Construction and projects in Italy: overview

A Q&A guide to construction and projects law in Italy.

The Q&A gives a high level overview of the main trends and significant deals; procurement arrangements; transaction structures and corporate vehicles; financing projects; security and contractual protections that funders require; standard forms of contracts; risk allocation; excluding liability, including caps and force majeure; contractual provisions covering material delays and variations; appointing and paying contractors; subcontractors; licences and consents; projects insurance; labour laws; health and safety; environmental issues; corrupt business practices and bribery; bankruptcy/insolvency; public private partnerships (PPPs); dispute resolution; tax and mitigating tax liability; and proposals for reform.

To compare answers across multiple jurisdictions, visit the construction and projects Country Q&A tool.

This Q&A is part of the global guide to construction and projects law. For a full list of jurisdictional Q&As visit

Marco Padovan and Roberto Panetta, Padovan Law Firm

Overview of the construction and projects sector

1. What are the main trends in the local construction and projects market? What are the most significant deals?

Main trends

After eight years of significant crisis, during which the Italian construction industry recorded a decrease in investments, at the end of 2015, estimates of the Italian Construction Industry Association (Associazione Nazionale Costruttori Edili) forecasted a 1% increase in investments for 2016. This positive forecast was explained at the time by an increase in construction activities in the public sector due to the:

  • Cancellation of the Italian internal stability pact.

  • Application of the EU budget flexibility clause for investments.

However, this forecast is no longer substantiated due to the:

  • Introduction of the New Code of Public Contracts (Legislative Decree No. 50 of 18 April 2016).

  • Adoption of recent economic policies, which may reduce to 0.4% the increase in investments in public works for 2016.

In addition, in the first quarter of 2016, the number of persons employed in the construction sector decreased by 3.5% compared to 2015. Sales of residential houses increased by 20.6% compared to 2015. This increase has had an impact on renovation works, which are also strongly incentivised through tax advantages.

Major projects

One of the most important transactions that will be implemented within the next few years in Italy is the completion of the biggest shopping centre in Milan, which will host major luxury brands. In addition, the Italian Government and the Milan municipality have unveiled plans to renovate the area that hosted the 2015 World Exposition. This area may be renovated to host one of the main centres for nanotechnology and medical research.

Other projects across the country include investments in:

  • New roads.

  • Transport infrastructures.

  • Energy plants.

There is serious uncertainty over the implementation of the projects relating to the Strait of Messina Bridge.


Procurement arrangements

2. Which are the most common procurement arrangements if the main parties are local? Are these arrangements different if some or all of the main parties are international contractors or consultants?

In private construction contracts, procurement arrangements reflect the two following phases of projects:

  • Design phase, which involves professional designers.

  • Construction phase.

In the design phase, the employer can select and appoint the professionals involved (such as architects, engineers, interior designers and professionals responsible for compliance with health and safety regulations) either directly or through a tender procedure.

The development phase consists of setting out a detailed schedule of the subsequent phases of the project before the construction phase, including the following:

  • Preliminary study.

  • Preparation of final design documents.

  • Issuance of the tender documents required for the construction phase.

In complex projects, contractors can be co-ordinated by a project manager.

In commercial property development projects, the design phase is usually reserved to professionals appointed under consultancy agreements. Complex procurement arrangements for design and execution are mostly used for plant/industrial projects (for example, design and build contracts and engineering, procurement and construction contract agreements).

The arrangements do not differ if some or all of the main parties are international contractors or consultants.

With regard to the public sector, the most common public procurement procedures are set out in the New Code of Public Contracts (Legislative Decree No. 50 of 18 April 2016), which conforms to EU directives on procurement.


Transaction structures

3. What transaction structures and corporate vehicles are most commonly used in both local and international projects?

Local projects

Investors can use different transaction structures and corporate vehicles, depending on the parties involved, the scope of the relevant transactions and tax issues.

Investors often set up special purpose vehicles (SPVs) to limit risks and liabilities, while the financing of the project is secured by parent company guarantees. In most cases, SPVs are incorporated as limited liability companies (società a responsabilità limitata or S.r.l.), as the applicable capitalisation requirements are rather low.

Contractual transaction structures are also used extensively. The Italian Civil Code contains rules on consortium agreements, under which entrepreneurs can establish a joint organisation for certain common undertakings. Third parties can only enforce their claims regarding liabilities arising from obligations undertaken in the name of the consortium by its representatives against the consortium's fund. Members of the consortium are liable for any obligations undertaken by the consortium on behalf of its members. Consortiums can also be incorporated as limited liability companies.

Entrepreneurs can also enter into a:

  • Partnership agreement (Associazione in partecipazione), under which an entrepreneur grants to an investor the right to participate in the profits of their enterprise or of one or more transactions, in return for a specified contribution.

  • Subcontract, under which the contractor delegates to another entity, usually specialised in a specific field, a part of the project (without establishing any contractual relationship between the employer and the subcontractor).

The New Code of Public Contracts (Legislative Decree No. 50 of 18 April 2016) allows the creation of a temporary aggregation of enterprises (Associazione temporanea tra imprese or Raggruppamento temporaneo di imprese) to participate in public procedures for the award of public contracts and the execution of public works. Under this transaction structure, the associated enterprises can jointly bid and commit themselves to jointly execute the works while remaining independent legal entities.

Given the wide range of contractual transaction structures available under Italian law, unincorporated joint venture agreements in Italy are only used on a residual basis. In certain circumstances, they may entail the risk of requalification as a de facto company.

International projects

See above, Local projects.



4. How are projects financed? How do arrangements differ for major international projects?

In the Italian market, local and international projects are usually financed by European, governmental or local institutions.

