Agency and Distribution Agreements in Italy: A Legal Guide for Foreign Companies

Foreign companies seeking to access the Italian market through a local agent or distributor encounter a legal framework that affords the Italian intermediary significant protections — often greater than those available under the laws of the company’s home country. Underestimating these protections can expose the foreign company to unexpected and substantial costs at the end of the relationship.

This guide explains the main features of commercial agency and distribution agreements under Italian law, with particular focus on the aspects most relevant to foreign companies: the distinction between agent and distributor, the applicable legal framework, critical contract clauses, and — above all — the termination indemnity that may be owed to the agent when the contract ends. For a broader overview of Italian commercial contracts: Commercial Contracts in Italy: What Foreign Companies Need to Know.

Agent or Distributor: A Fundamental Distinction

Before examining the specific contracts, it is essential to understand the distinction between the two figures, since they carry very different legal consequences:

• An agent (agente di commercio) is an independent party who promotes the conclusion of contracts on behalf of the principal (the foreign company) without purchasing the goods. The agent never becomes the owner of the products and receives a commission on business concluded. The commercial risk remains with the principal.
• A distributor purchases the foreign supplier’s products and resells them on their own account, assuming the resale risk. The distributor acts in their own name; the foreign supplier has no direct relationship with end customers.

This distinction is critical because the agency agreement is governed by mandatory rules protecting the agent (Arts. 1742 ff. c.c. and Legislative Decree no. 65/1999), while the distribution agreement is in principle an atypical contract governed primarily by the parties’ freedom of contract — with important exceptions and risks discussed below.

The characterisation of the relationship depends on its substance, not on the label in the contract. The decisive elements are the continuity and stability of the promotional activity in the territory, the periodic settlement of commissions, and the presence of territorial exclusivity. A foreign principal who wishes to avoid reclassification must structure the relationship carefully — even the label “occasional deal-finder” (procacciatore d’affari) does not prevent reclassification as an agency relationship where stability, territorial exclusivity, and periodic commissions are present in practice.

Reclassification — Trib. Varese no. 1267/2023: the decisive elements for reclassification as agency are continuity and stability of the promotional activity in the territory, with periodic commission settlements. Trib. Milano no. 10724/2024: the label “occasional deal-finder” does not prevent reclassification where stability, territorial exclusivity and periodic commissions are present. Conversely, Trib. Roma no. 2114/2024: a fixed fee unconnected to business concluded excludes an agency characterisation.

The Agency Agreement: Legal Framework

The commercial agency agreement in Italy is governed by a layered body of rules:

• Arts. 1742–1753 c.c.: the basic Civil Code provisions, many of which are mandatory in the agent’s favour.
• Legislative Decree no. 65 of 10 September 1999: implements EU Directive 86/653/EEC on self-employed commercial agents, strengthening agent protection and introducing the termination indemnity in the current formulation of Art. 1751 c.c.
• Collective economic agreements (AEC): agreements between the agents’ trade associations (Enasarco, Fnaarc) and the principals’ associations, which supplement the statutory framework with specific rules on commissions, expense reimbursements, social security contributions and — as discussed below — the three components of the termination indemnity.

The Principal’s Obligations Towards the Agent

• Payment of commissions: the agent is entitled to commission on all business concluded during the contract in the assigned territory or with the assigned customers, even where the order reached the principal directly without the agent’s involvement (Art. 1748 c.c.).
• Exclusivity: unless otherwise agreed, the principal may not simultaneously engage more than one agent in the same territory for the same products, and the agent may not handle competing products.
• Commission statement: the principal must provide the agent with a quarterly statement of commissions earned (Art. 1749 c.c.).
• Enasarco contributions: the principal is required to register the agent with the agents’ pension fund (Enasarco) and pay the related social security contributions. This obligation applies to all principals — including foreign ones — who engage agents operating in Italy, regardless of the principal’s nationality.

Termination of the Agency Agreement: The Termination Indemnity

The most financially significant aspect for foreign companies using Italian agents is the termination indemnity (indennità di fine rapporto) under Art. 1751 c.c. — one of the most important and least-known provisions of Italian commercial law.

When the Indemnity Is Owed

The indemnity is owed upon termination of the relationship in all cases — including notice of termination by the principal, and notice by the agent where the termination is attributable to conduct by the principal. The indemnity is not owed in the following exhaustive cases:

• Termination by the principal for a serious breach by the agent justifying immediate rescission.
• Termination by the agent that is not justified by conduct attributable to the principal — unless the termination is attributable to the agent’s age, illness, or infirmity that makes it unreasonable to require the agent to continue their activity (Art. 1751, para. 2, c.c.).
• Assignment of the agent’s contractual rights and obligations to a third party agreed with the principal.

