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overview
Italy
CurrencyEuro (EUR)
CapitalRome
Official languageItalian
Time zoneGMT +1
Working hours40 hours
Public holidays12 Days (2026)
Payroll frequencyMonthly
Minimum monthly salaryN/A
Date formatdd/mm/yyyy
Payroll in Italy
Employees in Italy enjoy an organised pay structure, characterised by sector-specific wage agreements, and extensive benefits.
Rather than a national minimum wage, the national collective bargaining agreements determine the wages, which vary by industry. Taxes are progressive, and social security contributions cover pensions, healthcare, and other benefits, with both employees and employers contributing.
Understanding this essential information about Italy’s payroll system will help you ensure your employees are paid fairly, protecting your business from potential legal disputes.
Outsourcing payroll services in Italy
In the most recent Global Payroll Complexity Index or GCPI report, Italy was ranked fifth in terms of payroll complexity. This covers both setting up and effectively running payroll. One of the most impactful reasons for this is the sheer number of collective bargaining agreements employers have to take into consideration when paying their workers.
Because of this, outsourcing payroll has been a preferred solution to many companies, especially for businesses that are unfamiliar with Italy’s labor laws and regulations. Working with a reliable global payroll service provider, such as CXC, can take care of these complexities and help you avoid costly payroll mistakes. This way, you can save time and resources and focus on your core business. Going this route also ensures that employees are always paid on time, and that regulations are followed.
In this guide, we will explore everything you need to know around payroll in Italy, including the minimum wage, payroll cycle, working hours, remote work policy, and more.
Minimum wage in Italy
Since there is no mandatory national minimum wage in Italy, several factors determine the minimum pay an employee is entitled to receive. In practice, sector rules and contract type are the main drivers of minimum pay levels in Italy in 2026.
Italy’s minimum wage policy
Wages in Italy are primarily determined through sector-specific national collective bargaining agreements (CBAs/CCNL). These agreements are negotiated between unions and employer associations and set minimum pay scales, classifications, allowances, and progression rules across industries such as manufacturing, retail, services, and agriculture. Because minimum pay is defined by the applicable agreement, minimum wages can vary significantly by sector and job classification. This system helps align pay with industry conditions, but it also means Italy does not have a single uniform wage floor nationwide.
Average minimum wage” in Italy
Because minimum pay is negotiated by sector, any “average minimum wage” is only an approximation. In 2026, minimum pay levels set in many CBAs often translate to roughly €7 to €9 per hour (gross) for lower-grade roles, depending on the sector and job level. Region can also influence overall earnings through market practice and allowances, with wages often trending higher in Northern Italy than in the South. For low-skilled full-time roles, minimum monthly earnings commonly fall around €1,200 to €1,500 gross per month, depending on the applicable CBA, job grade, and working time. Net take-home pay will vary based on tax and social contributions.
Minimum pay for different types of workers in Italy
Apprentices and interns: Apprentices typically earn less than fully qualified employees because pay is tied to training status and progressive wage steps under the applicable CBA. Monthly pay can vary widely by sector and apprenticeship year, and is often lower than standard entry-level wages.
Part-time workers: Minimum pay is applied pro-rata. Part-time employees must receive at least the same hourly-equivalent CBA minimum as comparable full-time employees in the same sector and classification, adjusted for their reduced hours.
International students: There is no separate minimum wage for international students. They are entitled to at least the minimum pay set by the applicable CBA for the role and classification, with working time governed by the terms of their contract and any immigration-related limitations.
Italy's Payroll
Understanding how payroll works in Italy is crucial for businesses and employees alike. Italy’s payroll system is distinct due to various laws, mandatory contributions, and unique components like the 13th-month salary.
Payroll cycle in Italy
The standard payroll cycle in Italy is monthly, with salaries usually being paid on the 27th of each month.
Employers are required to provide detailed pay slips that break down earnings, taxes, and deductions. These pay slips are vital for workers to understand their total compensation, including any variable elements like overtime or bonuses.
