What is the conguaglio fiscale?
The conguaglio fiscale is the adjustment an employer in Italy makes between the income tax (IRPEF) it withheld from an employee’s pay during the year and the tax actually due on the year’s total pay. Monthly withholding is based on each month’s pay, so the year-end calculation corrects the difference, and the employee receives a refund or has more tax deducted.
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Under article 23 of Presidential Decree 600 of 1973, the employer carries out the conguaglio by 28 February of the following year, or on the date employment ends if the employee leaves during the year.
What it takes into account
The calculation applies the IRPEF brackets to the year’s total pay and deducts the tax credits the employee is entitled to, such as the credits for employment income and for dependent family members, and other deductions handled through payroll. If the employee worked for other employers earlier in the year, they can ask the employer to include that income by handing over the CU from the previous employer by 12 January of the following year.
If pay is not enough
If the pay due is too low to absorb the extra tax at year-end, the employee can pay the amount to the employer or authorise it to be withheld from later pay periods, with interest of 0.5% a month on the deferred amount. Any amount still not withheld, because pay was too low or employment ended, must be notified to the employee, who pays it directly by 15 January of the following year.
The conguaglio and the 730
Separately, when an employee files a 730 tax return naming the employer as withholding agent, the employer pays any refund or withholds any balance due through payroll once it receives the result from the Agenzia delle Entrate. The year-end conguaglio and these adjustments are both reported in the employee’s CU.
The conguaglio when TopSource runs your payroll
When TopSource runs your payroll in Italy, we recalculate each employee’s tax at year-end and on termination, apply their tax credits and any income from earlier employers they report, and settle the difference in payroll.
Frequently asked questions
When is the conguaglio fiscale done in Italy?
By 28 February of the year after the income year, or on the date employment ends if the employee leaves earlier.
Can the year-end conguaglio reduce an employee’s net pay?
Yes. If too little tax was withheld during the year, the difference is deducted in payroll. If pay is not enough, the balance can be spread over later pay periods with interest of 0.5% a month.
How is income from a previous employer included in the conguaglio?
The employee gives their current employer the CU from the previous employer by 12 January of the following year and asks for the income to be included.
Related terms in Italy
- Comunicazione Obbligatoria (Italy)
- Libro Unico del Lavoro (Italy)
- Smart Working Agreement (Italy)
- ROL and Ex-Festività Permits (Italy)
- Patto di Non Concorrenza (Italy)
- Employee Categories (Italy)
- Mandatory Disability Hiring Quota (Italy)
- Cassa Integrazione (Italy)
- Decreto Flussi and Nulla Osta (Italy)
- Welfare Aziendale (Italy)
- F24 Payment Form (Italy)
- UniEmens (Italy)
- Certificazione Unica (Italy)
- Modello 770 (Italy)
- Busta Paga (Italy)
- Supplementary Pension Funds (Italy)
- Impatriate Tax Regime (Italy)
- IRAP (Italy)
- Cuneo Fiscale (Italy)