Hire Contractors in Italy

The share of people with high-level qualifications in Italy is expected to increase from 25% in 2022 to 34% in 2035. This is great news for businesses constantly looking for opportunities to hire contractors in Italy.

An international contractor can bring a new perspective to your business. You can access all the required skills and expertise without a long-term commitment. 

When you hire employees, you spend a lot of time and resources onboarding, training, and paying for their statutory benefits. 

But that’s not the case with Italian contractors. They are already skilled in their respective fields, so you do not have to invest extra resources after training them. Also, you do not have to pay them monthly salaries or manage their taxes, which makes it much easier for you to run your business. 

Despite these benefits, companies can still face a few challenges when hiring contractors in Italy. Let’s understand these obstacles and how you can solve them with Skuad’s global AOR solutions.

How to Hire Contractors in Italy

Direct hiring an independent contractor from Italy is a common approach most businesses follow. This means you will first have to set up a subsidiary, complete all the business registration paperwork, and begin sourcing and onboarding candidates. 

This process is only suitable if you plan to conduct business in this country for the long term. However, it is not always advisable to follow this approach when hiring for short-term projects. 

First, setting up your business entity can take time; sourcing the required talent can take even more time and money. 

An alternative is to hire remote contractors in Italy with contractor management software like Skuad. These contractors will handle all the tasks related to contract workers throughout the employment lifecycle. 

These include simplifying invoices, managing assignments, and analyzing worker performance.

Hiring Contractors through Skuad AOR

Utilizing Skuad as your AOR partner is the best and most cost-effective way to hire a contractor in Italy. 

Skuad features some of the most unique capabilities that streamline the hiring process. They include,

• Locally compliant contracts are vetted by our in-house team of legal experts.
• Processing accurate and timely payments to all your contractors.
• Protecting your company’s IP under the relevant laws of Italy
• Bullet-proof privacy and data security to keep your sensitive business information intact
• Managing expense approvals, reimbursements, and more.

How to Pay Contractors in Italy

You can pay your Italian contractors in cash, paycheques, or cards. Direct payment processing usually allows for more autonomy and transparency throughout the process. 

However, to ensure efficient processing, you must follow all tax regulations thoroughly and understand the currency exchange rates.

A better way to pay an independent contractor in Italy is through a contractor management platform/AOR like Skuad. 

Skuad’s global payroll solution features multiple capabilities, like

• Automated invoicing and payment processing
• Built-in payroll compliance
• Payment in 100+ currencies
• Expense management and real-time reporting.

All these can help you streamline the entire contractor payroll processing journey, if not more.

Hiring Contractors Directly vs Hiring Contractors via Skuad

Let’s understand the difference between direct hiring and hiring contractors with Skuad in a more detailed manner.

Cost of Hiring Contractors in Italy 

Usually, an independent contractor in Italy earns up to €73,883 a year, or €36 an hour. But this is just a tentative figure. You can’t expect every new hire to charge you the same amount, regardless of their experience level or industry. 

A self-employed professional who has worked in a particular industry, such as healthcare, for a very long time already has a proven track record of experience. Therefore, they will charge you more than someone who has just started freelancing. 

Consider all these factors before hiring contractors in Italy. This will help you better adjust your budget.

How to Convert a Contractor into an Employee in Italy 

Switching from a 1099 worker (contractor) to a W2 employee is relatively straightforward. All you need to do is,

• Understand and follow Italy's employment laws thoroughly. One small example is to provide your full-time employees with a minimum of 22 paid annual leaves.
• Review the changes that need to be made to your current hiring strategies. 
• Talk to your contractor about this change and negotiate the work hours, salaries, and compensation.
• If both parties agree, draft a formal employment contract. 
• After the labor agreement has been signed, begin the background check process.
• Add the new contractor-turned-employee to your company’s payroll if everything is good to go.

Challenges of Hiring Contractors in Italy

Here, we have highlighted three unique challenges that businesses should be aware of before they begin hiring Italian contractors. 

1) Risk of Misclassification of Workers 

Italian contractors and employees are not the same. The main and most important test for determining an individual's employment status is the existence of subordination. 