In addition, Italian law requires that employees are paid regularly, and delayed payments can lead to penalties for employers. For workers on fixed-term contracts or those in temporary roles, payroll cycles may vary slightly, but the monthly schedule is generally the norm across sectors.
13th-month salary in Italy
One unique feature of Italian payroll is the mandatory 13 th -month salary, known as the “tredicesima”. This is an additional monthly salary paid to employees, typically in December, just before Christmas. The 13 th -month salary is a form of deferred compensation designed to help employees with the added expenses of the holiday season.
In some sectors, employees may also receive a 14 th -month salary, usually paid in June or July. This is more common in industries like manufacturing and banking, where collective bargaining agreements provide additional compensation structures. Both the 13 th – and 14 th -month salaries are prorated based on the time worked during the year for new hires.
Social security in Italy
Italy’s social security system offers a wide range of benefits to employees and self-employed individuals alike. Understanding the nuances of social security contributions in Italy is critical when hiring and engaging local talent compliantly.
Social security contributions in Italy
Social security contributions in Italy are mandatory for both employers and employees, with the majority of the funds allocated towards pensions, healthcare, unemployment benefits, and other welfare programs. Contributions are handled by the INPS or Istituto Nazionale della Previdenza Sociale, Italy’s national social security institution.
- Employers’ social security contributions typically range from 29% to 32% of an employee’s gross salary, depending on the sector and the applicable collective bargaining agreements.
- On the other hand, employees contribute around 9% to 10% of their gross salary towards social security. These contributions are deducted directly from their pay and managed by the employer.
Social security benefits in Italy
Both employee and employer contributions are used to fund a variety of benefits, including the following:
- Health services and sickness compensation
- Incapacity and disability benefits
- Maternity, paternity, and parental leave pay
- Occupational accidents and diseases benefits
- Unemployment benefits
- Old age and survivor’s pensions
To ensure transparency, all contributions and their exact amounts are listed on the monthly pay slips of employees.
Self-employed social security contributions in Italy
Self-employed individuals in Italy, including freelancers and independent contractors, are also required to make social security contributions. However, the structure for the self-employed differs slightly from that of traditional employees.
Those who are self-employed typically follow a separate social security regime, which takes into account that they are essentially paying for both the employee and employer contributions. The rate for the self-employed in Italy varies but is generally around 25% to 30% of gross income. This contribution is split between mandatory pension funds and healthcare.
There are several social security schemes available for distinct categories of self-employed individuals. For instance, those in specific professions, like lawyers or doctors, may pay into private pension schemes regulated by their professional bodies. Meanwhile, other freelancers pay directly to the INPS through a dedicated system for independent workers.
Pension schemes in Italy
Pensions in Italy are structured based on an individual’s contribution history. The pension system operates on a pay-as-you-go basis, meaning today’s workforce funds the pensions of current retirees.
To qualify for a pension in Italy, individuals generally need to have contributed to the social security system for at least 20 years. The retirement age in Italy is currently 67, although this can vary depending on ones’ employment history and any early retirement provisions. Pension amounts are calculated based on the total number of years of contributions and the average income during an individuals’ working life.
Italy also provides survivor pensions for spouses and children, as well as disability pensions for individuals unable to work due to health conditions. These pensions are funded by both employer and employee contributions, making Italy’s social security system one of the more comprehensive in Europe.
Special category pensions in Italy
There are special pensions available for workers in specific industries or with unique employment statuses. For example, individuals in the public sector, military, and law enforcement often have different pension schemes than those in the private sector.
Additionally, Italy provides early retirement options for workers in physically demanding jobs. Known as “lavori usuranti” or strenuous work, individuals who qualify for this category may retire earlier, often at 61 or 62, provided they have sufficient contribution years. This category includes professions like miners, construction workers, and nurses working in intensive care units.
Farmers and agricultural workers also have access to special pension schemes under INPS, where contribution rates are typically lower but are compensated by the state to ensure a fair pension upon retirement.
Other employee benefits in Italy
In addition to salaries and pensions, many employees in Italy enjoy a variety of additional benefits that improve their quality of life. These benefits, not mandated by law, can include health insurance, meal vouchers, company perks like cars or mobile phones, and flexible working conditions.