In public private partnership contracts, projects can be fully or partially financed by private resources, including bonds (such as project bonds).


Security and contractual protections

5. What forms of security and contractual protections do funders typically require to protect their investments?


The parties can use the typical forms of security set out in the Italian Civil Code, namely:

  • Mortgages over real estate assets.

  • Pledges over the shares of the special purpose vehicle (SPV) or over movable property generally.

  • Assignment of receivables.

  • Pledges over bank accounts.

There is no particular difference between local and international projects.


Where the financing is granted to a Newco/SPV, the most common contractual protection for funders is a parent company guarantee. Other less common protections required by funders include:

  • Step-in rights (direct agreement).

  • A commitment from the sponsors to inject equity (equity agreements).


Standard forms of contracts

6. What standard forms of contracts are used for both local and international projects? Which organisations publish them?

Local projects

Standard forms of construction contracts are drawn up and published by legal publishers and professional associations. These standard forms can be freely adapted by the parties and do not have a specific legal status. They are drafted with the sole aim of assisting the parties, providing a variety of clauses that the parties can use and adapt when drafting their contract. There is no prevailing standard form published by a particular body or organisation.

However, the parties' autonomy is more limited in public construction contracts, especially when preparing the contract. This is because the contract must comply with the New Code on Public Contracts and related rules.

International projects

No specific standard forms are used for international projects.


Contractual issues

Contractors' risks

7. What risks are typically allocated to the contractor? How are these risks offset or managed?

The Italian Civil Code regulates the allocation of certain typical unforeseeable risks under construction agreements, as follows:

  • Destruction or deterioration of the property for causes not attributable to any party taking place before acceptance of the works by the employer (Article 1673). The contractor is liable for losses if it furnished the construction materials. If the employer provided the materials, the employer will bear losses in proportion to the materials provided, while the contractor will bear the remaining losses.

  • Hardship or difficulties in execution of the works (Article 1664). In the event of an unforeseeable increase of costs for materials or workmanship (of more than one-tenth of the agreed total price), either the contractor or the employer can ask for a revision of the price corresponding to the amount above the one-tenth of the total price agreed. In the event of hardship due to geological or hydrological causes, the contractor is entitled to fair compensation.

  • Ground conditions. If ground conditions (or construction defects) cause the destruction of the building within ten years from its completion, the contractor will be liable towards the employer, provided that the employer gave notice to the contractor within one year from the discovery of the defects.

In practice, construction contracts often require the contractor to represent and warrant that they have both:

  • Acquired full knowledge of the project.

  • Thoroughly examined the contractual documents, to manage the risk of inconsistency with the design developed for the project.

In addition, to face unforeseeable events relating to the site, the contractor must usually warrant that it is familiar with the conditions of the site and with any special restrictions to construction activities (such as restrictions set out in legislation for the protection of artistic heritage).


Excluding liability

8. How can liability be excluded or restricted under local law?

Limitation and exclusion clauses are recognised by Italian law and are largely adopted in practice.

However, any agreement is void if it excludes or limits in advance the liability of the debtor arising from both (Article 1229, Italian Civil Code):

  • Fraud and gross negligence.

  • Cases where the debtor or its personnel violated obligations arising from public policies rules.


Caps on liability

9. Do the parties usually agree to a cap on liability? If yes, how is this usually fixed? What liabilities, if any, are typically not capped?

Parties involved in construction projects tend to negotiate caps on liability. The aggregate cap is often established as a percentage of the contract price, typically in the case of non-exact performance of obligations, or of delay by the contractor.

See also Question 8.


Force majeure

10. Are force majeure exclusions available and enforceable?

A force majeure event is an event that is all of the following:

  • Unforeseeable before entering into the contractual obligation.

  • Unavoidable and beyond the parties' control.

  • Not capable of being overcome.

  • Not attributable to the affected party.

The parties can determine the scope and consequences of a force majeure event. Accordingly, the performance of the relevant contractual obligations can be suspended, delayed or terminated, or the scope of these obligations can be changed.

In practice, force majeure limitations are largely adopted. The parties tend to enumerate the situations that can amount to force majeure events to avoid future disputes regarding their classifications. In addition, the parties usually set out requirements for giving evidence of the occurrence of force majeure events and for common acknowledgement of these events. In particular, the affected party is often required to:

  • Give prompt notice to the other party.

  • Specify any circumstances that have the effect of preventing the performance of its obligations.


Material delays

11. What contractual provisions are typically negotiated to cover material delays to the project?

The parties can establish penalties for each day or week of delay in delivery or completion of the works. These penalties can be limited to an agreed cap or be unlimited.

Generally, penalties for delay are deducted from payments due from the employer. If the contractor completes the works by the milestone dates (despite any delay), any penalties withheld must be paid back to the contractor or in any case be offset.

Clauses regulating an extension of time for completion, along with payment of additional costs incurred, are commonly included where the contractor's delay was either:

  • Authorised by the employer.

  • Justified by substantiated hardship or an event of force majeure.

The courts can reduce the amount of penalties where they clearly exceed an equitable standard (Article 1384, Italian Civil Code).


Material variations

12. What contractual provisions are typically negotiated to cover variations to the works?

In private construction contracts, the employer can usually impose variations to the works through written change directives, granting the contractor either or both an:

  • Adjustment of the contract price.

  • Extension of time for completion.

The parties can agree in advance on limits to the exercise of the owner's power to impose variation to the works.

Alternatively, the parties can agree on a document detailing the variation on each relevant occasion.

Additionally, variations may be required by the nature of the project. In this context, the design documents can play a significant role by identifying in advance possible variations and, as a result, the criteria for establishing:

  • The grounds for adjustment of the contract price and/or an extension of time.

