Payroll in Italy
The payroll and tax system in Italy is different from many other European countries, making the Italian regulatory environment uniquely challenging to navigate.
In order to administer accurate and compliant payroll in Italy, you’ll need a firm understanding of the regulations that govern payroll processing and reporting.
The euro (EUR) is the official currency of Italy.
There is no required frequency for wage payments in Italy. Wage payments must be accompanied by a payslip that itemizes deductions. Employers may pay by check or direct deposit into a bank account.
Taxes for payroll in Italy
Corporate entities in Italy are subject to an income tax of 24% plus a regional production tax of 3.9%. Non-operating entities are subject to a 34.5% corporate tax rate.
Generally, employee income tax in Italy is assessed on a progressive scale, with rates ranging from 23% to 43% depending on annual income. Current tax brackets include:
- Up to €15,000: 23%
- €15,000 – €28,000: 27%
- €28,000 – €55,000: 38%
- €55,000 – €75,000: 41%
- Over €75,000: 43%
Regions and municipalities collect an additional income tax of up to 2.03% for regions and up to 0.9% for municipalities.
Italian payroll requires that all employment wages, tax and social security contributions are reported in a yearly document called the Certificazione unica dei redditi di lavoro dipendente (CUD). By March of each year, employers must provide all employees with two original CUD documents for the previous reporting year. Each year a new model of the CUD is released by the Ministry of Finance, due to the introduction of new tax provisions.
Employees and employers contribute to the social security system, which funds social programs such as pensions; disability; benefits for sick leave, maternity and parental leave; workers’ compensation; and unemployment benefits. The National Health Service is financed separately through general taxation.
Generally, employers contribute 35% of gross earnings. Employee contribution rates vary by employment category, but the common rate is 10% of gross earnings.
Contribution rates for social taxes include:
- Pension:19% for employees; 23.81% for employers
- Sick leave: No employee contribution; 22% to 2.44% for employers
- Maternity leave: No employee contribution; 46% to 0.24% for employers
- Workers’ compensation: No employee contribution; 04% to 1.3% for employers, according to an assessed degree of risk
- Unemployment: No employee contribution; 1.61% for employers
- Family allowances: No employee contribution; 0.68% for employers
Additionally, executives and their employers make contributions to supplementary pension funds and health care funds. These supplementary funds may have their own deadlines for payment of contributions.
Employee compensation and benefits in Italy
In Italy, employment contracts are ruled by collective bargaining agreements, locally known as Contrattto Collettivo Nazionale del Lavoro (CCNL). These agreements have a big impact on the structure of payroll in Italy, as they define the general rules of employment and individual employment contracts cannot deviate from these rules.
When processing Italian payroll, you’ll need to consider the following employment regulations:
Partner with Safeguard Global for your payroll in Italy
- Comply with Italian labor laws and regulations
- Deduct the appropriate income, social and other tax withholdings
- Ensure your employees in Italy are paid accurately and on time
The information provided on or through this website is for informational purposes only and does not constitute legal advice. Safeguard Global expressly disclaims any liability with respect to warranty or representation concerning the information contained herein, including the lost essence, interpretation, accuracy and/or completeness of the information in transit and language translation.
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