We have a start up animation and VFX studio in California. Recently we began using the services of digital artists who are not residents of the US.

For example, we subcontracted the production of one piece of digital art to an Italian artist who lives and works in Italy. Once the digital asset is complete he will transfer his work to us via the internet.

Do I treat him like an American subcontractor or must I withhold tax on that individual and what are our reporting requirements related to the use of foreign subcontractors. Do they receive some type of year end statement? (1099).

Is there any documentation/forms that I need from him?

A foreign subcontractor in a foreign country is not required to pay US taxes. To establish that, you should get a W8BEN from him/her. That form is for you only and is not submitted to the IRS. That will allow you not to withhold any taxes.
You would not provide a 1099 for this subcontractor as they are not liable for taxes in the US. However, they might want a statement to use for the Italian tax return, so ask them what kind of document they might want.

TaxForAliens covers this rather well. Note that the W-8BEN DOES have a shelf life and must be renewed periodically (I blieve every three years).