  • When variations fall outside the scope of any previous agreement.

The Italian Civil Code regulates in detail the different types of variations that can be:

  • Agreed between the employer and the contractor (Article 1659, Italian Civil Code).

  • Necessary for the execution of the project works (Article 1660, Italian Civil Code).

  • Ordered by the employer (Article 1661, Italian Civil Code).


Other negotiated provisions

13. What other contractual provisions are usually heavily negotiated by the parties?

Contractual provisions that are mostly discussed and negotiated relate to:

  • Progress of the works and progress of payments.

  • Terms and conditions of insurance policies.

  • Grounds for early termination of the contract.

  • Dispute settlement mechanisms.


Architects, engineers and construction professionals

14. How are construction professionals usually selected? Following selection, how are they then formally appointed?

Construction professionals are accountable to the employer under the rules governing their relationship with the employer (for example, professional retainer, contract of employment and so on). They are usually appointed without referring to specific selection rules or procedures. However, they must possess the specific technical capability to ensure the results promised to the employer. In major projects, professional teams are:

  • First shortlisted in accordance with functional requirements.

  • Then selected on the basis of their price proposals.

15. What provisions of construction professionals' appointments are most heavily negotiated? Are liabilities commonly limited or capped in construction professionals' appointments?

Negotiated provisions

The most heavily negotiated clauses in contracts with construction professionals are those relating to the:

  • Contract price for services to be provided.

  • Duty of care of the construction professionals.

  • Final completion date.

In a contract for public works, if the contracting authority adopts standard contractual terms or any pre-drafted provisions, construction professionals cannot propose any amendments and can only accept or refuse the proposed terms.


Professional liability is governed by the Italian Civil Code. See Question 20 regarding insurance matters. In practice, liabilities are frequently limited, subject to the limits established by the law (see Question 8).


Payment for construction work

16. What are the usual methods of payment for construction work? Are there ways for the contractor and consultants to secure payment or mitigate risks of non-payment under local law?

Methods of payment

The primary criterion for determining the contract price and method of payment is the parties' intention, as expressed in the contract (Article 1665, Civil Code).

A list of typical payment provisions can include the following:

  • An advance payment, usually 10% of the contract value.

  • Progress payments, usually on a monthly basis, reflecting the progress of the works as certified by the project manager and the employer. Alternatively, progress payments can be linked to contractual milestone deadlines, which are set out for specific categories of work. A share of the advance payment is usually deducted from each progress payment. It is also common to retain an amount from each progress payment as a guarantee for performance of the contract.

  • In addition to the amount retained on each progress payment, the employer may withhold amounts up to a certain percentage of the agreed contract price (around 10%) to guarantee the contractor's obligations (notably the obligation to remedy any defects).

Final payment may be affected if a portion of the works does not comply with the requirements of the contract, where the contract provides that the employer must replace any covered works at the contractor's expense.

Final payment is subject to a positive certification of the works by the project manager and the employer, after deduction of any amounts/penalties due from the contractor (typically for delays in the completion or delivery of the works).

In the absence of agreement between the parties, the method and time of payment must be determined in accordance with customary practices. If there are no customary practices, payment must be made at the time of completion of the works (Article 1665, Italian Civil Code). If the employer expresses reservation on delivery of the project, this does not amount to acceptance and final payment is not due. However, the contractor can claim payment where the employer unjustifiably delays acceptance of the project.

Securing payment

In private construction agreements, the contractor usually requires bank guarantees to secure payment.

In the public sector, the employer must provide the contractor with a bank guarantee (garanzia fideiussoria) to guarantee payments due.



17. How do the parties typically manage their relationships with subcontractors?

Subcontracts are regulated by Articles 1656 and 1670 of the Italian Civil Code. Under a subcontract, the main contractor co-operates with a third party (subcontractor) to perform works that the main contractor has undertaken to accomplish for the employer, organising the necessary means and operating at its own risk. For a subcontract to be valid, the employer must authorise the contractor to subcontract (Article 1656, Italian Civil Code). Unauthorised subcontracts are null and void.

On notification of a defect by the employer, the main contractor must inform the subcontractor within 60 days from receipt of the notification (Article 1670, Italian Civil Code).

A subcontract can be concluded on a back-to-back basis, so that the rights and obligations of the subcontractor in relation to the contractor are the same as those of the main contractor in relation to the employer.

The employer is not liable to pay a subcontractor directly. However, the main contractor's employees can demand payment of their salaries to the employer if the contractor fails to pay them. Equally, the subcontractor's employees can demand payment of their salaries to the main contractor if the subcontractor fails to pay them.



18. What licences and other consents must contractors and construction professionals have to carry out local construction work? Are there any specific licensing requirements for international contractors and construction professionals?

In private contracts, the contractor must possess the necessary technical and professional requirements for the functions or the works to be performed, while construction professionals must have the relevant qualifications.

In the public sector, there is a specific system for verifying that a supplier complies with the applicable suitability requirements. Any economic operator wishing to take part in a public contract must prove its technical capabilities, which are confirmed by certifications issued by the Società Organismo di Attestazione (that is, a private firm entitled to attest that construction firms comply with EU legislation on qualification systems). Suitability requirements (including personal situation, economic and financial standing and technical and professional ability) often lead to interpretative issues, which are generally settled by the courts.

19. What licences and other consents must a project obtain?


Before construction work starts, the employer must obtain the appropriate licence/building permit (permesso di costruire or denuncia di inizio attività) from the competent local administrative authority. The request for a building permit, along with the technical details of the construction project, must be filed with a one-stop shop (sportello unico dell'edilizia). The employer must also file:

  • A certification issued by a technical expert attesting the energy efficiency of the project.

