Payroll in Italy

Italian employees are normally paid monthly. The payday comes from the applicable collective agreement (CCNL) and the employment contract.

Payment frequency and timing

State the payment frequency, method, amount and pay components in the employment terms, and apply the CCNL payday and salary-instalment rules.

Agree cut-offs for variable pay, hours, leave and expenses, and fund payroll in time for the payday. Check whether a quoted annual gross salary already includes the extra salary months before dividing it into monthly payments.

13th and 14th month payments

The 13th month payment (tredicesima) is mandatory. It is usually one month's pay, paid in December; the applicable CCNL sets the exact basis and date.

The 13th month is prorated based on months worked. An employee working six months receives 50% of their monthly gross salary as their 13th month payment.

Many collective bargaining agreements also require a 14th month payment (quattordicesima), typically paid in June or July. This varies by sector and isn't legally mandated for all employees.

Both payments are subject to full income tax and social security contributions, just like regular monthly salary.

Holiday and vacation pay

Employees receive full salary during their annual leave. Italy doesn't use a separate vacation pay calculation - employees continue receiving their regular monthly salary while on approved vacation.

You must allow employees to take their annual leave and can't replace it with additional pay, except in specific termination circumstances.

Some collective agreements add a 14th month or other payments before the summer holidays. Check the applicable CCNL.

Payment methods and requirements

Bank transfer is the standard payment method in Italy, and wages must be paid through traceable means rather than cash.

You must provide detailed payslips (busta paga) with every payment. Payslips can be electronic but must include:

• Employee personal and tax details
• Gross salary breakdown
• All deductions (taxes, social contributions)
• Net pay amount
• Year-to-date totals

Since 28 June 2026, the payslip must also identify the applied CCNL by its unique alphanumeric code. The statutory payslip rule excludes executives (dirigenti), so assess their documentation separately.

Before your first payroll run in Italy, the legal employer needs an Italian tax code and must act as withholding agent (sostituto d'imposta) for employee income tax.

Income tax in Italy operates on a progressive scale, with three national bands from 23% to 43% for 2026. Here's what you'll withhold from employee paychecks:

Annual Income (€)	Tax Rate
€0 - €28,000	23%
€28,000 - €50,000	33%
Over €50,000	43%

Withholding requirements

You're responsible for withholding income tax from every paycheck and remitting it monthly to the tax authorities.

Monthly withholding payments are due by the 16th of the following month. For example, January withholdings must be paid by February 16th. Late payments trigger a penalty on the outstanding amount.

Each year you issue the Certificazione Unica (CU) to every employee and send it to the Agenzia delle Entrate. For 2025 income the deadline for both was 16 March 2026. The CU reports each employee's income, withholdings and contributions.

Regional and local taxes

Beyond national income tax, employees pay a regional income-tax addition (addizionale regionale) set by their region of residence.

Most municipalities also add a municipal surcharge (addizionale comunale). Both depend on where the employee lives, so payroll needs the actual residence. IRAP, the regional tax on productive activities, is a business tax on the employer, not an employee deduction.

Common tax mistakes

Misclassifying employees as contractors remains the costliest error. Italian authorities scrutinize working relationships closely, and reclassification triggers back taxes, penalties, and social contributions.

Missing monthly deadlines triggers penalties plus interest. Set up automatic reminders for the 16th of each month to avoid this trap.

Ignoring regional and municipal additions catches many employers off guard. They depend on the employee's residence, so collect it during onboarding.

There is no single employer social-contribution rate in Italy. INPS calculates it from the sector, employer size and legal form, worker classification and contract. The OECD puts the average at 31.58% of gross pay for employers and 9.49% for employees.

Contribution breakdown

Here's what you'll pay on top of every salary:

Cost	How it is set
INPS social insurance	Rate depends on sector, employer size, worker classification and contract
INAIL workplace-injury cover	Rate depends on the job's risk class
TFR (deferred termination pay)	Annual pay divided by 13.5, with statutory and contractual adjustments
Contractual funds and benefits	Set by the applicable CCNL

The ordinary FPLD pension rate of 33% is the combined employer and employee pension contribution, not an employer-only rate or the whole employment cost. Ask for separate employer and employee calculations.

