The last year has uncovered the advantages of remote working, sometimes for temporary reasons, sometimes due to personal choices made by workers.
In this context, many employees have chosen to work remotely from abroad, i.e. in Italy.
Where, due to the type of activity carried out, there is no need to open a branch office, the questions which arise refer to what obligations and fulfillments an Italian (or foreign) employer has in the case of a foreign or Italian employee working in Italy or abroad.
General principle of remote working
If we restrict the analysis to the case of workers from other European countries who decide to return to Italy to work remotely, it should be pointed out that art. 11, paragraph 3, letter a) of EC Regulation 883/1994 establishes the principle of territoriality, according to which the worker is subject to the social legislation of the country in which the work is carried out.
In case of voluntary transfers, which are not imposed by Company’s business needs, the rules of the Regulation which derogate from the general principle stated above – provided for the cases of secondment or relocation – cannot be applied.
As a consequence – in lack of specific regulations – the principle of territoriality will be fully applied and the foreign Employer who does not have a permanent establishment or an operating structure in Italy, as well as the employee, must pay social security and pension contributions in the place where the work is carried out, i.e. in Italy.
The Social Security Representative and his obligations
In order to fulfill the obligations provided for by the territoriality principle, the foreign employer must appoint a Social Security Representative (SSR) in Italy, so that the latter can assists it and fulfills the Italian contribution obligations on behalf of the foreign employer.
The Social Security Representative will have the mandate to:
- pay the monthly contributions, within the established deadlines;
- provide for the keeping of LUL (i.e. Libro Unico del Lavoro);
- prepare all the necessary documents related to the employment relationship (e.g. CU, F24, Uniemens).
It is important to point out that the first responsible for the payment of contributions is the foreign employer; however, the SSR is jointly liable in case of omitted payment.
From a fiscal point of view, the Social Security Representative does not imply that the same is obliged to act as withholding agent, which is a typical obligations of an Italian employer. The SSR will therefore not be obliged to withhold taxes from the employee’s income when the payslip, prepared only for social security purposes, are processed. Therefore, the employee, if the necessary conditions are met, will have to fulfill his/her own Italian tax obligations by submitting his/her income tax return, according to his/her tax residency status.
If we want to broaden the scope of our analysis, comparable or similar obligations could be requested to an Italian employer in case of an Italian worker who moves to another European country to carry out his/her work activity remotely from the chosen country.
This case will be the treated on a subsequent article.