Payroll and Benefits Guide Italy
Last updated: May 09, 2023
Contributions
Employer
Employer Payroll Contributions
| 29.40% – 33.00% | Total Employment Cost |
| 29.00% – 32.00% | Social Security |
| 0.40%-1% | Injuries at Work Insurance (INAIL) |
Employee
Employee Payroll Contributions
| 10.00% | Total Employee Cost |
| 10.00% | Social Security |
Employee
Employee Income Tax
| 23.00% | Up to 15,000 |
| 25.00% | 15,000 – 28,000 |
| 35.00% | 28,000 – 50,000 |
| 43.00% | Over 50,000.01 |
Employer taxes
Employee taxes
Minimum Wage
General
There is no statutory minimum wage in Italy. The sector usually sets minimum wages for each contractual level in the relevant national collective agreements (NCAs).
MINIMUM WAGE (PER MONTH)
Payroll
Payroll Cycle
The payroll cycle in Italy is generally monthly and is paid on the 27th of each month.
13th Salary
Under Italian law, salary calculations are paid in 12 monthly installments. The additional 13th installment (“tredicesima”) is paid out each year alongside the December salary.
Some NCAs also include a 14th monthly installment, normally paid in June.
Working Hours
General
Standard working hours within Italy are 8 hours per day, 40 hours per week.
Overtime
All work more than the standard working hours a week is to be paid as overtime and is regulated by employment contract/collective agreements etc. In general, overtime maximum limits paid are as set in the NCA.
Working Week
Monday-Friday
Leave
Paid Time Off
The Civil Code outlines paid leave in Italy as a statutory minimum of 8 days paid leave a year, following completion of 1 year of service. This leave is in addition to any public holidays. Minimum leave of all other employees is determined by their collective agreement, which generally provides paid annual leave of not less than four weeks per year.
Public Holidays
There are 12 national holidays.
If a public holiday falls on a Sunday, the day is carried over to Monday or paid in lieu.
In addition to the below national holidays there may be regional holidays that workers are also entitled to take off.
Sick Days
Employees in Italy are entitled to paid sick leave, paid for by the employer and subsequently the government.
For the first two periods of sickness per year, the employer pays the first three days at 100.00% of the regular salary rate of pay. This reduces to 66.00% for the third period of sickness and 50.00% for the fourth. Any subsequent sickness in one year is unpaid.
The employee continues to receive 100.00% of the regular salary rate of pay from the fourth day onwards, paid as 50.00% by the employer and 50.00% by the Italian government from days 4 to 21. From day 22 onwards, the government pays 66.00%, and the employers’ payment reduces to 34.00%. Employees are required to provide a medical certificate from a doctor from the first day of their illness.
Maternity Leave
All female employees are entitled to 5 months of paid maternity leave, generally taken two months before the due date until three months after childbirth. The maternity leave before the due date can start at an earlier date than two months if the employee’s work is dangerous for her health or that of the unborn child or delayed until after childbirth.
The employee is entitled to 80.00% of her regular salary during maternity leave, which the employer pays and is subsequently reimbursed by the INPS.
In addition, a new mother can take up to six months of unpaid leave after maternity leave. Alternatively, if a mother chooses not to take parental leave after maternity leave, she can work 6 hours a day until the child is one year old.
Mothers whose income was lower than 8,145 EUR prior to maternity leave will have their maternity indemnity increased by three months.
PAID MATERNITY LEAVE (DAYS)
Paternity Leave
The father is entitled to receive 100.00% of the regular salary and compulsory paternity leave of 10 days within five months of the child’s birth.
Parental Leave
In Italy, an employee can take up to 10 months of unpaid parental leave.
With effect from 1st January 2023, the government issued a new law that introduces an extra month of parental leave, paid with an allowance equal to 80% of the employee’s salary. This month of enhanced parental leave must be used, alternatively by either parent, before the child reaches the age of six.