Total employer cost example

For a €36,000 annual gross salary, the basic TFR accrual alone is €2,666.67 a year before adjustments. Add the actual employer social contributions, INAIL cover, required contractual funds and benefits. Confirm whether the €36,000 already includes the 13th and any 14th month.

Contribution caps and high earners

The annual pension contribution ceiling is €122,295 for 2026, but only where the statutory ceiling applies, such as workers first insured from 1996 or who opted into the contributory system. It does not cap every contribution for every employee.

Employees also pay an additional 1% pension contribution on pay above €56,224 a year. INPS sets a general daily contribution minimum of €58.13 for 2026.

Registration requirements

You must register with multiple agencies before hiring:

• INPS (social security): Register before the first payroll
• INAIL (work injury): Registration required before first employee starts
• Hiring notice (UNILAV): Notify each new hire by the day before work starts

Each registration requires your Italian tax code, business registration documents, and detailed job descriptions for INAIL risk assessment.

Payment deadlines

Contributions are due by the 16th of the following month. Miss this deadline and INPS applies penalties that grow the longer the payment is outstanding.

Maternity leave in Italy is five months, paid by INPS at 80% of the reference daily pay. Here's how it affects your payroll.

INPS (Italy's social security institute) covers the cost, but you'll handle the calculations and payments. Employees take 2 months before birth and 3 months after, though with the required medical certifications they can take one month before and four after, or all five after the birth.

Annual leave

Italian employees get at least four weeks of paid annual leave, which is 20 working days on a five-day week. Many CCNLs add more leave and paid hours off (permessi), so check the applicable agreement.

Employees keep their regular pay during annual leave; the CCNL sets the daily-rate method.

At least two weeks must be taken in the year they accrue, and the remaining two within 18 months after that year ends. Cash cannot replace the statutory minimum during employment; unused leave is paid out on termination.

The tredicesima (13th month) calculation includes vacation periods, so don't reduce this bonus for time off taken.

Sick leave

The INPS sickness allowance runs up to day 180, and some employee categories are excluded from it. The CCNL sets any employer pay for the first three days, any top-up, and the job-protection period.

Doctors send the medical certificate to INPS electronically, and you can view it through the INPS system.

For most employees you advance the INPS allowance in payroll and recover it through your monthly INPS contribution filing.

Parental leave

Beyond maternity leave, parents share up to ten months of parental leave, rising to eleven when the father takes at least three months. It can be used during the child's first 14 years. Nine months are paid at 30%, and qualifying employees can get 80% for up to three months within the child's first six years.

Fathers also take 10 mandatory working days of paternity leave (20 for a multiple birth), from two months before the birth to five months after, paid at 100%. INPS funds these allowances; you normally process them in payroll and recover them through your INPS filings.

Public holidays 2026

Date	Holiday	Notes
January 1	New Year's Day	National
January 6	Epiphany	National
April 6	Easter Monday	National
April 25	Liberation Day	National
May 1	Labour Day	National
June 2	Republic Day	National
August 15	Assumption Day	National
October 4	St. Francis of Assisi	National, new from 2026
November 1	All Saints' Day	National
December 8	Immaculate Conception	National
December 25	Christmas Day	National
December 26	St. Stephen's Day	National

Pay for holiday work, and for holidays that fall on a weekend, follows the CCNL. Check its treatment before you build the payroll calendar.

Each workplace also observes its local patron-saint day, such as June 29 in Rome and December 7 in Milan. Check the applicable rules and CCNL.

Mandatory benefits affecting payroll

Tredicesima (13th month salary) is mandatory and usually paid in December, on the date the CCNL sets. Calculate as gross monthly salary × months worked ÷ 12. Include vacation and sick leave periods in the calculation.

TFR (deferred termination pay) accrues each year at the relevant annual pay divided by 13.5, with statutory and contractual adjustments. The existing balance is revalued annually by 1.5% plus 75% of the ISTAT consumer-price increase. From 1 July 2026, a new private-sector hire generally has 60 days to choose where future TFR goes; without a choice it flows to the designated collective pension fund.