  • Project clearance from the fire department and the public health authorities.

Additionally, the employer must make preliminary notifications to the provincial employment directorate (Direzione provinciale del lavoro).

Depending on the type of infrastructure, other specific permits may be required. For example, the construction of major renewable power plants requires a single permit (Autorizzazione Unica) from all the authorities involved in the permission procedure.

The Documento Unico di Regolarità Contributiva (DURC) (that is, a single document attesting the fulfilment of social contributions' obligations, which is strongly required and promoted by the unions) certifies, by means of a single application, that a company complies with the requirements of the national social welfare authorities (that is, the Istituto Nazionale della Previdenza Sociale, Istituto nazionale Assicurazione Infortuni sul Lavoro and Cassa Edile). The DURC can be requested online through a processing platform (DURC online).


In public contracts, contracting authorities must appoint a supervisor to oversee the performance of the contract (New Code of Public Contracts). However, contractual breaches are frequently reported, due to the lack of professional skills in managing the performance phase of public contracts.

On completion

An engineer or architect who was not directly involved in the project must carry out a structure and utilities tests. In addition to the final test on completed structures, the worksite director must provide test results for the structural materials used for the construction works.

The certificato di agibilità, which is required for any type of construction, certifies that the works have been carried out in accordance with health and safety regulations. A fire safety certificate is also required for certain buildings. Buildings are increasingly evaluated to obtain the leadership in energy and environmental design certification.


Projects insurance

20. What types of insurance must be maintained by law? Are other non-compulsory types of insurance maintained under contract?

Compulsory insurance

In the public sector, mandatory insurances include the following (Article 103, New Code of Public Contracts):

  • The "definitive guarantee" equal to 10% of the contract price, to be executed by the contractor at the signing of the contract, which covers against non-performance of the contractual obligations. This guarantee expires on the date of issuance of the provisional test certificate or certificate of due performance.

  • Insurance to be executed by the contractor covering any damage suffered by the employer during the works. This insurance must cover the employer against third-party liability during the works with an indemnity falling, in any case, between EUR500,000 and EUR5 million. This coverage starts running from the delivery of the works until the date of issuance of the provisional test certificate or certificate of due performance and, in any case, expires after 12 months from the completion of the works as indicated in the relevant certificate.

  • Ten-year warranty insurance (polizza indennitaria decennale) in favour of the employer, if the price of the works exceeds the double of certain thresholds established by Article 35 of the New Code of Public Contracts. This insurance covers damages from partial or total collapse, or serious defects of the works. Insurance coverage starts running for ten years from the date of issuance of the provisional test certificate or certificate of due performance. The ten-year policy compensation limit is fixed between 20% and 40% of the value of the works carried out, in accordance with the principle of proportionality and having regard to the nature of the work.

  • Ten-year third-party liability insurance (polizza per responsabilità civile verso terzi) if the price for the works exceeds the double of certain thresholds established by Article 35 of the New Code of Public Contracts. This insurance covers damages resulting from the partial or total destruction of the works/building with an indemnity of up to 5% of the value of the works and of between EUR500,000 and EUR5 million. Insurance coverage starts running for ten years from the date of the issuance of the provisional test certificate or certificate of due performance.

Other mandatory insurances include the following:

  • Insurance for workers' accident prevention and occupational diseases, as required by the Istituto nazionale Assicurazione Infortuni sul Lavoro.

  • Professional indemnity insurance, covering professional designers against damages arising out of the execution of professional duties. In the private sector, professional insurance became mandatory under Law No. 27 of 24 March 2012.

  • A developer/employer must provide to the buyers of residential units an insurance policy covering damages to the property due to defects arising from defective construction (Law 122/2005 regarding residential property development projects). This insurance only covers partial or total collapse, or serious defects of the works.

Non-compulsory insurance

The contractor can purchase contractor's all risk insurance (CAR) for the benefit of the employer, which covers damages resulting from the execution of the works.

Insurance against damages to third parties' property is also available under CAR insurance or an erection all risks (EAR) policy, through a particular condition to be agreed within Part 1 (Damages to the works), section 2 of the policy (Damages to existing works and plants). Under the EAR policy, the contractor is insured against damages to existing property, including property owned by third parties. To be enforceable, this condition must be expressly indicated in the policy certificate, in the list of particular/additional conditions.

Insurance policies do not specifically cover delay damages (including liquidated damages). However, a CAR policy can cover damages arising from the interruption or suspension of the project, provided that these damages arise from certain specific events.

For damages due to environmental hazards, the contractor can typically execute a policy for pollution caused by the contractor. This coverage can be extended to include damages arising from the interruption of construction activities (for example, costs due to the delayed delivery of the project).

Other insurance policies can cover shipment of goods to the site.


Employment laws

21. What are the main requirements for hiring local and foreign workers?

In Italy, employers and employees can conclude various types of employment contracts for a fixed or an indefinite term (which are the most common types of contracts). All employment contracts must be concluded in writing and include certain information, such as (among others):

  • Starting date.

  • Job title.

  • Work location.

  • Legal holiday.

  • Salary.

  • Working hours.

  • Applicable collective agreement.

Local workers

To avoid risks of irregular employment, Italian labour law imposes the following obligations:

  • The employer must issue a statement of the hiring (comunicazione dell'assunzione del lavoratore) to the competent centre for employment (Centro per l'impiego). The communication must be submitted through a specific electronic system and must be sent within 24 hours before the start of the employment contract. The communication process requires the employer to register on the specific web portal that manages the service. The statement must include the following information:

    • hiring date;

    • expiration date (for a temporary employment contract);

    • type of employment contract;

    • salary; and

    • applicable national collective bargaining agreement.

