Cross-Border Remote Work FAQs Italy

Assume that a foreign national employee of a foreign company wishes to work remotely for a period of time in your country performing services exclusively for the foreign company and not interacting with the local market in your country.

Work authorisation

A. Is work authorisation required? If so, please provide a brief description of the type of visa, procedure, processing time, etc.

No work authorisation is required for EU citizens who are free to enter and stay on the Italian territory for work purposes.

With reference to non-EU nationals, Italy officially introduced in April 2024 a new visa category for highly qualified employees performing remote work from Italy under the employment of foreign entities (so-called “digital nomads”).

This visa does not require a work clearance (“nulla osta al lavoro”). The residence permit, upon issuance of an entry visa, is granted for a period not exceeding one year, renewable, provided that:

• the applicant has a subordinate employment or collaboration contract or binding offer;
• the employee has a valid health insurance covering all risks on the Italian territory;
• appropriate documentation regarding living arrangements is issued;
• the applicant proves a minimum annual income;
• a declaration certifying the absence of criminal convictions against the remote worker is provided;
• the applicant holds a university degree or demonstrates relevant professional experience.

The entry visa is issued by the competent Italian Authorities, followed by a residence permit application within eight days from entry into Italy.

In alternative, and only where the digital nomad visa is not applicable, the EU Blue Card may be considered. It allows individuals with specific professional qualifications or a university degree to work in Italy, outside the foreign workers’ entry quota (“decreto flussi”).

The procedure to obtain the  EU Blue Card is as follows (very brief description):

1. University diploma and professional qualification validation;
2. On-line application for “nulla osta” and issuance of it;
3. The “nulla osta” is sent to the Italian diplomatic Authorities of the employee’s country of origin, which will have to issue an entry visa for Italy;
4. Once “nulla osta” and the entry visa are issued, the employer is convened before the Labour Immigration Office “Sportello Unico Immigrazione – SUI” at “Prefettura” together with the employee. To schedule this meeting, it is possible to select the date that better works for the employer and the employee and the meeting may be held also remotely (depending on the involved Office). The meeting is aimed at: i) allowing the employee to have an Italian tax code; ii) signing the contract of stay “contratto di soggiorno”; iii) obtaining the form to request the EU Blue Card by sending the relevant application kit of “Poste Italiane” to “Questura”; iv) obtaining and sending the mandatory communication for employment (the so-called “modello UNILAV”);
5. Filing of the application for the EU Blue Card addressed to “Questura” by way of certified e-mail, using the kit of “Poste Italiane”;
6. After approximately 60 days, the employee is convened before Police for fingerprinting and pictures;
7. After 30/40 days the EU Blue Card should be issued.

The processing time for obtaining the EU Blue Card can be in the region of 90/120 days and can vary, becoming even longer, depending on a case-by-case basis.

Risk of ‘permanent establishment’

B. Is there risk of ‘permanent establishment’ consequences for the foreign company by virtue of the remote worker’s activities?  If so, what are the main factors determining the exposure.

There are possible risks of “permanent establishment” consequences.

By law a permanent establishment is a stable business office by means of which a non-resident entity carries out all or part of its business in the territory of another state.

The main factors determining the exposure to the risk of permanent establishment can be:

• The fact that a permanent establishment can consist of an office of a foreign entity in Italy and so the presence of an individual working remotely from the Italian territory may suffice to deem an office existing;
• An individual acting in the name and on behalf of a foreign entity and who customarily stipulates contracts or operates to stipulate contracts in the name of such entity, without the entity requesting substantial amendments of the stipulated contracts;
• The said individual operating essentially exclusively for the same legal entity.

C. At what point and under what circumstances would the remote worker become subject to local social security and other payroll requirements?  Can such requirements be fulfilled by a foreign company, and if so by what mechanisms?

Preliminarily, we highlight that the 27 member states of the European Union, Norway, Iceland, Liechtenstein, Switzerland and the UK have been invited to enter by 1^st July 2023 into a framework agreement for social security contribution that can allow employers and employees to opt to maintain  social security coverage in the country of the employer when an employee works from home in another country less than 50% of the time (i.e. an employee, working 25% to 49.9% in the country of residence and 50.1% to 75% in the country of the employer, can be covered by social security in the country of the employer). To make use of this framework agreement it needs to file an application for an A1 certificate.

Italy has signed the above-mentioned EU Framework Agreement. However, it is not retroactive and only applies on request.

If the exemption provided above does not apply, assuming that a foreign national employee of a foreign company wishes to work remotely for a period of time in Italy, the principle of “lex loci laboris” applies and social charges must be paid in Italy. Regarding the timing for payment, social security contribution must be paid by the employer to “INPS” – the National Security Body – by the 16th day of the month following the month in which the last pay period, to which the monthly contribution statement refers, expired. The contribution for the assurance against accidents and industrial diseases must be paid to “INAIL” – the National Institute for the insurance against on-the-job injuries – by the employer in advance by the date on which working activity commences. The same rules on anticipated payment apply for the following years of working performance.

