AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
An Italian company has three common routes: engage people as independent contractors, use an employer of record (EOR) that employs them in Nigeria for you, or set up a Nigerian subsidiary that runs its own payroll. Once someone is an employee in Nigeria, PAYE is due to the tax authority of the state where they live on 1 January (or to the NRS if they have no state of residence), and pension contributions follow the Pension Reform Act. Italy and Nigeria have no general tax treaty in force, which makes the tax-presence question more important.
Three routes, and what each means
| Contractor | Employer of record | Nigerian subsidiary | |
|---|---|---|---|
| Who employs | Nobody: a business-to-business contract | The EOR, in Nigeria | Your Nigerian company |
| Who runs PAYE and pension | The contractor handles own tax | The EOR | Your subsidiary |
| Set-up effort | Low: a contract | Medium: a service agreement and fee | High: CAC incorporation, tax registration, bank account |
| Main risk | Misclassification; tax presence | Cost; the EOR's quality | Ongoing filings and audits |
| Best for | A few specialists with their own clients | A small team, quickly | A long-term team or local sales |
The contractor route, and its limits
Paying a Nigeria-based freelancer an invoice each month is the simplest arrangement, and it is covered in our guide to hiring a contractor in Nigeria from Italy. The risk is that a contractor who works only for you, on your hours, under your managers, looks like an employee. Nigerian courts do not use a single test: they weigh control, integration into the business, economic reality, mutuality of obligation and exclusivity, according to a June 2026 note by Adeola Oyinlade & Co. A reclassified worker may claim notice, leave and sick pay under the Labour Act, and can bring wrongful or unfair termination claims at the National Industrial Court.
Tax presence: the question to settle first
The same note says the Nigeria Tax Act widens the idea of a permanent establishment to a service presence through employees, agents or subcontractors. If people working for your Italian company in Nigeria create such a presence, the company itself may owe Nigerian tax on the profits connected with it. This is why many foreign firms choose an EOR or a subsidiary once a team grows: the Nigerian entity carries the local obligations.
Treaty protection is limited. The FIRS information circular on treaty claims (2022/15) lists Nigeria's treaty with Italy as covering air and shipping only. So, unlike for a UK or French company, there is no general treaty definition of a permanent establishment, and no mutual agreement procedure, to fall back on if both countries tax the same profit. See the Italy-Nigeria treaty question.
PAYE when you employ in Nigeria
Under the Nigeria Tax Act 2025, an employee is taxed in the state where they have their place or principal place of residence on 1 January of the tax year, or on the date they take up full duties if they start mid-year, according to Streamsowers & Köhn's March 2026 overview of the Twelfth Schedule. Someone on leave on 1 January is treated as resident where they lived just before the leave. If the employee has no place of residence in any state, the employment is treated as foreign employment and the NRS administers the tax. Benefits in kind are taxable where the employer meets expenses for the employee: the use of an asset at 5% of its cost, and accommodation capped at 20%, in that summary.
For the 2026 tax bands themselves, see the Nigeria library's guide to PAYE bands for 2026.
Pension and other deductions
Employers in Nigeria with staff on payroll register them with a pension fund administrator and remit both the employer and employee contributions each month. The rates and the remittance rules are set out in the Nigeria library's guide to pension contributions in Nigeria; an EOR or your subsidiary's payroll provider should handle them as part of the service.
Paying people: the practical side
Whatever the route, decide early which currency people are paid in. Staff in Nigeria spend in naira, and under the CBN's 2026 FX Manual the naira is the legal tender for transactions within Nigeria. An EOR or subsidiary will normally run payroll in naira; a contractor may invoice in euros or naira by agreement. Fix the pay date, the exchange-rate rule if pay is set in euros, and who bears transfer costs, and write them into the contract.
Steps for an Italian company
- Decide whether each person is truly independent. If not, use an EOR or a subsidiary.
- Ask a Nigerian tax adviser whether your activity in Nigeria creates a permanent establishment, given there is no general treaty with Italy.
- If using an EOR, get its employment contract, payroll breakdown and proof of PAYE and pension remittances each month.
- If setting up a subsidiary, plan for CAC incorporation, tax registration, a Nigerian bank account and a payroll calendar.
- Ask your commercialista how the payments are recorded and whether any Italian obligations arise on the cost.
Where Pryme fits
A Nigerian subsidiary or an Italian company can open a Pryme Business Account holding euros and naira, convert with Swap (the app shows the rate and the fee before you approve) and pay a team through payroll or bulk payouts. Outside Nigeria, these activities are carried out through regulated partners.
Questions people ask
Can an Italian company employ someone in Nigeria directly?
It can, but it then takes on Nigerian payroll duties and may create a taxable presence. Many firms use an employer of record or a Nigerian subsidiary instead.
Which state collects PAYE for a Nigerian employee?
The state where the employee lives on 1 January of the tax year; if they have no state of residence, the NRS administers it.
Is there a double tax treaty between Italy and Nigeria?
The FIRS circular lists the Italy treaty as covering air and shipping only, not general business profits.
Is it safer to pay Nigerian staff as contractors?
Only if they are independent in fact. Courts look at control, integration, economic reality and exclusivity, not the label.
Sources
- Mondaq (Streamsowers & Köhn): Taxation of employment income under the Nigerian tax reform Acts, 11 Mar 2026 · accessed Oct 2026
- Adeola Oyinlade & Co: Worker misclassification in Nigeria, 18 Jun 2026 · accessed Oct 2026
- FIRS Information Circular 2022/15 on claiming tax treaty benefits in Nigeria (11 May 2022, hosted by KPMG) · accessed Oct 2026
- TheCable: CBN FX Manual 2026, what changes (3 Jun 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.