Payroll Services in Italy

The pension contribution (IVS) is 33% of pay: 23.81% from the employer and 9.19% from the employee, who pays an extra 1% on pay above €56,224 a year in 2026. For employees first insured from 1996, pension contributions stop at €122,295 a year. Employers also pay unemployment insurance (NASpI) at 1.31%, with an extra 1.4% on fixed-term contracts that rises by 0.5 points at each renewal, and contributions for family allowances, maternity, sickness and wage guarantee funds that depend on the sector, headcount and job category.

In all, the employer usually pays about 30% of gross pay, and the employee 9.19% or a little more where wage guarantee funds apply. Contributions are declared to INPS every month through UniEmens and paid with the F24 form by the 16th of the following month. INAIL accident insurance is paid separately, at the rate of the employer’s risk tariff.

The employer is the withholding agent (sostituto d’imposta): it deducts IRPEF from each salary at 23% on income up to €28,000, 33% from €28,000 to €50,000 and 43% above, after the employee’s tax credits, plus regional and municipal surtaxes that depend on where the employee lives. The 2026 Budget Law cut the middle rate from 35% to 33%.

It also added flat taxes applied through payroll in 2026: 5% on pay rises from collective agreements renewed between 2024 and 2026, for private-sector employees who earned up to €33,000 in 2025; 15% on night, holiday and shift allowances up to €1,500, for those who earned up to €40,000; and 1% on productivity bonuses up to €5,000. Electronic meal vouchers are now tax free up to €10 a day.

Under article 2120 of the Civil Code, every employee accrues TFR (trattamento di fine rapporto): each year, annual pay divided by 13.5, about 7.41%. Apart from the current year’s accrual, the fund is revalued every 31 December by 1.5% plus 75% of ISTAT inflation, and it is paid when employment ends, for any reason. After eight years of service, employees can ask for an advance of up to 70% for medical costs or a first home.

From 1 July 2026, private-sector employees hired for the first time join the pension fund of their collective agreement automatically, with their whole TFR, unless within 60 days they choose to keep it with the employer or send it to another fund. Employers with 50 or more employees pay the TFR that stays with them into the INPS Treasury Fund; since January 2026 this also covers employers that reach 50 after their first year (60 in 2026 and 2027), and from 2032 the threshold is 40.

For an office employee at a services company on €3,000 a month, paid 13 times a year, the gross annual salary (RAL) is €39,000. The employer pays about €11,700 in INPS contributions (30%) and accrues €2,888.89 of TFR: €14,588.89 a year, an annual cost of €53,588.89, or about 37.4% on top of salary, before INAIL accident insurance.

The employee pays €3,584.10 of INPS pension contributions (9.19%), and IRPEF and the surtaxes are withheld from the rest, after tax credits. Most collective agreements pay the 13th month (tredicesima) in December, and some, such as commerce, add a 14th month in the summer: include it in the annual salary.

Normal working time is 40 hours a week, and average weekly hours, overtime included, cannot exceed 48 over four months unless a collective agreement extends the period. Without a collective agreement, overtime needs the employee’s agreement and is capped at 250 hours a year. Employees are entitled to at least four weeks of paid holiday a year, which cannot be paid out instead of taken except when employment ends.

Mothers stop work two months before the expected birth and three months after, five months in all, paid at 80%, and fathers take ten working days at full pay between two months before and five months after the birth. Each parent can then take parental leave until the child turns 14, with up to three months between them at 80% until the child turns six and most of the rest at 30%. Probation, notice and sick pay top-ups are set by the collective agreement.