  • The employer must keep a unique labour electronic register (libro unico del lavoro) containing all relevant information on the employment relationship with any type of workers employed (for example, subordinate employees, temporary workers, occasional workers and so on) (Law No. 133/2008).

  • In the case of procurement and subcontracts, the employer must provide an identification card (tessera di riconoscimento) to all the workers in charge of specific contracts (including non-subordinated employees) (Legislative Decree No. 81/2008). The card must meet specific requirements and be visibly exhibited while the worker performs their activity.

Failure to observe the above mandatory legal provisions have the following consequences:

  • Employing subordinate workers without filing a previous communication with the competent centre for employment: administrative fine ranging from EUR1,500 to EUR36,000, depending on the length of undeclared work.

  • Lack of, or false, registration in the unique labour electronic register: fine ranging from EUR150 to EUR1,500 depending on the number of workers involved or the months of illegal employment.

  • Failure to provide an identification card: administrative fine ranging from EUR100 to EUR500 for each worker.

Foreign workers

There are no additional requirements for workers that are citizens of EU member states or of member states of the European Economic Area.

The employer must positively verify the possession of a valid residence permit (permesso di soggiorno) of each foreign non-EU prospective employee.

The following penalties apply in the case of infringement:

  • Imprisonment from six months up to three years.

  • A fine of EUR5,000 for each illegally employed worker.

The sanctions are increased if there are more than three illegally employed workers. These sanctions also apply if a worker's residence permit has been cancelled, revoked or expired, and no request of renewal was submitted.

Hiring a foreign worker without a regular residence permit can also constitute the crime of exploitation of clandestine immigration (sfruttamento dell'immigrazione clandestina) under the Italian immigration laws.

22. Which employment laws are relevant to projects?

Italian labour law regulates the conditions and phases of the employment relationship. Collective bargaining (contrattazione collettiva) plays a significant role in detailing several aspects of the employment relationship (for example, provisions of employment agreements, working hours, wages, rights of representation and union rights, health and safety norms in the workplace).

The main relevant provisions of employment contracts are outlined below.

Minimum wage

There is no statutory minimum wage under Italian law. The vast majority of workers are covered by minimum wage provisions established through collective bargaining. However, employees who are not covered by a collective agreement are entitled to receive a salary commensurate with the quality and quantity of their work and, in any case, one that is sufficient to guarantee a decent lifestyle for themselves and their family (Article 36, Italian Constitution). When deciding on minimum pay levels, the courts often consider the minimum salary set out in the national collective bargaining agreements for the relevant sector, even if the employer does not apply them.

Working time

The maximum working time must be fixed by law (Article 36, Italian Constitution). Currently, employees are entitled to a daily rest period of 11 consecutive hours every 24 hours. This restricts how many hours a worker can work in a day. The normal working week is 40 hours, and the maximum working week is an average of 48 hours every seven days, including overtime, calculated over a four-month reference period. Collective bargaining agreements can extend this reference period to six or 12 months provided that there are objective, technical or organisational reasons for doing so. Collective bargaining agreements often provide for a shorter normal working week (for example, 37 or 39 hours).

Applicable collective agreements regulate overtime. Where no collective agreement applies, overtime must be agreed between the parties, although overtime cannot exceed 250 hours per year.

Part-time work is governed by the law and the applicable national collective bargaining agreements.

Sick leave

In the event of sickness, the employee's protection is guaranteed by law. Protection has remarkably improved, mainly through national collective bargaining agreements. During sickness, the suspension of the contract, with job protection, lasts for periods usually determined by collective agreements, according to the employee's seniority. During this time, the worker is fully paid (by the employer or by the Italian Social Security Institute). Beyond this period, an employee is usually entitled, under collective agreements, to a further period of unpaid leave.


The Italian Constitution recognises the right to strike, which must be exercised within the limits fixed by the law (Article 40). However, only one law regulates the right to strike, which applies to essential public services (Act 146, 12 June 1990). The law and collective agreements provide for and regulate other union rights (such as rights of assembly).

Maternity and parental rights

Italian labour law provides for various maternity protection measures. In particular, the law provides for a compulsory period of maternity leave. During this period the employee is entitled to:

  • Retain her job.

  • Do no work.

  • Receive a maternity allowance instead of pay.

The maternity leave period covers all of the following:

  • Two months before the expected date of birth.

  • Period between the expected date of birth and the actual date.

  • Three months following the birth.

Additional periods of paid leave before or after the child's birth are granted on the occurrence of exceptional events, such as pregnancy at risk, child's sickness and multiple births.

If the mother does not take maternity leave (due to death or infirmity, or where the father has exclusive custody of the child), the father is entitled to three months' paternity leave after the birth of the child. 

Parental leave has been recently reformed by Legislative Decree No. 80/2016, amending Law No. 151/2001.

Health and safety

The provisions on health and safety, which have been unified through Legislative Decree No. 81/2008, are particularly relevant to construction projects (see Question 24).


In Italy, there are limitations on an employer's ability to terminate an employment contract. Some of the limitations are based on Italy's anti-discrimination laws and prohibit the termination of employees on the basis of protected characteristics (such as those applicable to pregnant women, employees on parental or family leave, employees who are unable to work due to illness or accident and employees belonging to unions).

Employers can dismiss employees in the following circumstances:

  • Individual dismissal for just cause.

  • Individual dismissal without a just cause but for a justified subjective reason (giustificato motivo soggettivo).

  • Individual dismissal for a justified objective reason (giustificato motivo oggettivo).

