Workforce Payments Guide Italy
Last updated: Dec 24, 2023
Papaya Global fully support payments in Italy.
Papaya Global supports payments to contractors in Italy. The payout currency may vary based on the receiver bank account setup when receiving foreign currencies. Contractors are advised to reach out to their bank to confirm how foreign currencies are handled
|IBAN Example Italy
|IBAN in print
|IT05 Y030 0203 2801 9226 6882 9896
|National check digit
|Bank Account Number
In Italy, the Know Your Customer (KYC) process, also known as “Questionario per l’adeguata verifica della clientela”, is a set of legal procedures that institutions and professionals, such as banking and financial intermediaries, accountants, labor consultants, notaries and lawyers, legal auditors and auditing companies, real estate agents, civil mediators, gaming service providers, and virtual currency service providers, are obliged to implement.
The KYC process is used to acquire data on the identity of their users and clients, not only to verify their identity but also to assess potential risks of money laundering and terrorism financing. These entities are required to carry out constant checks and update the procedures over time.
The KYC process falls within the regulatory requirements established by the European anti-money laundering directives, known as AMLD (Anti Money Laundry Directives), implemented by Italy with the Legislative Decree 90/2017 and subsequently the Legislative Decree 125/2019, which introduced the “Risk Based Approach” and extended the obligation to digital wallet service providers.
The KYC procedures involve the completion of a questionnaire for the collection of information regarding the customer’s subjective and objective profile. The main goal of these procedures is to reduce the risks to which the bank or financial institution is exposed when initiating a relationship with a customer, ensuring that the information provided by the customer is truthful and preventing dangerous reputational, legal, and commercial consequences.
Cross-border workforce payments, often referred to as international payroll, involve several banking laws and regulations in Italy. Here are some key points:
Payment Services Act: This act regulates the conditions under which payment services may be provided. It includes provisions on transparency and information requirements for payment services, and the rights and obligations in connection with the provision of payment services.
Anti-Money Laundering Measures: Italy has strict anti-money laundering laws that impact cross-border transactions. These laws require banks and other financial institutions to perform due diligence on their customers, monitor transactions, and report suspicious transactions.
Data Protection: The General Data Protection Regulation (GDPR) impacts how employers and payroll providers handle employee data. Companies must ensure that personal data transferred outside the EU is treated in a way that is consistent with the GDPR.
Tax Regulations: Employers must comply with the tax regulations of both the home country and the host country. This includes withholding the correct amount of tax and social security contributions, and reporting these amounts to the relevant authorities.
Employment Laws: Changes to the Italian Employment Protection Act may impact cross-border workforce payments. For example, changes to the rules for termination of employment and priority rules for re-employment.
Opening a Bank Account
The requirements to open a company bank account in Italy are:
The following company’s documents are needed:
- Certificate of Incorporation
- Certificate of Good Standing
- Valid passport of the director
- Company name and full contact details including email, telephone numbers, tax identification number are required
- Company VAT number
- A person, or a representative of the company, must go to the bank in person to set up the account.
- Confirmation of your corporate existence from a recognized authority such as an embassy or consulate is needed.
- An appointment must be made with a business account manager at the chosen branch. It’s advisable to bring an interpreter if you’re not fluent in Italian.
- All directors and shareholders must obtain an Italian tax identification number (codice fiscale) which is issued by the Inland Revenue Agency (Agenzia delle Entrate). This can be done personally or through a simple written power of attorney.
- The shareholders must execute the articles of incorporation through a public deed, meaning they must be signed in front of a Notary Public.
- Activate the account by depositing the required initial funds.
The timeframe for opening a corporate bank account in Italy generally takes around 4 weeks. However, with digital platforms like wamo, the process is quick and your application will be processed within 24 hours.
If the application includes the incorporation of a company, obtaining VAT, and opening a bank account, it can take around 5-7 days from the day the incorporation procedure starts. This timeline may vary according to the type of business you need to set up.
The major foreign banks operating in Italy include:
- Aareal Bank AG
- Abc International Bank
- AKF Bank Gmbh & Co
- Alpenbank AG
- Attijariwafa Bank Europe Sede Secondaria Italiana
- Banca Transilvania
- Banco do Brasil S.A.
- Bank of America, N.A.
- Bank of China Ltd
- Bank Sepah
- Banque Populaire Cote D’Azur
- Banque PSA Finance
- Barclays Bank Plc
- Bayerische Landesbank
- BHW Bausparkasse AG
- Binckbank NV
- BMW Bank Gmbh
- BNP Paribas Leasing Solutions S.p.A.
- BNP Paribas Securities Services
- Bnp Paribas Succursale Italia
- BSI Europe S.A.
- Carrefour Banca
- Citibank International Plc
- Citibank N.A.
- Commerzbank AG
- Credit Agricole Corporate & Investment Bank
- Credit Suisse
- Depfa Bank Public Limited Company
- Europe Arab Bank Plc
- Fce Bank Plc
- HSBC Bank plc
- Hypo Alpe-Adria-Bank SpA
- Hypothekenbank Frankfurt AG
- Industrial and Commercial Bank of China
- ING Bank N.V
- ING Direct N.V.
- J.P. Morgan Securities Plc
- JPMorgan Chase Bank
- National Association
- La Compagnie Financiere Edmond de Rothschild Banque
- Bank of America Merrill Lynch International DAC
- Morgan Stanley Bank International Ltd
- Natixis S.A.
- Portigon AG
- Societe Generale
- Standard Chartered Bank
- MUFG Bank Ltd
- Volkswagen Bank GmbH
- Union Bancaire Privee
- Banca Nazionale del Lavoro S.p.a.
- Credit Agricole Italia S.p.a.
- Deutsche Bank S.p.a.
- Banca Generali – SpA
- Credit Agricole Friuladria S.p.a.
- Dexia Crediop S.p.a.
- Allianz Bank Financial Advisors S.p.a.
- Societe’ Generale Securities Services S.p.a
Major Local Banks
The major local banks operating in Italy are:
- Intesa Sanpaolo
- Cassa Depositi e Prestiti
- Banco BPM
- BPER Banca
- Banca Monte dei Paschi di Siena
- Banca Nazionale del Lavoro
- Credit Agricole Italia
- Banca Mediolanum
The B2C payment tools available in Italy include:
- Debit cards such as Bancomat, Visa, Mastercard, and Maestro
- Prepaid cards like Postepay and CartaSi
- Digital wallets like PayPal, Satispay, Skrill, Amazon Pay, Google Pay, Bancomat Pay, and Apple Pay
- Bank transfers either direct or through a third-party like SEPA credit transfer, Sofort or MyBank
- Buy now pay later (BNPL) services like Klarna, Scalapay, and Clearpay
It is possible to pay employees with cryptocurrencies in Italy, but it is subject to regulations and taxes. The payment of goods or services in cryptocurrencies, including wages to employees, is considered a taxable event and is subject to the standard Personal Income Tax rates, which range from 23% to 43%. The fair market value in euros of the crypto at the time of its receipt is used to calculate the tax owed.
In addition to income tax, crypto assets are subject to capital gains tax if the portfolio has exceeded EUR 51,645.69 for seven consecutive days during the tax year. Profits from buying and selling crypto assets are taxed at the capital gains rate of 26%.
The new regulations require individuals involved with crypto assets to report their transactions, including any resulting in capital losses. It is crucial for individuals to accurately track and record their crypto transactions for proper declaration on their tax returns, as failure to do so may result in penalties and fines.
However, the Agenzia Entrate has not provided specific guidance for activities such as mining or staking. It’s important to note that taxes may also depend on the region and municipality in which the recipient is based.