The Three-Part Structure Under the AEC: FIRR, Supplementary Indemnity and Merit Indemnity

The Civil Code provides for a single indemnity under Art. 1751 c.c., but under the Collective Economic Agreements (AEC) the indemnity is broken down into three distinct components, each with different preconditions:

• FIRR (Fondo Indennità di Risoluzione del Rapporto): always owed upon termination, regardless of the reason. It is accrued annually by Enasarco and paid to the agent on termination. It is not subject to any merit requirement.
• Supplementary client indemnity (indennità suppletiva di clientela): requires that the contract be terminated through no fault of the agent (notice by the principal, or termination for reasons attributable to the principal) and is grounded in the principle of equity. It does not require proof of the specific conditions of Art. 1751, para. 1, c.c.
• Merit indemnity (indennità meritocratica): the concrete expression of Art. 1751 c.c. and requires proof that the agent introduced new customers or substantially developed business with existing ones, and that the principal still derives substantial benefits from dealings with those customers.

The principle of mandatory protection operates in the relationship between the AEC and statute: where the indemnity calculated under Art. 1751 c.c. is more favourable to the agent than the sum of the three AEC components, the statutory framework prevails.

Three-part structure — Cass. civ., order no. 18575/2026: the supplementary client indemnity requires only that the contract be terminated at the principal’s initiative through no fault of the agent, being grounded in the principle of equity, without requiring the specific conditions of Art. 1751, para. 1, c.c. Trib. Milano no. 3015/2024: the FIRR is always owed upon termination, regardless of the reason. C. App. Palermo no. 1630/2024: where the indemnity under Art. 1751 c.c. is more favourable than the AEC, the statutory framework prevails, even where the applicable AEC has not been disputed.

The Calculation Basis

The calculation base for the termination indemnity includes not only commissions earned but also any fixed fee received by the agent, since Art. 1751 c.c. refers to the broader concept of “remuneration received” (retribuzioni riscosse). The maximum amount is in any event equal to the average annual remuneration received by the agent over the last five years (or over the entire duration of the contract if shorter).

Calculation base — Cass. civ., order no. 23043/2024: the calculation base includes not only commissions but also any fixed fee received by the agent, applying the concept of “remuneration received” under Art. 1751 c.c. C. App. Milano no. 53/2025: principle confirmed on referral.

The One-Year Forfeiture Period: A Deadline That Cannot Be Missed

A critically important provision that foreign companies must be aware of — including from the principal’s side: the agent forfeits their right to the indemnity if, within one year of the termination of the relationship, they fail to notify the principal of their intention to assert their rights (Art. 1751, para. 5, c.c.). This is a forfeiture period, not a limitation period: it cannot be suspended or interrupted, and its expiry permanently extinguishes the right. The notice does not need to specify the amount — it is sufficient to express the intention to assert the right.

Annual forfeiture — Trib. Milano no. 361/2026: the notice within the one-year period under Art. 1751, para. 5, c.c. does not need to specify the amount; it is sufficient to express the intention to assert the right to the indemnity.

Notice Period

Unless there is just cause, an open-ended agency agreement may be terminated by giving notice (Art. 1750 c.c.). The statutory minimum periods range from one month (first year) to six months (sixth year onwards). Unless otherwise agreed, the notice period must expire on the last day of a calendar month (Art. 1750, para. 5, c.c.). The AEC may provide for longer periods.

Critical Clauses in the Agency Agreement

• Territory and exclusivity: clearly define the geographic territory or client portfolio and the consequences of any breach of exclusivity by the principal.
• Minimum turnover thresholds: make the maintenance of exclusivity conditional on achieving sales targets, without the revocation of exclusivity constituting notice attributable to the principal.
• Post-contractual non-compete clause: permitted for a maximum of two years, limited to the contract’s territory and products, and must be remunerated with a specific indemnity (Art. 1751-bis c.c.).
• Applicable law: even where a foreign law is chosen, for an agent operating in Italy, Italian law already applies as the law of the service provider under Art. 4(1)(b) of the Rome I Regulation. The mandatory rules of Art. 1751 c.c. prevail in any event. The Court of Cassation has also held that the right to the indemnity is a non-waivable right, making any contractual derogation of Italian jurisdiction in favour of non-EU courts void.
• Written form: not required for validity, but each party may demand a written copy of the contract (Art. 1742, para. 2, c.c.). A detailed written contract is always advisable in practice.

Applicable law — Cass. civ., Full Court, order no. 21657/2025: the indemnity under Art. 1751 c.c. is a non-waivable right under Art. 4, para. 2, Law no. 218/1995; any contractual derogation of Italian jurisdiction in favour of non-EU courts is void.

The Distribution Agreement: A More Flexible Regime, But Not Without Risk

The distribution agreement is an atypical contract, not governed by specific rules comparable to those on agency. In principle, the parties have wide contractual freedom. However, the foreign supplier must be aware of certain risk areas.

