Looking to grow your company? Hiring international employees can give you access to cost-effective, skilled talent that will benefit your team.
Hiring from Italy gives you access to a talented workforce. In fact, the talent pool in Italy is not only deep but also highly specialized.As such, this southern European country is an ideal choice if you’re looking to grow your team worldwide.
Of course, you’ll need to understand the costs of hiring in Italy beyond salaries. This includes benefits, bonuses, payroll, and taxation in Italy.
In this article, we’ll break down the cost of hiring talent from Italy and look at how much you should expect to spend per hire.
Italian Hiring Costs
To start, as an employer, you’ll need to fulfill a few basic payment obligations. These include:
- Payroll (gross salaries)
- Taxes payments and withholding
- Statutory benefits
- Paid leave
- Overtime
- Severance pay
To make your hiring offers more attractive to prospective employees, it’s always helpful to include bonuses if possible, or “fringe benefits” like pay-in retirement plans, health insurance plans, meal subsidies, or other extras that go above and beyond an employee’s basic salary.
Required Costs of Hiring an Employee in Italy
Italian Gross Salary
Italy has no official minimum wage. Instead, Italian workers have their wages standardized through collective bargaining agreements.
According to the Istituto Nazionale di Statistica (Istat), the Italian average gross salary in 2021 was €41,081. This figure included social security, tax, and non-cash benefits like holiday and sick pay, as well as travel and training costs.
Italian Work Bonuses
Italy generally observes 13th-month and 14th-month “bonuses”, which they call “tredicesima.” Although often referred to as the Christmas bonus, the tredicesima is simply another way of dividing up salary payments. There is no standard way of calculating this cost. Instead, it is determined by collective agreements. One popular method, however, is calculating this supplemental pay at one-twelfth of an employee’s gross yearly salary (without factoring in overtime or bonuses).
As of 2022, Italy also introduced a cost of living bonus to help workers mitigate the challenges of increased prices in the country.
Employees, self-employed people, pensioners, and unemployed individuals, are eligible for the €200 bonus if they have a yearly gross income of less than €35,000.
Italian Government Fees and Taxes
Italy follows a progressive taxation model that ranges from 23% (this rate is implemented from 0-15,000 EUR) to 43% (applied on anything over 50,001 EUR).
Workers also pay additional lower-rate municipal and regional income tax, and certain sectors, like finance, are subject to further tax on variable compensation like bonuses and stock options.
Benefit Payments and Social Security
There are a few types of paid contributions in Italy that you must contribute to as an employer.
Firstly, both employers and employees pay into social security. The total contributions are paid at a rate of approximately 40% of the employee's gross pay. Rates can vary based on an employee’s role and the size of the company. This cost is split between the employee and the employer, with employers paying around 30% and employees paying approximately 10%.
Approximately 33% of the total rate goes into National Pension Scheme payments, with the remainder funding social security funds including:
- Unemployment
- Illness
- Maternity
- Social mobility fund
- Compensation for temporary unemployment
- Other minor social security funds. Some of these funds do not apply to employees at the executive level.
Overtime Pay
Workers in Italy are entitled to overtime pay if they work over 40 hours per work week, however there is no standard overtime rate. It often ranges from 15%-50% extra on top of a worker’s regular salary. Overtime must be paid at a rate of at least 10% more than the employee’s regular pay.
Severance Pay
Severance pay, or trattamento di fine rapporto (TFR) is required, even if an employee resigns or is dismissed with just cause. To calculate severance, the employee’s annual salary is divided by 13.5.
If an employee is terminated and has not used up all their permitted holidays before the end of their contract, they are entitled to payment in lieu of any accrued holiday allowance that wasn’t used. If the employee has been receiving supplementary monthly pay as per their contract, they are entitled to payment pro-rata up to their date of termination as severance.
Optional Remote or Office Working Costs
Does your remote Italian team need digital hardware or software set up to do their jobs? If you are bringing on team members remotely, you may have added costs like high-speed internet service, upgraded electronics, printers, or higher-volume servers.
Around one third of Italians speak English as a second language, so you may need to factor in the cost of translation tools when hiring Italian workers.
Consider whether you are hoping to hire a small or large number of Italian workers. If there’s a significant team, it could be worth investing in an office or coworking space so your team can access the technologies they need to perform successfully and build connections with their coworkers.
Total Cost of Hiring
Let’s say you wanted to hire an employee in Italy at a salary of 100,000 USD (92,390 EUR).
Salary: $100,000 Gross pay
Employer social security contributions: USD 12,000 (11,086.80 EUR)
Bonuses and other costs:
- Cost of living bonus: not eligible
- Tredicesima: $8,333 (€7698.86)
Total: USD120,333 (€111,175.66)
It is important to note that this is a minimum payment, as generally, you will attract higher-skilled and competent candidates by including bonuses or other paid benefits
How Borderless Can Help
Although it can seem like all these costs add up quickly, we want to make your hiring process stress-free. Onboarding your new Italian team should feel like a breeze. It’s an investment, but it’s a major step for your company that you deserve to feel confident about.
At Borderless, we help you hire employees from Italy and over 150 different countries if you are looking to grow your team. Book a demo to see how we’ll help you hire top global talent quickly and compliantly.
Disclaimer
Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
