Employment Cost Calculator for Italy
Calculate the total cost of employing someone in Italy, including taxes, benefits, and our management fee.
Employer Tax Contributions
| Tax Type | Rate | Base |
|---|---|---|
| Social Security (INPS) | 27-32% (employer) | Gross salary |
| Income Tax Withholding (IRPEF) | Progressive (23-43%) | Employee's gross salary |
| Regional and Municipal Surcharges | Up to 2.03% (regional); up to 0.9% (municipal) | Employee's gross salary |
| Severance Pay (TFR) | Approximately 6.91% | Employee's gross salary |
Filing & Compliance
- Monthly Payments: Income tax and social security contributions are due by the 16th of the following month.
- Annual Certificazione Unica: Employers must issue this annual employment certification to employees by March 16th.
- Annual Form 770: Employers must submit Form 770 to report withheld taxes and payments by September 30th.
In Italy, employee tax deductions encompass various areas, including income tax (IRPEF), social security contributions, and specific deductions for certain expenses and life events.
IRPEF (Imposta sul Reddito delle Persone Fisiche)
IRPEF is the progressive income tax levied on individuals residing in Italy or earning income there. For 2024, the tax rates are structured as follows:
- Up to €28,000: 23%
- €28,001 - €50,000: 35%
- Over €50,001: 43%
For 2025, potential changes are under consideration, including a potential no-tax area for income up to €12,000, additional deductions for incomes between €20,000 and €40,000, and limitations on deductions for higher incomes (above €75,000). Expanded child deductions are also being considered.
Social Security Contributions
Employees in Italy contribute a portion of their salary to social security, covering areas like pensions, healthcare, and unemployment benefits. The specific contribution rates and thresholds vary based on the employee's industry and employment category.
Deductions and Tax Credits
Several deductions and tax credits can reduce the overall tax burden. Some notable examples include:
- Productivity Bonuses: A 5% deduction is applicable for productivity bonuses up to €3,000 for incomes within €80,000 (valid through 2027).
- Fringe Benefits: Tax exemptions are available for fringe benefits up to €1,000. This increases to €2,000 for workers with dependent children and €5,000 for new employees living over 100 km away from home.
- "Inpatriate" Regime: This regime offers a 70% or 90% income tax exemption for individuals relocating to Italy for work, potentially extending up to ten years under certain conditions.
- Flat Tax Regime (Regime Forfettario): For those eligible, this scheme offers a simplified tax calculation with a flat rate of 15% on income up to €85,000, excluding VAT, IRAP, and ISA, and without withholding taxes.
Specific documentation requirements and deadlines apply to each deduction and credit.
Additional Considerations
Employers are subject to IRES (corporate income tax) and may qualify for various deductions, including a super deduction for new hires (up to 130% for specific categories, including women and disadvantaged individuals).
It is important to note that tax regulations are subject to change. Consulting with a tax professional is recommended for personalized guidance and updates on the latest regulations.