  • Collective dismissal, which occurs when an employer of more than 15 employees dismisses at least five individuals employed in one or more departments within a period of 120 days, as a result of either a reduction in production or a change in the type of work performed.

23. Must an employer pay statutory redundancy or other payments at the end of a project? Are all employees eligible?

The Italian labour laws and national collective bargaining agreements contain specific provisions relating to the termination of employment contracts.

In particular, at the end of the employment relationship, the employer must pay the due periods of holidays and leave that the employee accrued and did not use.

An employer that wishes to terminate a permanent employment contract, except for just cause, must give notice to the employee (the duration of which is determined in the applicable collective agreement) or an indemnity in lieu of notice.

In any case, a statutory termination indemnity is due (trattamento di fine rapporto) for all employees whose employment is terminated for any reason (Article 2120, Italian Civil Code). Self-employed workers and collaborators are not entitled to this indemnity.

In the context of procurement and subcontracts, there are specific rules that protect workers. The employer, the contractor and any subcontractor are jointly liable for the payment of any amounts owed to workers as remuneration and/or social security contributions (Article 29, Legislative Decree No. 276 of 2003).


Health and safety

24. Which health and safety laws apply to projects?

Health and safety on building sites is regulated by Legislative Decree No. 81/2008, which sets out the general principles and measures to be taken to guarantee the safety of workers.

The employer is responsible for the implementation of health and safety measures on building sites, unless a person responsible for the works (responsabile dei lavori) is appointed. The principal or the person responsible for the works must evaluate, at the planning stage, the health and safety plan (piano di sicurezza e coordinamento).

Additionally, to guarantee the workers' health and safety, and to contest undeclared and irregular work, the inspectors of the Ministry of Welfare can adopt measures to suspend an entrepreneurial activity in the following cases:

  • Workers are not registered in the payroll or in any other mandatory document.

  • Serious and repeated infringements of health and safety requirements, such as:

    • failure to complete the risk evaluation document;

    • failure to provide training;

    • failure to set up a prevention unit; and

    • infringements that lead to asbestos-related risk.

Penalties apply for breach of the obligations of employers and/or persons responsible for the works.


Environmental issues

25. Which local laws regulate projects' effects on the environment?

The implementation of EU environmental directives has paved the way for Italian environmental laws in all sectors, including water, air, waste and environmental impact assessments. Legislative Decree No. 152 of 3 April 2006, as amended (Environmental Code) contains the relevant provisions. Legislative Decree No. 128 of 29 June 2010 included into the Environmental Code the provisions of Directive 2008/1/EC concerning integrated pollution prevention and control (IPPC Directive).

Construction projects must also comply with local rules adopted by the competent regions, provinces and municipalities.


Italy first adopted air pollution legislation in 1966, and additional regulations setting guidelines for controlling pollution were added in the 1980s. Part V of the Environmental Code requires the authorisation of air emissions before the installation, substantial modification or transfer from one place to another, of plants discharging air emissions. Environmental and building permits contain requirements relating to gas emissions thresholds.


Part III of the Environmental Code regulates the protection of water from pollution and implements the relevant EU directives. The regional legal requirements must be adapted to comply with the requirements of the Environmental Code. In this context, there is consensus among the professionals involved on the need to develop and improve the national water infrastructure network.


Part IV of the Environmental Code implemented Directive 2008/98/EC on waste, which sets out the fundamental principles and rules for the definition and management of waste. Regional legal requirements must be adapted to conform to these requirements. To create a "recycling society", the legislators have identified specific objectives and have considered a genuine prevention programme. In this context, the reuse of waste from construction works and demolitions must be increased by 70% by 2020 (Article 181, Environmental Code).

Environmental impact assessments (EIAs)

Projects that are deemed to produce significant and negative effects on the environment are subject to the EIA procedure in accordance with EU rules.

An application for an EIA must be filed before, or simultaneously with, the applications for other relevant authorisations. EIAs are considered separately because of their objects, their contents and their aims. EIAs are aimed at verifying the environmental sustainability of public and private projects having significant effects on the environment. The IPPC Directive is aimed at preventing and controlling pollution arising from industrial activities.

Generally, EIAs concern specific construction works or specific projects (and their substantial modifications) and provide measures designed to prevent (where possible) or reduce emissions in the air, water and land, including measures concerning waste, to achieve a high level of protection of the environment.

Sustainable development

There are no overriding regulatory requirements to use sustainable construction practices in addition to the requirements relating to carbon emissions or climate change targets. Over the past few years, a few key drivers (for example, legislation, certification, the active role of trade associations and green building clusters) have increased the interest and demand for green building products and services in Italy.

26. Do new buildings need to meet carbon emissions or climate change targets?

Legislative Decree No. 28 of 3 March 2011 implemented Directive 2009/28/EC on the promotion of the use of energy from renewable sources, as part of the EU climate change and energy package and to meet the EU "20-20-20" targets (that is, the goals to have a 20% reduction in CO2 emissions, 20% of the energy coming from renewables and a 20% increase in energy efficiency by 2010). Italian legislation therefore requires a reduction in energy use and imposes technical standards for reducing carbon emissions, in accordance with the requirements of the Kyoto Protocol to the UN Framework Convention on Climate Change. In particular, projects for new buildings and the significant renovation of buildings must provide use a certain percentages of renewable sources for the consumption of energy, heating and air conditioning, which are set out in Annex 3 of Legislative Decree No. 28 of 3 March 2011 (Article 11, Legislative Decree No. 28 of 3 March 2011). Compliance with these obligations is a condition for obtaining a building permit. Legislative Decree No. 28 of 3 March 2011 also promotes the production of electricity through photovoltaic sources.

Italy has also implemented Directive 2010/31/EU on the energy performance of buildings (Law Decree 63/2013 as converted into Law 90/2013).


