost models, since together they add roughly a third or more on top of gross salary, before even accounting for the 13th and 14th month payments most CCNLs require.
Do you need an office to hire in Italy?
Short answer: no. A physical office is not a legal requirement to employ someone there. Many US companies assume they need local office space before they can hire, but an EOR or NRP arrangement allows fully remote or distributed hiring without any physical presence.
That said, an office can matter for specific reasons: building brand visibility in the Italian market, supporting in-person collaboration as a team grows, or meeting client expectations in certain industries. If your goal is simply to hire one or a small number of employees, office space is a business decision rather than a legal requirement.
How Parakar helps American companies hire in Italy
Parakar is a European Employer of Record, payroll, and HR services provider active across 10 EU markets, including Italy. For US companies, that means:
- Employer of Record services to hire compliantly without opening an entity.
- NRP support for companies that want to remain the legal employer while offloading payroll compliance.
- Local contracts and payroll aligned with Italian employment law and the correct CCNL from day one.
- HR guidance on TFR, 13th/14th month payments, and termination procedures.
Whether the plan is one specialist hire or a growing Italian team, Parakar handles the compliance so the US side of the business can focus on the work itself. Ready to hire in Italy? Talk to our experts about compliant hiring options, from Employer of Record to Non-Residential Payroll, without opening an Italian entity.
Frequently Asked Questions
How can a US company hire employees in Italy? A US company can hire in Italy by setting up a local entity, using an Employer of Record (EOR), or using Non-Residential Payroll (NRP). An EOR is typically the fastest option, since it doesn’t require opening an entity.
How long does it take to set up a company in Italy from the USA? Registering an Italian entity such as an SRL typically takes 4-6 weeks, including incorporation, registration, and opening a local business bank account.
What does an Employer of Record do for an American company hiring in Italy? An EOR becomes the legal employer of a worker in Italy on the company’s behalf, managing the employment contract, payroll, tax withholding, and statutory benefits, while the employee works exclusively for the US company.
Does a US company need an office to hire employees in Italy? No. A physical office is not a legal requirement to employ someone in Italy. US companies can hire remotely through an EOR or NRP arrangement without any local office space.
What are the real hiring costs in Italy for a US employer? Beyond gross salary, US employers should budget for employer social security contributions of roughly 28-32%, a TFR severance accrual of around 7% annually, and 13th (and often 14th) month salary payments required under most collective bargaining agreements.
Get in touch