Employee health insurance in Italy
While Italy has a public healthcare system, many companies offer private health insurance as part of their employee benefits package.
Private health insurance in Italy typically supplements the public system by providing quicker access to specialists, better hospital accommodations, and coverage for medical expenses that the public system does not fully reimburse, such as dental care and certain prescriptions.
Private health insurance is not a mandatory employee benefit in Italy, but it is increasingly popular, especially among multinational companies and larger businesses. By offering private health insurance, employers can attract top talent, especially those who value quicker access to healthcare services.
Employee meal vouchers in Italy
Meal vouchers are a common and popular benefit in Italy, known as “buoni pasto..” These vouchers are provided by employers to subsidize meals for employees during working hours. Meal vouchers are often distributed in paper or electronic form and can be used at restaurants, cafes, and supermarkets. The value of each meal voucher typically ranges from 5 EUR to 10 EUR per day, depending on the company.
Meal vouchers are a non-mandatory employee benefit in Italy, but many companies offer them as a tax-efficient way to compensate employees. For employers, offering meal vouchers is beneficial because they are partially exempt from social security contributions and income taxes, up to a certain limit. For employees, meal vouchers provide a significant savings on daily food expenses.
Company car and mobile phone benefits in Italy
For higher-level employees or those whose job involves extensive travel, company cars are a common perk. Company cars are provided by employers for both professional and personal use. The exact terms depend on the company policy, but they usually include all costs related to the car, such as insurance, maintenance, and fuel.
The mobile phone benefit is also widely offered, particularly to employees who need to stay connected for work. Many companies provide smartphones along with data plans, covering both business and personal use. This is especially common in the tech, sales, and management sectors.
These benefits offer employees the convenience of staying connected and mobile without incurring personal costs, and they are tax-deductible for the employer, which makes them an attractive perk for both parties.
Flexible work benefits in Italy
In recent years, flexible work benefits have gained traction in Italy, especially after the pandemic reshaped the workplace. Flexible work arrangements include remote work, flexible hours, and part-time arrangements. Italian labor laws provide employees the right to request flexible working hours, particularly for those with caregiving responsibilities, such as parents with young children.
While not mandatory, offering flexible work benefits in Italy can enhance employee satisfaction, improve work-life balance, and increase productivity. Many companies now offer hybrid working models, where employees can split their time between the office and working from home. These arrangements are particularly common in sectors like technology, finance, and consulting.
Compliant, seamless payroll and benefits in Italy and beyond
Getting payroll and benefits right is not just a legal issue. Every country also has its own customs, norms, and expectations about employee compensation. And if your operations aren’t in line with your workers’ expectations, they may not stick around for long.
Thankfully, we know what we’re doing. When you work with CXC to engage workers in Italy, we’ll handle everything from tax withholding to employee bonuses on your behalf.
Want to find out more?
FAQ's
How is payroll processed in Italy?
Employers usually process payroll in Italy each month by calculating pay, making deductions and paying employees under their contract and collective agreement. The Contratto Collettivo Nazionale di Lavoro (national collective labour agreement), often called a CCNL, determines sector-specific pay classifications and related conditions.
The payroll run includes basic pay, overtime, allowances and any other amounts due for that period. Employers deduct the employee’s social-security contribution and apply income-tax withholding when they act as the Italian withholding agent. They also set aside amounts for extra salary payments required by the agreement and the employee’s end-of-employment payment.
Employees covered by the payslip legislation must receive a payslip showing their pay components, contribution and tax deductions and other required information. The CCNL’s unique alphanumeric code is used in the relevant employment and social-security reporting, but it is not generally a mandatory payslip item in every case. Employers pay the resulting net amount and remit the social-security contributions they owe, including the employee’s share. They send monthly employee earnings and contribution reports to INPS, Italy’s social-security agency. Social-security contributions are generally paid by the 16th of the following month, while the monthly UNIEMENS report is generally due by the final day of that following month.
What are the steps to set up payroll in Italy?