Termination
Termination Process
Termination must be justified, with notice, and per the NCA, unless it is through a mutual agreement that the employee is not fulfilling work requirements, has performed serious misconduct, or that the termination is due to economic factors.
Notice Period
In Italy, the notice period is dependent upon the party that initiated the termination, whether it is the employer or the employee. The length of the notice period is determined by the applicable NCBA, the length of the employment and the classification of the employee. According to some of the major NCBA in Italy, If the employer decides to terminate the contract, the notice period can range from 30 days to 12 months. However, if it is the employee who resigns, the length of notice required will vary from 30 days to 4 months.
Severance Pay
In Italy, severance pay is applicable if the employer made the termination for authorized causes. Upon termination, the employee must be paid the TFR (Trattamento di fine rapporto), which the employer defers each month. The TFR is calculated according to the formula of a year’s overall salary divided by 13.5, plus 1.50% for each year of service plus compensation for inflation.
Probation Period
Statutory probation periods in Italy are set per the job role of the employee. For employees with no managerial responsibilities, the probation period is three months, whereas for all other employees/managers/supervisors, etc., the probation period is six months.
However, the probation period is commonly set in the relevant NCAs and possibly longer.
Common Benefits
General
- Mobile Phone Allowance
- Meal Vouchers
- Electronic vouchers (non-taxable up to € 8 in value each for each working day)
- Paper vouchers ( non-taxable up to € 4 in value for each working day)
- Supplemental health care contributions
- Car Allowances
- Wellness Allowance
VISA
VISA
Any foreigners coming to work in Italy require a work visa, a national visa, or a D-Visa, which allows entry into Italy within eight days of arriving in the country. However, additional permission is required (a residence permit – permesso di soggiorno) to stay in Italy.
The potential employer must make all visa applications via a Nulla Osta document at the company province’s (Preffetura’s) Immigration Office (Sportello Unico d’Immigrazione – SUI.
The Italian government has a limited number of approved work permits and only accepts work permit applications occasionally (for a few months every one or two years), depending on the status of Italy’s job market at that time. (Decreto Flussi).
VAT
General
The standard rate of VAT in Italy is 22.00%.
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Questions & Answers
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Payroll and Benefits Guide
in Italy
What’s covered in this guide:
- Employer/employee contributions
- Minimum wage
- Working hours
- Visa requirements
And more...
Public Holidays Calendar
| Day | Date | Holiday | Notes |
|---|---|---|---|
| Sunday | Jan-1 | New Year's Day | |
| Friday | Jan-6 | Epiphany | |
| Sunday | Apr-9 | Easter Sunday | |
| Monday | Apr-10 | Easter Monday | |
| Tuesday | Apr-25 | Liberation Day | |
| Monday | May-1 | International Workers’ Day | |
| Friday | Jun-2 | Republic Day | |
| Tuesday | Aug-15 | Assumption Day | |
| Wednesday | Nov-1 | All Saints' Day | |
| Friday | Dec-8 | Immaculate Conception | |
| Monday | Dec-25 | Christmas Day | |
| Tuesday | Dec-26 | St Stephen’s Day |
With companies moving to telework, are there any restrictions on hours or days worked?
The decision on whether a workforce works at home ore in an office is individual for every company. It does not have any impact on the labor laws between employees and employers.
Is there any compliance about payment of Social Security / Pension / Health insurance to Italy employees?
Hi Liron, employers in Italy are obligated to pay social security at a rate of 29%-32% and to withhold social security from employees at a rate of 10%. Italy has health care through the National Health Service provided to all Italian citizens and funded by taxes, and an old-age pension provided by the government. Collective bargaining agreements, however, may require employers to supplement what the government provides.
Which legal entity is the employee hired from? Do you have a collection of available legal entities?
Hi Edmondo, Everything we do is tailored for each company’s specific needs. I recommend you reach out to our sales team and they will find the right EoR for you. https://papayaglobal.com/contact-us/
If the agency worker works on a public holiday, are they entitled to a premium? If so, what is that?