Meal vouchers (buoni pasto) aren't mandatory unless the CCNL requires them, but they are common. Their tax-free threshold sets the tax treatment; it does not create a right to them.

Many collective agreements require quattordicesima (14th month) paid in June or July. Check your specific industry agreement for requirements.

Italy requires you to keep payroll records for 10 years. Lose them during an inspection and face fines.

Monthly filing requirements

You'll submit your F24 tax payment form by the 16th of each month following the payroll period. This covers income tax withholdings, social security contributions, and the regional and municipal income-tax additions.

The submission happens through the Agenzia delle Entrate online portal or your bank's electronic system. Most employers use the portal since it provides immediate confirmation of receipt.

Late filing attracts penalties from the Agenzia delle Entrate, and they grow with the length of the delay.

Social security reporting

INPS requires monthly contribution declarations through their UNIEMENS system. The deadline is the last day of the month following the payroll period.

This electronic filing includes detailed employee data, working hours, and contribution calculations. The system flags discrepancies immediately, so you can correct errors before they become penalties.

Annual reporting

Year-end reconciliation

The withholding agent's annual return (Modello 770) is due by October 31. In 2026 that is a Saturday, so the deadline moves to November 2. It reports the year's withholdings and the payments made through F24.

Year-end adjustments to each employee's tax (the conguaglio) run through the December payroll, or by the end of February at the latest.

Employee tax statements

Issue Certificazione Unica (CU) statements to all employees by March 16, 2026. These show total earnings, tax withholdings, and social contributions for 2025.

Employees need these statements to file their personal tax returns. You'll also submit copies to the tax authority by the same deadline.

Employee documentation

Employment contracts

Give the employee the written contract or employment-registration copy before work begins. Outstanding mandatory particulars follow within seven days, with some allowed within one month. Since 28 June 2026, private employers must identify the applicable CCNL by its unique alphanumeric code. The particulars include:

• Job classification and level according to the applicable CCNL (collective bargaining agreement)
• Gross monthly salary broken down by basic pay and allowances
• Normal working hours and overtime rates
• Probationary period duration (maximum 6 months for most roles)
• Notice periods for termination

Payslip requirements

Italian payslips must show detailed breakdowns of gross pay, each deduction, and net pay. Key mandatory elements include:

• Employee's tax code (codice fiscale)
• Employer's tax identification number
• Pay period dates
• Normal hours, overtime hours, and rates
• Each social contribution with separate employer and employee portions
• Regional and municipal income-tax additions
• Year-to-date totals for all items

Record retention

Keep all payroll records for 10 years. This includes:

• Original employment contracts and amendments
• Timesheets or attendance records
• Payslips and payment confirmations
• Tax withholding documentation
• Social contribution payment receipts

Digital storage is acceptable if records remain accessible and complete. Many employers scan physical documents immediately to ensure nothing gets lost.

Penalties and fines

Penalties apply for late filing, late payment and incorrect withholding. They are set by the Agenzia delle Entrate, INPS and the labour inspectorate (INL), so check the current schedule on its website before relying on a figure.

The labour inspectorate can also suspend business activity for serious violations, such as employing undeclared workers.

Regulatory bodies

Agenzia delle Entrate (Tax Authority)

Handles income tax withholdings, regional tax, and annual reconciliations. Their online portal processes most payroll-related filings.

• Website: agenziaentrate.gov.it
• Helpline: 848 800 444
• Portal: Fisconline or Entratel (depending on company size)

INPS (Social Security Institute)

Manages pension contributions, unemployment insurance, and family allowances. All monthly social security reporting goes through their systems.

• Website: inps.it
• Employer portal: Servizi Online per le Aziende
• Contact center: 803 164

Ministry of Labor

Oversees employment law compliance, workplace safety, and labor inspections. They coordinate with other agencies during payroll audits.

Regional labor offices handle most employer interactions, but serious violations escalate to the national ministry level.