Building a business with a global reach means expanding across borders and engaging diverse markets. If you’re considering expanding your business to the Holy See, Globalization Partners can help you seamlessly establish your presence in a new country.
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Partner with us for global business growth solutions through our established international entities and in-depth expertise of local requirements. We’ll guide you through compliance, visas, hiring expectations, and other critical concerns to help you move forward more successfully. When you work with us, you can rely on us to maintain your company interests worldwide.
Hiring, Negotiating, and Doing Business
The Holy See is the central governing body of the Vatican City State and the Catholic Church. This unique independent country is an absolute monarchy with some private enterprises that operate within its jurisdiction. As a city-state headed by the pope, this region technically has universal jurisdiction across the worldwide Catholic Church. Territories under its control afford many benefits for business establishment, including minimal taxation — or, in some cases, no taxation. It also offers limited to no restrictions on importing or exporting funds.
Because of its legal standing and unique position as part of and yet separate from Vatican City, the governing entity’s labor laws are not directly addressed in the constitution. However, it’s advisable to follow best practices that meet Italian market standards and ensure your employees receive competitive benefits. Many properties owned by the Holy See but located outside the Vatican grounds are considered to be under Italian jurisdiction, so you may need to comply with Italy’s labor regulations as well.
Hiring, negotiating, and doing business is faster and easier with Globalization Partners at your side. With entities established in over 180 countries worldwide, we have the in-depth expertise and network to help you set up your business overseas.
As in any new business environment, being courteous and professional as you engage with local candidates, employees, and other professionals is crucial. A polite greeting and handshake can help you set a welcoming, professional tone in your interactions. Ensure that you convey respect as you interact with any interviewee and employee and strive to build trust with them.
It’s an excellent idea to create a written employment contract specifying the terms for your employee’s benefits, compensation, and termination requirements. Establish a clear understanding of your responsibilities and those of your employees. Setting these expectations right away will facilitate strong communication in the future. Depending on whether you’re preparing a fixed-term or indefinite contract, ensure you specify ending dates and are prepared to meet any remuneration requirements involved.
You should have a standard of 40 hours per week for your employees to work. If they work more than six hours per day, they should receive a rest period during the workday. It is also a market standard in Italy to provide additional compensation if you require your employees to work overtime.
Employees may receive up 25 hours of paid leave for vacations, and they can have an additional 32 hours of paid leave based on Italian market standards. These durations of leave renew annually for each year of employment with your business.
It is recommended that you provide at least three working days of paid leave for illness. In specific conditions of prolonged illness with proof of a medical certificate, you can negotiate with your employee to find a solution for their situation.
Mothers in Italy are entitled to five months total of maternity leave, with two months before and three months after giving birth. To ensure optimal benefits for your female employees in the Holy See, you may want to follow a similar system for paid maternity leave for your business. If an employee experiences prolonged illness or complications after giving birth, you may consider negotiating further leave if you receive a physician’s certificate.
Termination and Severance
According to Italian labor standards, you may only terminate employment if you have a justified reason. To dismiss an employee from your company, you will need to prove a breach of contract or economic difficulties outside your control that require your business to lay workers off.
Suppose you dismiss an employee because of a breach of contract. In that case, you will need to follow a disciplinary process of informing your employee of the misconduct and allowing them the opportunity to rectify the situation. Other just causes for dismissing a worker include serious infractions such as significant insubordination or theft.
Regardless of the reason for termination, Italy’s market standards dictate paying severance of approximately 7 percent of an employee’s annual pay per year of their service with you. Most employers in Italy will set this amount aside every year to cover severance costs in the future if needed.
Within Vatican City, there are no taxes or duties to be paid. However, if you operate outside the city-state, you may need to comply with Italian tax standards. Italy has a progressive income tax ranging from approximately 23 to 43 percent depending on earnings. If you’re under Italian legal jurisdiction, you may also need to pay social security taxes. These can vary depending on the industry but may be approximately 35 percent of employees’ income.
Benefits and Bonuses
The Servizio Sanitario Nazionale (SSN) provides national health insurance in Italy. Since citizenship within Vatican City is based on residency rather than on birth, your employees will likely be nonnationals. The benefits they are entitled to receive may depend on current Italian standards. You can also purchase private health care coverage as another option to provide benefits for your employees.
In Italy, it’s a common practice to give employees a significant bonus just before Christmas. Known as the 13th-month bonus or annual bonus, it’s an option you may want to consider providing for your employees as well.
The Holy See observes several public holidays throughout the year. Your employees are entitled to paid leave for each of these dates:
- New Year’s Day
- Lateran Treaty Day
- Anniversary of the Election of Pope Francis
- Saint Joseph’s Day
- Easter Monday
- Feast of Saint George
- Saint Joseph the Worker
- Saints Peter and Paul’s Day
- Assumption Day
- Assumption Holiday
- All Saints’ Day
- Immaculate Conception Day
- Christmas Day
Choose Globalization Partners to Help Your Company Grow
Expanding your business to a new country can be complex. Globalization Partners is here to help simplify the process. We handle legal compliance, HR requirements, and other critical considerations related to establishing your business in a new country. You can trust us to handle your international growth while you focus on other goals. Contact our team to learn more.