To set up payroll in Italy, the employer needs to register with the authorities, collect employee details and identify the collective agreement and job level. The company first decides whether to employ the worker directly or use an Employer of Record to handle employment and payroll.
The main setup tasks are to register with the social-security agency, INPS, and the workplace accident insurer, INAIL, where that cover is compulsory. The employer identifies the applied collective agreement and the classification matching the employee’s duties. It then records the employee’s tax identifier, start date, pay components, working hours and payment details.
The employer enters the agreement’s leave, extra salary payments and required benefit-fund contributions into payroll. It records whether the employee’s end-of-employment payment will remain with the company, go to the public Treasury Fund or be allocated to a supplementary pension.
Finally, it assigns responsibility for payslips, contribution payments, monthly earnings reports and tax deductions and filings where the employer must withhold income tax.
Can you run payroll in Italy without a local entity?
Yes, a foreign company can run payroll in Italy without incorporating a local entity by using an Employer of Record (EOR) or registering as a foreign employer. An EOR becomes the local employer and administers the employee’s pay and employment obligations. In Italy, an EOR arrangement under which the provider supplies an employee who works under the client’s direction will generally need to be structured through an employment agency authorised to carry out somministrazione di lavoro. Direct foreign employment keeps those obligations with the overseas company.
For direct employment, the foreign employer needs the Italian registrations required for social security and any applicable workplace accident insurance. It can appoint an authorised intermediary or, where required, an Italian social-security representative to handle those filings and payments. Hiring a payroll processor alone does not transfer the employment relationship or replace the employer’s registration obligations.
Income-tax withholding needs a separate assessment. A foreign employer without an Italian permanent establishment, meaning a taxable business presence, is not automatically required to withhold Italian employment income tax. The employee’s tax liability still remains. If the employer chooses to operate Italian withholding, it must also complete the associated tax filings and other duties.
What is the cost of payroll administration in Italy?
Fees for administering payroll in Italy may be quoted at approximately EUR 16.50–39 per employee per month for different volumes and service packages. The fee depends on the number of employees and the services included. VAT and work outside the monthly package may be charged separately.
Overtime, allowances and extra salary payments required by the collective agreement can increase payroll administration costs. The fee also depends on whether the provider handles monthly social-security reports, leave records and the end-of-employment payment employees earn over time. Providers may include these tasks in the monthly fee or price them separately.
Employer registration, new hires, departures and annual tax filings can carry additional charges, depending on the package. Salary payments, employer contributions and insurance premiums are separate employment costs rather than the payroll provider’s administration charge. An Employer of Record service also covers employment responsibilities beyond payroll processing and is therefore normally priced separately and substantially above payroll-only administration.
What taxes and contributions must employers pay in Italy?
Employers running payroll in Italy pay their share of social-security contributions and any required workplace accident insurance premiums. When the employer is responsible for withholding income tax, they deduct the employee’s income tax and applicable regional and municipal surtaxes, then send these payments to the tax authority.
The social-security agency collects contributions that fund pensions and other employment protections. Employers pay their own share and deduct the employee’s share from their pay before sending both to the agency. Rates vary by sector, company size, employee category and employment arrangement, so the same percentage does not apply to every hire in Italy.
Employers pay workplace accident insurance premiums where cover is required. The cost depends on the employee’s insured earnings and the risks involved in their work. The employee’s collective agreement may also require payments into supplementary health or pension funds. Income tax comes out of the employee’s agreed gross salary, reducing take-home pay. It is not an extra cost for the employer.
What are the mandatory employee benefits in Italy?
Mandatory employee benefits in Italy include paid annual leave, maternity and paternity leave, social-security coverage and an end-of-employment payment earned throughout employment. The employee’s collective agreement adds benefits such as extra salary payments and, in some sectors, supplementary health or pension arrangements that the employer must fund.
Employees have at least four weeks of paid annual leave. Maternity leave normally lasts five months and paternity leave lasts 10 working days. Compulsory paternity leave is generally taken between two months before and five months after the birth, subject to the statutory notification rules. Italian law also provides parental leave, while sickness protections depend on the employee’s category and the collective agreement.