Prohibiting corrupt practices

27. Are there any rules prohibiting corrupt business practices and bribery (particularly any rules targeting the projects sector)? What are the applicable civil or criminal penalties?


Corruption and bribery constitute two distinct criminal offences under the Italian Criminal Code. In addition, the Italian Criminal Code sets out sanctions for both domestic and foreign bribery committed by individuals (Articles 321, 322 and Article 322-bis, respectively).

Italy is also a party to the:

  • UN Convention against Corruption 2003.

  • OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions 1997.

The Anti-Corruption Authority (Autorità Nazionale Anticorruzione) (which controls public contracts, among other things) is responsible for preventing corruption in public procurement procedures. Any public administration can refuse to proceed with selection in any phase of the procedure when a case of corruption is suspected.


The penalties for corruption offences include:

  • Imprisonment.

  • Bar from entering into public contracts and/or from holding public office.

  • Confiscations.

Additionally, legal entities and other types of enterprises and associations without legal personality can be held administratively liable for certain criminal offences (including bribery, false accounting and money laundering) committed by individuals holding a position in these entities (Legislative Decree 231/2001). Administrative liability can entail:

  • Fines.

  • Suspension or revocation of authorisations, licences or concessions.

  • Prohibition on contracting with the public administration.

  • Denial of facilitations, funding, contributions and subsidies.

  • Prohibition on advertising and conducting business activities.



28. What rights do the client and funder have on the contractor's bankruptcy or insolvency?

Under Italian Bankruptcy Law (Royal Decree 267/42, as amended), a construction contract is automatically terminated in the case of bankruptcy of either party, unless the bankruptcy receiver resolves to continue the contract in the interest of creditors within 60 days from the declaration of insolvency. Where the contractor's specific qualities were of the essence (intuitus personae), the contract will be terminated on bankruptcy of the contractor, unless the client decides to continue the relationship (Article 81, paragraph 2, Italian Bankruptcy Law).

In projects for the development of private residential buildings, the developer/employer must provide to buyers of each residential unit a bank guarantee to cover the risk of interruption of the project due to the developer's/employer's insolvency (Decree 122/2005).



29. Are public private partnerships (PPPs) common in local construction projects? If so, which sectors commonly use PPPs?

Private sector participation in public infrastructure and services projects is becoming more and more common in Italy. PPPs have been used in a wide range of sectors and projects, including:

  • Transport (road, rail, light rail and underground).

  • Network infrastructures (for example, gas and electricity).

  • Airports and ports.

  • Water plants.

  • Public lighting.

  • Public parks.

  • Sports facilities.

  • Prisons.

  • Schools.

  • Housing.

  • Healthcare.

30. What local laws apply to PPPs?

PPPs are regulated by:

  • Articles 180 et seq of the New Code of Public Contracts.

  • Provisions of the Italian Civil Code.

  • Relevant sectoral laws (for example, laws relating to water resources, waste, energy, transport, gas and so on).

31. What is the typical procurement/tender process in a PPP transaction? Does the government or another body publish standard forms of PPP project agreement and related contracts?

Italian laws provide both for contractual and institutionalised PPPs, in accordance with EU rules. The main forms of PPPs are:

  • Works concession.

  • Service concession.

  • Project finance.

  • Sponsoring.

  • Availability contract.

  • Financial lease for public works.


Dispute resolution

32. Which are the most common formal dispute resolution methods used? Which courts and arbitration organisations deal with construction disputes?

Formal dispute resolution methods

In the construction industry, the parties can use all types of dispute resolution methods to resolve their disagreements. If the parties do not choose another method, they can submit their case before the ordinary court that is competent under the rules of the Italian Code of Civil Procedure. The court of the place where the building is located is considered as the competent court. However, because of the length of ordinary trials, the parties may opt for alternative dispute resolution mechanisms.

In public contracts, the private party can file a petition with an administrative court if it claims that the public authority violated its legitimate interests.

Courts and arbitration organisations

Ad hoc arbitration proceedings are frequently used in the construction industry. When opting for institutional arbitration, the parties most commonly use the:

In the context of public contracts, Article 209 of Legislative Decree 50/2016 provides for a specific arbitration procedure.

33. What are the most commonly used alternative dispute resolution (ADR) methods?

Apart from domestic and international arbitration, dispute boards are becoming more and more frequent in practice. In the context of public works, Legislative Decree 50/2016 recently introduced the Dispute Review Board (collegio consultivo tecnico), which largely resembles dispute boards.



34. What are the main tax issues arising on projects?

The main tax issues arising on projects relate to:

  • Corporate income tax (Imposta sul Reddito delle Società) (IRES). Companies resident in Italy must pay IRES on their income (earnings before taxes and non-deductible expenses) earned in Italy or abroad. Non-resident companies are only liable for IRES on income earned in Italy, including income earned through a permanent establishment. The applicable rate is now 27.5%, but is expected to be reduced in the near future to 24%.

  • Regional tax on businesses (Imposta regionale sulle attività produttive) (IRAP). IRAP is levied on the net value of production generated in a region. IRAP is calculated by subtracting from revenues all intermediate costs. This tax is also levied on the production generated by non-residents.

  • Value added tax (VAT). Generally, VAT is levied on the sale of goods or services produced or rendered within the Italian territory. The current rate of general VAT is 22%.

35. Are any methods commonly used to mitigate tax liability on projects? Are there any tax incentives to carry out regeneration projects?

Mitigating tax

Real estate funds can be used to mitigate tax. An adequate tax planning structure should be set out on a case-by-case basis, after an analysis of the specific situation.

