Italy Global Payroll & Tax Information Guide
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Payroll in Italy – 2021 Updates
Due to covid-19, the following measures were taken by the Italian authorities:
- Italy has introduced an obligation to provide Covid Green Pass, a certifying that a person is vaccinated, has recovered from Covid or has negative Covid test from previous 48h, for all workers of any sector of activity starting from October 15, 2021.
- The European Commission has approved a €31.9 billion Italian scheme to support companies affected by the coronavirus outbreak. The scheme will be open to all companies, irrespective of their size and of the sector where they operate (except for the financial sector). It consists of limited amounts of aid and support for uncovered fixed costs incurred during the period between March 2020 and December 2021 or parts of that period. Under the scheme, limited amounts of aid will take the form of tax exemptions and reductions, tax credits and direct grants.
Basic Facts about Payroll in Italy
Doing business in Italy can be challenging as there are many kinds of work contracts.
Additionally, taxes are high and complicated. The Global Payroll Association noted that Italy has “one of the most complicated payroll algorithms in the world.” Because of this, European payroll experts strongly encourage those doing business in Italy to hire a Professional Employment Outsourcing (PEO) agency or a Global Employer Organization (GEO) before doing business in Italy. That being said, Italy does possess the third-largest economy in Europe. Foreign businesses are likely to benefit by expanding into Italy.
Even though there are 20 work contracts, there are two basic categories: indefinite (long-term) or fixed-term contracts (temporary). Payroll taxes include income taxes (on the national, regional, and city levels), public accident insurance, and public pension. Any companies wishing to do business in Italy must register their business with the government. As such, foreign companies operating within Italian borders are responsible for all payroll, tax, and labor laws.
Tax Rate Chart
Income tax rates in Italy for 2021:
|Income Range||Tax Rate|
|€15 001 – 28 000||27%|
|€28 001 – 55 000||38%|
|€55 001 – 75 000||41%|
|€75 001 +||43%|
*The chart above does not take into account public pension, public accident insurance, regional taxes, and city taxes. Because these rates vary on minutiae, it is best that companies doing business in Italy work closely with a payroll consultant, GEO, or PEO.
Compensation and Benefits
Most wage and benefit stipulations are outlined in a work contract. All employees are granted substantial paid leave, per Italy’s labor laws.
How Employees File Taxes at the End of the Year
As noted above, employees are responsible for filing their own taxes by October 31 of the following year. If they owe any taxes, they must pay those taxes no later than June 30 the year after.
Because Italy is a member of the European Union and the Schengen Treaty, employees from other member countries are not required to secure a worker’s permit. For those foreigners originating from non-member countries, they must secure the necessary permits and work visas before they are legally allowed to work for an employer in Italy.
For more information about how our Global Payroll Control Platform integrates with local payroll providers in Italy, contact us today.
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