Termination of the Distribution Agreement

• Adequate notice: even where no contractual provision exists, a supplier who terminates a long-standing distribution agreement must give a reasonable notice period, proportionate to the duration of the relationship and the investments made by the distributor. One year’s notice has been held adequate for a relationship of over twenty-five years; three months was held insufficient in the same circumstances. However, where the contract provides for an agreed notice period, compliance with that period does not constitute an abuse of rights in the absence of proof of an exclusive intention to cause harm.
• Client indemnity by analogy — a marginal case: the case law of the higher courts is restrictive on this point. In the absence of a specific contractual provision, the indemnity under Art. 1751 c.c. cannot be extended to a distributor. The analogical extension is an entirely marginal scenario and should not be regarded as an ordinary risk in a distribution contract.

Notice in distribution agreements — Trib. Firenze no. 2877/2025: Art. 1569 c.c. applied by analogy to termination of an open-ended distribution agreement; one year’s notice held adequate for a relationship of over twenty-five years, three months insufficient. Trib. Torino no. 664/2025: termination with contractually agreed notice does not constitute an abuse of rights in the absence of proof of an exclusive intention to cause harm. Exclusion of indemnity for distributor — C. App. Milano no. 2296/2025: the distribution agreement is structurally and functionally distinct from the agency agreement; in the absence of a specific contractual provision, the Art. 1751 c.c. indemnity cannot be awarded to a distributor.

EU Competition Law

Exclusive distribution agreements with Italian importers fall within the scope of EU Regulation 2022/720 on vertical agreements (in force from 1 June 2022, replacing Reg. 330/2010). The main changes: exclusive distribution may now involve up to five buyers per territory; the 30% market share threshold applies to both supplier and buyer. The imposition of minimum resale prices remains a hardcore restriction that does not benefit from the block exemption.

Critical Clauses in the Distribution Agreement

• Duration and termination: clearly define the duration and notice periods. For multi-year agreements, expressly provide for an annual right of termination with adequate notice calibrated to the duration of the relationship.
• Minimum purchase targets: make the maintenance of exclusivity conditional on minimum purchase volumes. Failure to perform allows the supplier to revoke exclusivity or terminate for breach.
• Stock and repurchase: include repurchase obligations for unsold stock upon termination of the agreement.
• Trade marks and promotional materials: regulate the distributor’s use of the supplier’s trade mark and the fate of promotional materials upon termination.

Frequently Asked Questions

How do I know whether my Italian business partner is an agent or a distributor?

The distinction does not depend on the label given to the contract, but on the substance of the relationship. If the partner purchases products on their own account and resells them in their own name, they are a distributor. If they promote contracts on behalf of your company without purchasing the products, they are an agent. Italian courts may reclassify the relationship regardless of the label used, particularly where continuity, territorial exclusivity and periodic commissions are present in practice.

If the contract provides for English or German law, does the Italian agent still have a right to the termination indemnity?

Yes. For an agent operating in Italy, Italian law already applies as the ordinary law of the service provider under Art. 4(1)(b) of the Rome I Regulation, regardless of the choice-of-law clause. The mandatory rules of Art. 1751 c.c. prevail in any event, and the Court of Cassation has declared void any contractual derogation of Italian jurisdiction in favour of non-EU courts (Full Court, order no. 21657/2025).

Can I contractually exclude my Italian agent’s right to the termination indemnity?

No. The termination indemnity under Art. 1751 c.c. is mandatory in the agent’s favour: any clause excluding or limiting it is void. The only way to avoid the indemnity is for the termination to be caused by a serious breach by the agent, or by the agent’s own unjustified termination. Note: if the agent fails to notify the principal within one year of termination of their intention to assert the right to the indemnity, they forfeit that right permanently (Art. 1751, para. 5, c.c.).

Do I have to register my Italian agent with Enasarco even if my company is based abroad?

Yes. The Enasarco registration obligation applies to all principals — regardless of their nationality and location — who engage agents operating in Italy. Failure to pay contributions exposes the foreign principal to penalties and recovery of unpaid contributions plus interest.

Conclusion

Agency and distribution agreements with Italian partners offer foreign companies an effective tool for penetrating the Italian market, but they carry obligations and risks that must be understood before signing — not after. The agent’s termination indemnity — in its three AEC components and subject to the one-year forfeiture period — Enasarco contributions, and the risk of reclassification of a distribution agreement as agency are the three factors that most frequently catch foreign companies off guard at the end of a relationship.

A properly drafted contract, with clauses that appropriately balance the parties’ interests within the limits of the mandatory rules, is the best investment a foreign company can make before expanding into Italy through a commercial intermediary.

For assistance in drafting or reviewing agency and distribution agreements with Italian partners, Studio Legale Giorgianni is available. Further information is available in the Italian Business Lawyer section and on our Italian Lawyer hub page.