Independent contractors are not subject to any executive power, control, and discipline of the employer as an employee. You must be very careful to maintain this distinction when engaging such workers. 

If a misclassification of workers occurs (intentionally or not), businesses will face severe penalties from the labor authorities of Italy. These penalties include,

• 90% fine on the amount due for filing an unfaithful tax return.
• 20% fine on the amount due for withholding tax.
• 100% of the amount due for social security + interests
• Penalties amounting to EUR 10,000 to EUR 50,000 for unpaid pension contributions worth EUR 10,000.
• Three years of jail time + a fine of EUR 1,032 for unpaid pension contributions over EUR 10,000.

The best way to avoid this misclassification of workers is to hire contractors in Italy with contractor management software. But it can be quite expensive if you are on a tight budget.

2) Tax Regime for Self-Employed Individuals in Italy

The rules for managing payroll are different for Italian contractors. As an employer, you will not be obligated to register them with the Social Security institution or make the due contributions, as you would for an employee. While you would hope that this will make things easier, it’s not usually the case.

A self-employed person in Italy must follow all the obligations below when rendering services there.

• Register for a VAT number
• Keep all accounting records
• Use the Redditi PF form to file a tax return
• Submit the ISA form when required
• Submit a trade income tax return when required and
• Fulfill all other VAT obligations. 

As their employer, you must ensure that all these steps are completed to avoid any disruption in your business. Also, employers must withhold taxes on the amount they pay to all their employees, self-employed professionals, and occasional self-employed workers. 

For independent contractors, the withholding tax amount is 20%. If the person does not reside in Italy, the amount will increase to 30%.

Complying with all these guidelines is a must when hiring contractors in Italy. However, this process can be quite difficult if you lack the experience or contractor management platforms to help you.

3) Importance of Cultural Knowledge in Italy

One of the unique characteristics of this country is that the Italian culture can vary a lot depending on the region. 

For example, the work culture in northern Italy, like Lombardo and Veneto, is more business-focused and values efficiency highly. In contrast, the attitude of professionals in southern regions, like Calabria, tends to be more relaxed. They are mainly focused on building personal rapport with each other. 

Any international business wishing to hire self-employed professionals in Italy must be aware of these cultural differences. To this end, you can conduct thorough research or even seek guidance from local experts. Without this knowledge, businesses will likely suffer from misunderstandings and miscommunications, which can hamper overall productivity.

Hire Contractors in Italy with Skuad

Skuad has been the preferred choice for numerous businesses when hiring internationally. Thanks to our unified platform, all our clients manage even the most minute aspects of their global hiring process from one place. These include onboarding, payroll, and legal compliance, to name a few. 

Furthermore, with Skuad as your trusted partner, you no longer have to stress about worker misclassification. Our team of legal professionals will help you understand and guarantee adherence to all the country-specific regulations related to employment status. In this way, you can avoid paying legal penalties and fines. 

‍Schedule a demo today and start your global hiring journey with Skuad!

FAQs

How do I employ an independent contractor in Italy?

You can hire an independent contractor directly or through an AOR like Skuad. Most businesses prefer the latter because it is much more cost-effective and allows for a successful hiring process without legal or payroll complications.

Can I hire an independent contractor overseas?

Yes, you can hire an international contractor. This is a great way to expand your business globally and reduce costs usually associated with employees.

What is the difference between an independent contractor and an employee in Italy?

Independent contractors offer paid services to different clients on a project basis. They are not the same as employees and are not eligible for mandatory employment benefits under Italian labor laws. Employees are individuals who work and are a part of your business. They enjoy several statutory benefits like paid leaves, maternity allowances, etc.

How does Skuad help with hiring and paying international contractors?

Skuad’s AOR solution manages the entire contractor onboarding process on your behalf. These include drafting locally compliant contracts, processing payments to contractors in the right currency and at the right time, managing all taxes-related paperwork, and, most importantly, protecting your business against the risk of worker misclassification.

What is the cost of employing someone in Italy?

There is no fixed cost of employing someone in Italy. Before hiring an international worker, you need to consider many variables. For example, if you hire directly, the cost will automatically be higher than hiring through contractor management software/AOR like Skuad.