Hi Wendy, usually work on holiday is paid at the rate of 130% of the regular pay, however, if a collective bargaining agreement is in place, it could be more.
We have received a request to pay one of Italian employees 12k euros towards study costs – please advise if there are any payroll actions re taxes / social security / informing Italian authorities.
Hi Sue, thank you for your question. Can you please provide some more information? Are you looking to pay for a specific course for your employee or is this a flat sum you’d like to give them? Do their studies have anything to do with the qualification of your employee? Lastly, will the employee be absent from work due to their studies?
Hi. Italy work law question. Please explain if you are sick while on vacation and get a doctors letter for the sick days, can/should the affected vacation days be amended to sick leave (as in UK). Thanks
If a worker can provide all the proper documentation (DR and INPS) and prove that they are ill, then those days should be considered sick days, not vacation days.
Thank you so much Erez.
Really appreciate your insight.
The Doctors medical certificate is proof of the illness and states the period “not fit for work”. (Date from: xxxx Date to: xxx)
Would be useful to know where this (illness during vacation days) is covered in Italian law…searching in English doesn’t find much!
All the best
Tim
Glad to help. A guide (unfortunately in Italian) can be found on The National Institute of Social Security (INPS) website explaining what to do if a worker becomes ill while on vacation. https://www.inps.it/news/malattia-allestero-cosa-fare-in-caso-di-assenza-dal-lavoro
Absolutely awesome. That is excellent info – straight to the right place. Thank you so much for your knowledgable guidance. Kind regards. Tim
Hi, is there any usual car allowance amount for sales person in Italy? Thank you.
Hi Jana, there is not.
hi. my company provides a fully paid car incl petrol with no limit. however they decided to remove this from us. as an employe do they have to pay us compensation on a monthly basis so we can commute from our home to the office and back? is there a legal obligation for the employer to keep providing us with the personal cars owned by the company, or any monthly allowance? thanks a lot.
A short drive to the company office is not considered a business trip and no reimbursement is required.
Should the Company’s office be very far from the employee’s home, it could be provided a reimbursement of expenses in case the employee is requested to reach the company’s office. However, such payment is not mandatory.
Different rules apply for travel and business trips requested by the company. In this case, the employee is entitled to receive reimbursement of expenses and travel allowance provided by the applicable NCBA.
Hi,
If indian employee coming to italy abs spent 2 years,
Can he collect social security amount while leaving from italy.
Also italy has 70% exception law in salary for new talent. Is it applicable to Indian citizen coming to italy and staying minimum 2 years?
Foreign citizens who possess specific documentation, such as a residence permit, are enrolled in the social security system. An individual must reside in Italy for more than 183 days a year and not have been in Italy during the two tax periods prior to the transfer in order to qualify for tax relief; they must reside in Italy for a minimum of two years; they must work primarily on Italian soil.
Yes, I am selected In Italian Company and they are giving me the family visa.
I will be also register with Social security.
we are going to spent more than 2 years in Italy.
so can I get 70% tax relief ?
Hi Erez,
Thanks for your reply
Yes I am selected in Italian Company and they are proving family visa.
I will be also going to register with social Security in Italy.
This is first time I am coming to Italy in 1 week of October
So can I say, I will get tax relief of 70% ?
You mentioned pay rates for working on a public holiday. Is time off in lieu permissible in Italy?
In most companies, only the days worked by certain levels of employees are tracked, so weekend work and public holidays are automatically recorded. Overtime would be paid automatically on weekends and public holidays.
If the net income is 52500, how do you calculate the gross salary, which includes all government fees and taxes as well as additional benefits?
The calculation of net to gross cost in Italy is contingent on various factors, including the classification of the worker, collective bargaining agreements (CBA), the type of occupation, and other relevant factors. It is important to consider these variables when determining the net to gross cost for employees in Italy.
While Papaya do not provide a net to gross cost calculator, I would advise to explore other resources, consult with a professional accountant, or tax advisor who can assist in accurately calculating the net to gross cost based on the specific circumstances and variables involved.