Italy Payroll Guide
HR & Payroll in Italy
Good to know
- Local currency: Euro (€)
- Minimum salary: Italy does not have a legally mandated, nationwide minimum wage set by the government.
- Salary Payment: Salaries are typically paid monthly While less common, some agreements or specific circumstances may involve weekly or other payment frequencies.
- Salary Calculation: Gross to Net
- Legal Working Hours: 40 hours, typically divided into eight-hour days from Monday.
About Italy
Italy is part of Europe, and it is composed of 20 regions, with Rome as its capital. The country has a population of approximately 60 million and covers an area of roughly 301,000 square kilometres. In this beautiful country, there are three different climates: mountains in the north, continental in the plain, and Mediterranean in the south, a perfect climate to spend a beautiful holiday.
Payroll Italy is different from that of the most European countries, and newcomers to the Italian market may find local requirements complex and confusing.
Italy is subject to National Labour Collective Agreements, they define the general rules of work, and individual employment contracts cannot deviate from them. Deviations from NCLA are permitted only when the terms of the individual employment contract are higher than those described in the NCLA (for example, an employer may decide to offer more vacation days than the one specified in the applicable NCLA).
The Italian Social Security System
The Italian social security system has like four key players and contributions as following
INPS (Istituto Nazionale della Previdenza Sociale): e primary body responsible for managing and administering the social security system. It collects contributions and disburses benefits.
INAIL (Istituto Nazionale per l’Assicurazione contro gli Infortuni sul Lavoro): Handles insurance for work-related injuries and occupational diseases.
Employers and Employees: Both employers and employees contribute to the social security system.
All Italian employees, even those hired for a fixed period, must be registered at the INPS, which covers services including but not limited to:
Retirement Pensions (Pensioni di Vecchiaia e Anticipate).
Disability Benefits (Invalidità): Supporting individuals unable to work due to disability.
Survivors’ Pensions (Pensioni ai Superstiti): Offering financial assistance to surviving family members.
Family Allowances (Assegno Unico Universale): Supporting families with children.
INPS rates vary according to many factors such as industry, the total number of employees on the payroll and the location of the business but typically range between 29% and 32% of the employee’s gross wage. The specific contribution rate depends on the profile of the company, its industry, the number of employees and their positions.
Income Tax
In Italy, the personal income tax (IRPEF – (Imposta sul Reddito delle Persone Fisiche) is deducted at source. Italy utilizes a progressive income tax system, meaning the tax increases as income rises. For 2025, the IRPEF rates structured as follows:
Income up to €28,000: 23%
Income from €28,001 to €50,000: 35%
Income over €50,000: 43%
Residents Taxation in Italy:
Global Income: Residents are taxed on their worldwide income, regardless of where it’s earned.
Deductible Expenses (Oneri Deducibili): They can deduct a wide range of expenses to reduce their taxable income, including social security contributions, charitable donations, and certain medical expenses.
Deductions (Detrazioni): Residents can claim various deductions from their gross tax, such as deductions for dependents (spouse, children), and certain types of expenses (mortgage interest, education)
Non- Residents Taxation in Italy:
Italian-Sourced Income: Non-residents are taxed only on income earned within Italy.
Limited Deductible Expenses: They have a more limited range of deductible expenses, primarily specific donations.
Limited Deductions: They can claim certain deductions from gross tax, but these are restricted compared to residents.
No Family Deductions: Non-residents cannot claim deductions for family dependents.
Social Contributions in Italy
The contribution rates in Italy vary according to the business sector to which the company belongs (industry, commerce, public sector, etc.), the number of employees and their professional qualifications. The total social security contribution is approximately 40% of an employee’s gross salary, with the exact rate varying based on the company’s industry, workforce size, and the employee’s role. The contributions are distributed as follows:
Employees’ charge is around 30% (range between 29% and 33%).
Employee's charge is around 10%
The rates of financing for social insurance schemes (sickness, Maternity, IVS (Invalidity, old age, survivors), Unemployment, Family benefits, etc) and other social security insurance may be excluded or may be payable to varying degrees depending on the production sector to which the company belongs. For example, the standard employer rate for maternity is indeed 0.46%, and it is reduced to 0.24% for the commercial sector.
Our HR & Payroll Experts are Ready to Help
Payroll and HR are different in each country and to each business. Trust one of our local experts to ensure your company’s compliance in Italy.
Our Payroll and HR services in Italy
- Implementation and testing of the software
- An understanding of your individual business payroll processes
- Online payslips & payments
- A dedicated payroll expert
- Data entry & processing
- Payslip distribution
- Personnel & document production
- Legislation compliance
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