ITALY / Taxes & Work Rules

Taxes & Work Rules


The law provides for a system based on five taxes:
the Imposta sul reddito(income tax);
the Imposta sul reddito delle società(corporate tax);
the Imposta sul valore aggiunto(VAT or sales tax);
the Imposta sui servizi(tax on services);
the Accise(excises).

t is an individual income tax. Tax rates are progressive and range from 23% to 43%. Additional taxes are due at the regional (0.9% to 1.4%) and local (0.1% to 0.8%) levels.
If you are a foreign resident working in Italy, you are only taxed on the income earned in Italy. However, if you are an Italian resident, spend more than 183 days a year in Italy, and your “center of economic interest” (i.e. your business and investments) is in Italy, your worldwide income is subject to IRPEF.

After allowances have been taken into account, rates are on a sliding scale. They are currently as follows:
23% for amounts up to 15.000 Euros
27% for amounts between 15.001 and 28.000 Euros
38% for amounts between 28.001 and 58.000 Euros
41% for amounts between 58.001 and 75.000 Euros
43% for amounts over 75.001 euros.
The reporting agent is entitled to a series of deductions (19%) from taxable income relating to health care (medical expenses), education (university tuition fees) and life insurance.

It is a personal and proportional tax based on the corporate income. The percentage rate is currently 27,50%.

It is an indirect tax burden on consumption. The percentage rates – 4%, 10%, 22% – vary according to the type of product.

It is a tax on public services provided by the local authorities such as rubbish collection, maintenance of streets and street lighting as well as public safety. It must be paid by owners and tenants of buildings, both dwellings and stores.

It is an indirect tax on the production and sale of certain categories of goods (for example fuel). It is applied on quantity and not on prices.

Through this kind of contract companies provide young people with professional training in order to achieve further levels of qualification and make the apprentices more competitive on the labor market. However, employers pay lower salaries and social security and benefit from several other incentives.
At the end of the training period, the employer:
can withdraw from the agreement;
can convert 50% of apprenticeship contracts into permanent work contracts. In this case, the employer is allowed to avail of apprenticeship contracts again.

It is a written contract, with no pre-determined termination date. It specifies the tasks of the employee, labor schedule, wages etc. It is not applicable to those under 15 of age. High social security wages, around 33%, are paid almost entirely by the employer.

It is a written contract which specifies the termination date and tasks. It cannot be longer than 36 months, this working period can be extended one more time, with the same tasks, and the employer can withdraw from the agreement on the termination date. Wages for part-time employees are the same as those of permanent contract employees in the company. High social security wages are paid almost entirely by the employer.

SUPPLY CONTRACT (dependent job)
It can be of two types:
- signed by the work agency and the employee;
- signed by the work agency and the user.
It can be a permanent or temporary contract. It is a labor contract of a specific time length decided by both the employer and the employee. Staff Supply enables clients of employment agencies to avail of the labor activity performed by workers holding employment agreements with employment agencies. Both clients and employment agencies are jointly liable for payment of employee wages and social security contributions and for compliance with workplace safety regulations in force. Staff Supply contracts set down the rights and obligations of employment agencies as well as their clients, and can either be open-term or fixed-term contracts. According to the law, a worker with a fixed term contract may not work for the same employer more than 36 months, if the tasks established have never changed. Therefore, between the first fixed term contract and the following extensions, the contract may last for a maximum for 3 years. Nevertheless, the national collective contracts may infringe this rule since it is only the limit which affects fixed term contracts and not supply contracts. As a result, over 36 months the employer may employ the same worker drawing up a supply contract.

JOB SHARING (dependent job)
It is a written contract which provides a structured form of part time contract, where two people share one job. The contract specifies the different tasks and wages of each employee. The two employees are not supposed to be substituted by a third one. If one of the two resigns or is fired, then the contract is considered as concluded, and both employees are responsible for all the work results. High flexibility of working schedule can be decided and modified at any moment by the two employees. Social security contributions are paid entirely by the self-employee.

It relates to a professional activity performed on a discontinued or on an intermittent basis. It can be a temporary or permanent contract. It is an on-call job that permits a company to employ the worker at any time. Regardless of the professional nature, the job on call can be performed by employees under 24 or those over 55 of age only. The wages, for the effective working time, must be the same as those of another employee of the same level.

Ancillary occasional labor relates to a professional activity performed on a discontinued or intermittent basis by the same worker.
Contract payments do not have to exceed the following sum:
– 5.000 Euros yearly referring to the total number of purchasers
– 2.000 Euros yearly referring to a single purchaser, entrepreneur or professional figure.
Payment will be through vouchers, which will guarantee, in addition to the salary, the social tax for INPS (National Social Security Institute) and the social security cover for INAIL (National Institute for Insurance against Industrial Accidents.)

It is a short-term temporary contract which can be used only up to a maximum each year of 5,000 euros in total. It cannot be longer than 30 days with the same employer. It is not generally drawn up as a contract. The employer is not charged with contribution wages.

It is a dependent employment with open-contract, targeted to provide the apprentices with a professional qualification. This type of contract is for individuals between 18 and 29 of age. Social security wages are paid almost entirely by the employer.

This kind of contract is related to specific projects and cannot imply repetitive tasks already mentioned in a similar contract between the same employee and the same employer. The contract must describe the sort of project, specifying the main activities and the final result that is to be achieved. The salary must not be less than the national wage salary. Two thirds of social security wages are paid by the employer and one third by the employee.

The Jobs Act represents the most comprehensive labour market reform in Italy since the introduction of the “Workers’ Statute” in 1970. The main goals of the Jobs Act are to create a more inclusive, resilient and flexible labour market, to attract foreign investments and business and to reduce the scope of discretionary decisions of Labour Courts in the resolution of labour disputes. To pursue these objectives, the Government was delegated by Parliament to:
Strengthen and reorganise the social safety network;
Improve employment services and active labour market policies;
Review types of contracts, reduce atypical employment relationships also by introducing a new open-end contract with increasing levels of protection;
Support working mothers and fathers especially during the early years of their children.

For more information about the Jobs Act:
This publication reflects the views only of the author, and the European Commission cannot be held responsible for any use which may be made of the information there