Additional salary payments follow the applied agreement. For example, the commerce agreement provides a 13th payment at Christmas and a 14th in July, alongside supplementary healthcare arrangements. Employers must also build up the employee’s end-of-employment payment, known as Trattamento di Fine Rapporto (TFR), which employees earn over their period of service.
What is the minimum wage in Italy?
The minimum wage in Italy is determined mainly through sector collective agreements and job classifications, rather than a single national hourly rate. Employers identify the relevant collective agreement and match the employee’s duties to a job level. They then apply that level’s minimum pay and any other required payments.
The Constitution also requires employers to pay fairly for the amount and type of work and enough to support the employee and their family with dignity. An employee’s agreement to a salary does not override that protection. Collective-agreement pay scales provide the practical reference for setting pay for the role.
When comparing pay, employers need to consider contracted hours and how salary is paid under the collective agreement. Basic monthly pay may exclude extra salary instalments or required allowances. Employers also need to update the minimum used at hiring when the agreement’s pay rates change or the employee moves to a higher job level.
What is IRPEF tax in Italy and how is it calculated?
IRPEF is a personal income tax with higher rates for higher bands of taxable income. Employers deduct it through payroll in Italy when responsible for withholding tax. Its full name is Imposta sul reddito delle persone fisiche (personal income tax). Certain deductions reduce the income used to calculate the tax.
The national rates apply to annual taxable income as follows:
- 23% on income up to 28,000 EUR.
- 33% on the portion above 28,000 EUR up to 50,000 EUR.
- 43% on the portion above 50,000 EUR.
The 2026 Budget Law reduced the second rate from 35% to 33%. Each rate applies only to the income within that band, not the employee’s entire income.
Employment-related tax credits and other eligible credits reduce the tax payable. Regional and municipal surtaxes are separate charges. Employers calculate deductions using the employee’s available tax information, then check the year’s income, deductions and credits when reconciling tax. Employees may also need to correct those figures through their tax return.
What is TFR and how much must employers accrue annually in Italy?
TFR (Trattamento di Fine Rapporto) is a payment due when employment ends. Employers build it up through payroll in Italy at an annual amount generally calculated by dividing the qualifying annual remuneration by 13.5. This is equivalent to approximately 7.41% before the separate statutory contribution adjustment. , before any required contribution deduction.
For employees covered by the deduction, employers subtract a statutory contribution of 0.50% of pay from the amount built up. The effective net annual accrual is therefore commonly described as approximately 6.91% for those employees, although the legally accurate calculation remains remuneration divided by 13.5, followed by the applicable adjustment.
The calculation generally includes regular salary and non-cash benefits, unless the collective agreement sets different rules. Employers record the amount built up over the employee’s service, including part-years. Each year, previously accrued amounts increase by a fixed 1.5%, plus 75% of the rise in Italy’s consumer price index.
Employees earn this payment throughout employment, including if they resign later. TFR held for the employee is paid when employment ends, although payment may involve the employer, the INPS Treasury Fund or both, depending on where the accrual was held. Amounts paid into a supplementary pension fund follow the fund’s rules on benefits and withdrawals. Leaving the job does not automatically make that money available as cash.
How does CXC ensure compliant payroll and benefits management in Italy?
CXC manages payroll in Italy through local specialists who apply collective-agreement terms, calculate pay and handle tax and contribution reporting. With more than 30 years of workforce experience and payroll services across over 100 countries, we combine international delivery with the local knowledge needed for each employee’s pay and benefits.
Having local expertise is particularly useful in Italy because payroll can vary considerably under the applicable Contratto Collettivo Nazionale di Lavoro (CCNL). Employee classification can affect minimum pay, allowances, overtime, additional salary months and other benefits, while Trattamento di Fine Rapporto (TFR) adds another Italy-specific element to payroll.
For international companies, CXC can manage Italian payroll alongside payroll and workforce services in other countries. This is useful for businesses expanding across several markets that want local payroll expertise without appointing and managing a separate provider in every country.
Speak to our team to learn more about payroll and benefits management in Italy with CXC.
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