The posting of workers abroad in 2025 involves compliance with a set of administrative, tax, and social security obligations by multinational companies and SMEs.
While ensuring the continued existence of the technical, economic, and productive needs of the posting company, it is necessary to draft the secondment contract, which must include terms and conditions of the employee’s assignment abroad.
A key element of the assignment letter is the definition of the compensation package, which should include salary items related to the assignment (such as the Cost of Living Allowance, Relocation Allowance, etc.).
Also, any potential hypothetical tax must be reported in accordance with the tax equalization policy adopted by the multinational company.
If the employee has to be placed in a specific foreign role and works continuously and exclusively abroad, staying for more than 183 days within a 12-month period, conventional remuneration for tax purposes must be applied. In case of assignment to countries with no bilateral social security agreements, the same applies for social security purposes.
Posting an employee to EU countries or countries having a totalization agreement in force with Italy obliges the home company to apply for social security coverage certificate from the competent Social Security in its Country (Form A1 or similar).
Additionally, before starting the secondment, the mandatory notification required by the host country’s legislation and European Directives on cross-border secondments on a temporary basis, in the context of a contract of services must be made, in compliance with the obligations set forth by EU Directives.
In the event of tax liabilities incurred by the employee in the host country, the secondment letter must address both the local payment and the recovery of double taxation in the employee’s tax return. In addition, the letter must include reimbursement provisions for the company, which may have loaned the amount of the Italian personal income tax (IRPEF) on behalf of the employee.
Furthermore, starting from January 1, 2025, Article 16-ter of Decree-Law 131/2024, converted into Law no. 196 of November 14, 2024, has repealed paragraph 35 of Article 8 of Law 67/1988, making secondments and employee loans subject to VAT.
This VAT liability applies even if the reimbursement is limited to the employee’s costs (regular salary, bonuses, social security contributions).
This change aims to align Italian legislation with EU obligations and to prevent further infringement procedures. The VAT management must be ruled in the recharge agreement between the posting and receiving company.
Posting workers abroad in 2025 is a critical issue for companies intending to go international and our Firm is available to assist the company with the various obligations, upon contact with the relevant parties.
