DOING BUSINESS WITH ITALIAN COMPANIES

When drafting or negotiating commercial contracts between common law countries and Italy, it’s essential to consider key differences in legal systems. Italian law is civil law-based, often more rigid about formalities and less reliant on implied terms or precedent. Governing law, jurisdiction, dispute resolution methods (such as arbitration vs court proceedings), and language clauses should be clearly defined. Attention must also be paid to contract formation, termination rights, and liability limitations, which may differ significantly from common law norms.
 
For import/export, businesses must comply with EU customs regulations, VAT requirements, product conformity standards, labelling, and consumer protections. Misunderstanding these rules can lead to delays or fines. Local legal guidance ensures contracts are enforceable and business transactions are compliant and effective. 

Operating an Italian company involves ongoing administrative and secretarial obligations that can differ substantially from those in common law jurisdictions. Companies must maintain statutory books, file annual financial statements, and register changes with the Chamber of Commerce. Shareholder and director resolutions often require notarisation or formal filing, and corporate governance is governed by detailed rules under the Italian Civil Code. Tax filings, social security contributions, and periodic communications with public authorities must be handled correctly and on time.
 
These formalities are often more bureaucratic and documentation-heavy than in common law systems. As lawyers familiar with both common law and Italian corporate compliance, we help businesses navigate these requirements, ensuring deadlines are met, governance is maintained, and the company remains in good legal standing with the relevant authorities.
 

Companies operating in Italy are subject to several types of taxation, including corporate income tax (IRES), currently set at 24%, and a regional production tax (IRAP), which varies by region but averages around 3.9%.
 
Despite perceptions, the overall corporate tax burden in Italy is not as high as many expect when compared to other developed economies. Companies must also handle VAT, employee social security contributions, and withholding taxes on dividends, interest, and royalties.
 
Proper tax planning and compliance are essential, especially for foreign-owned entities. With the right structure and advice, businesses can operate efficiently while meeting all fiscal obligations under Italian law.

Foreign employers wishing to operate in Italy must navigate the visa and work permit system for employees from outside the European Union.
 
Typically, a work permit is required for non-EU nationals, with the employer responsible for securing it. This process involves proving that no suitable candidate from the EU is available for the role. Employees may apply for a visa at the Italian consulate in their home country once the work permit is approved.
 
There are several types of work permits based on job type, qualifications, and duration of stay, with the most common being the long-term employment visa. Legal assistance is recommended to ensure compliance.
 

When setting up a business in Italy or hiring Italian employees remotely, understanding employment contracts and social security obligations is essential. Italian employment law is highly protective of employees, with strict rules regarding contract terms, notice periods, and termination. Employment contracts must outline salary, job duties, working hours, and benefits.
 
For social security, employers are required to contribute to Italy’s national pension and healthcare system, which can be a complex and ongoing cost. Additionally, remote workers must be compliant with both Italian tax and labor regulations. Foreign companies must ensure proper registration with social security institutions and comply with Italian employment standards to avoid penalties.