Tax incentives

There are certain tax advantages in specific sectors, including reduced VAT (10%) for housing regeneration projects.


Other requirements for international contractors

36. Are there any specific requirements that international contractors or construction professionals must comply with?

Non-EU contractors and construction professionals may be subject to additional requirements under EU legislation.



37. Are there any proposals to reform construction and projects law?

Legislative Decree 50/2016, which entered into force on 18 April 2016, enacted the New Code of Public Contracts and implements:

  • Directive 2014/23/EU on the award of concession contracts.

  • Directive 2014/24/EU on public procurement.

  • Directive 2014/25/EU on procurement by entities operating in the water, energy, transport and postal services sectors.

Legislators are currently enacting specific regulations to provide a comprehensive legislative framework for construction activities.


Main construction organisations

National Association of Private Construction Contractors (Associazione Nazionale Costruttori Edili) (ANCE)

Main activities. The ANCE is active in public works, and residential and industrial building projects. It represents 20 regional organisations, 102 provincial associations and 20,000 construction companies of any specialisation and dimension.


Online resources



Description. Normattiva is the most important database of current Italian legislation, and is managed by the Italian Government. It provides access to state and regional laws currently in force, and makes references to laws approved by competent authorities to be published in the near future. This website is available in Italian only.

Giurisprudenza amministrativa


Description. Giurisprudenza amministrativa is the most important database of current Italian case law on administrative matters, including public procurement contracts and tenders. This website is managed by the administrative courts.

Anti-Corruption Authority (Autorità Nazionale Anticorruzione)


Description. The Anti-Corruption Authority was established by Law No. 114/2014. It replaces the Authority for the Supervision of Public Contracts and is responsible for fighting corruption in the activities of public authorities, and for promoting transparency, rightfulness and competition among operators in the context of public contracts.

Chamber of Arbitration of Milan (Camera Arbitrale di Milano)


Description. The Chamber of Arbitration of Milan is a special branch of the Chamber of Commerce of Milan and specialises in commercial dispute resolution.

Contributor profiles

Marco Padovan, Founder

Studio Legale Padovan

T +39 024 814 994
F +39 024 398 1694

Professional qualifications. Italy, Attorney at law, 1983

Areas of practice. Construction law; international trade, export control and international sanctions; mergers and acquisitions; project financing and finance law.

Non-professional qualifications. MA in International and Comparative Business Law, London Guildhall University, 1995

Recent transactions

  • Advising an Italian general contractor: PPP project in Turkey.
  • Advising an Italian general contractor: major infrastructure project in Poland.
  • Advising an Italian general contractor: major infrastructure project in France.
  • Advising an Italian general contractor: infrastructure project in Serbia.
  • Advising an Italian general contractor: infrastructure project in Egypt.
  • Advising an Italian general contractor: infrastructure project in Croatia.
  • Advising a world leading real estate development group: setting up of the largest shopping centre in Europe.
  • Advising a pool of renowned Italian and international architects and engineers: joint participation to a public tender procedure.
  • Advising a company belonging to a French-based group: management of a contract for the design, production and commissioning of an industrial waste treatment plant in Italy.
  • Advising a leading Italian railway and civil works contractor: review and update of its subcontract, supply, services, consultancy and design forms of contracts.
  • Advising a glass industry leading company: negotiation of a contract for engineering, procurement, delivery, installation and commissioning of a container glass production plant in an African country.

Languages. English, French, Spanish

Professional associations/memberships.

  • International Bar Association (IBA).
  • American Bar Association (ABA).
  • Italian Chamber of Commerce in Turkey.
  • Italy-Iran Chamber of Commerce and Industry.
  • Chambre Française de Commerce et de l'Industrie en Italie.
  • Camera di Commercio Italo-Russa.
  • Dispute Resolution Board Foundation (DRBF) (US).
  • Society of Construction Law (UK).
  • Italian Society of Construction Law (ISCL).
  • Credimpex Italia.
  • Associazione per il Commercio e la Cooperazione Italo-Turca (founding member and Chairman).
  • Centro Studi Finanza e Politica Multilaterale (founding member and Chairman).
  • International Center for Contemporary Turkish Studies (ICCT) (founding member and Chairman).
  • Legal Netlink Alliance (board member). and global coordinator of the
  • LNA Construction Law Practice Group (global co-ordinator).

Roberto Panetta, Of Counsel

Studio Legale Padovan

T +39 024 814 994
F +39 024 398 1694

Professional qualifications. Italy, Attorney at law, 2009; Adjunct Professor of Private Law, Bocconi University, Milan, Italy; Expert Fellow of Construction Law, Bocconi University, Milan, Italy and Luiss University, Rome, Italy.

Areas of practice. Contract law; construction law; litigation; domestic and international commercial arbitration.

Non-professional qualifications. Master's Degree in International Dispute Settlement, Graduate Institute of International and Development Studies of Geneva, University of Geneva; PhD in European Private Law, University of Padua

Languages. English, French

Professional associations/memberships. Italian Society of Construction Law; Swiss Arbitration Association; Dispute Resolution Board Foundation; International Bar Association.

Publications. Authored a book on the Italian Construction Contract and several papers and commentaries in leading publications on civil law, construction law, arbitration and dispute boards.

{ "siteName" : "PLC", "objType" : "PLC_Doc_C", "objID" : "1247643950448", "objName" : "Construction and projects in Italy overview", "userID" : "2", "objUrl" : "", "pageType" : "Resource", "academicUserID" : "", "contentAccessed" : "true", "analyticsPermCookie" : "2-605a14e:15af51f9872:27b2", "analyticsSessionCookie" : "2-605a14e:15af51f9872:27b3", "statisticSensorPath" : "" }