The requirements relating to social security contribution and payroll can be fulfilled by the foreign company by way of the appointment of a so-called “fiscal representative” in Italy (usually, a professional or a payroll consultant), so that the latter is provided with a mandate to comply with the mentioned obligations in the company’s name and on its behalf.

Local employment law requirements

D. At what point and under what circumstances does the remote worker become subject to local employment law requirements such as is wage-hour, local holidays, annual leave, maternity leave, disability leave, protection against unfair dismissal, etc.

The employer and the employee have the faculty to identify the law provisions of a country aimed at governing all the aspects of the employment relationship.

However, the law of a foreign country chosen by the parties is not fully applicable if it sets out employment conditions less favourable than those mandatorily granted by the Italian law, which can be deemed prevailing if the employee usually carries out his/her duties in Italy. Furthermore, additional restrictions to the applicability in Italy of a foreign law are prescribed pursuant to the principle of law and order (i.e. “ordine pubblico”) which protects fundamental rights, regardless of the law chosen by the parties.

Consequently, the remote worker becomes entitled to the same working conditions granted to Italian employees in terms of:

1. remuneration (considered globally on the basis of an applicable National Collective Bargaining Agreement), indemnities and relevant contribution (i.e. social charges and assurance against industrial diseases/accidents);
2. working time, rest periods and annual leave, including bank holidays;
3. protection against unfair dismissal (depending on a case-by-case basis and case law references on the matter), when working activity is exclusively performed in Italy or, if the activity is carried out in two different states, when the substantial and prevailing part of the activity is usually performed from Italy (e.g. over a period of 1 year, 70% of activity from Italy and 30% from another country); and
4. mandatory remote work notification to the Labour Ministry through the dedicated online portal, using the standard model within 5 days of the arrangement starting.Remote foreign worker.

E. Are there special requirements governing remote work in your country which would cover the remote foreign worker?

 

Assuming that a smart working agreement is governed by a foreign law other than Italian law, we confirm that the following provisions would also cover the foreign worker:

1. the provisions to guarantee the same remuneration as that granted to Italian employees having the same duties as those assigned to the foreign remote worker,
2. the priority to remote work for caregivers of disabled people and for working parents with minor children,
3. all H&S requisites for remote work (e.g. proper workstation),
4. all H&S safeguards against accidents and industrial diseases for working activity performed outside the company’s premises,
5. the provisions on mandatory rest periods and on the right to disconnection,
6. the mandatory notification on remote working to be served on the competent Italian Authority.

Income tax

F. What is the employee’s exposure to local income tax, and under what circumstances is the foreign employer required to arrange for withholding of income tax?

For income tax purposes, the employee is considered resident in Italy if he/she spends at least 183 days per year in Italy (184 days if the year is a leap year). So, if this condition is met, income from employment must be taxed in Italy and the employer is required to withhold the relevant income tax as tax withholding agent.

According to a memorandum of the Italian Revenue Agency (no. 626/2021) this is confirmed also for remote work, as it needs to take into consideration the place where working activity is carried out rather than the place where remote working activity produces its effects.

Anyway, Italy offers a favourable tax regime for inbound workers (so-called “regime degli impatriati”) which may reduce taxable income by up to 70% for eligible employees.

Double taxation can be avoided in the case of conventions between two countries.

Claim for workplace injury

G. Would the remote worker be entitled to bring a claim for workplace injury in your country?

Yes, considering that, under certain conditions, a remote worker is entitled to all the mandatory protections against risks arising from work performed outside the company’s premises and that an Italian Labour Court would be competent in terms of jurisdiction for all the reasons mentioned at previous points above.

National healthcare system or insurance

H. Would the remote worker be covered under the local national healthcare system or insurance?

Yes, also bearing in mind that, pursuant to the principle of lex loci laboris, the remote worker’s social charges and contribution for assurance against injuries and industrial diseases must be paid to the Italian Authorities.

Amongst the provisions on the matter, by law no. 81/2017 a remote worker is entitled to the protections against the accidents occurred during the journey from home to the place of work, and to come back, when the choice of the place of work is due to objective needs linked to working duties or to the need to reconcile the needs of life and work and corresponds to the criteria of reasonableness.

Data privacy and security

I. Is a foreign employer subject to data privacy and security requirements regarding protection of employee personal information for a foreign employee working remotely in your country?

Yes, this is confirmed also for foreign remote workers.

Foreign remote worker

J. Has there been any litigation or specific law or regulation regarding the foreign remote worker in your country?

No, apart from the provisions on digital nomads and provided that Italy has not adhered to the framework agreement on the payment of social security contribution yet, there are no specific law or regulation relating to foreign remote workers in our system.

Citizenship

K. Would any of the above answers change if the remote worker (a) is a citizen of your country, or (b) engages in activity interacting with the local market?

No, the above indicated answers are confirmed even if the remote worker is an Italian citizen or deals with activities involving interaction with the local market.