Italy

Set in the heart of the Mediterranean, Italy stands as a testament to a long and rich tapestry of history, culture, and innovation.

Cradle of the Roman Empire and Renaissance, Italy has played a pivotal role in shaping Western civilisation.

As a founding member of the European Union and a key player in international associations such as NATO and the G7, Italy not only cherishes its past but also actively shapes a connected and cooperative global future.

For businesses navigating the complexities of international growth, understanding Italy's influential position in global affairs is essential. 

General Information

• Population: 58.94 million (World Bank, 2022)
• Capital: Rome
• GDP (2011): USD 2,05 trillion
• Main Industries: Agriculture, Manufacturing, Services
• Official Language: Italian
• Monetary Unit: 1 euro = 100 cents
• GNI Per Capita: US $34,158 (World Bank 2022)
• Internet domain: .it
• International Dialing Code: +39

How Do I Say in Italian?

• Hello: Ciao
• Good morning: Buongiorno
• Good evening: Buona sera!
• Do you speak English?: Parla inglese?
• Good bye: Arrivederci
• Thank you: Grazie
• See you soon!: A presto!

Dates

Dates are usually written in the day, month and year sequence. For example, 1st July 2024 or 01/07/24.

Numbers are written with a period to denote thousands and a comma to denote fractions. For example, €1.234, 56 (one thousand, two hundred and thirty four euros and fifty six cents). The euro symbol appears before the numeric.

Situated in South-Central Europe, Italy is notable for its rich cultural history and strategic geographic location. As the eighth largest economy in the world and fourth in Europe, Italy’s diverse economy presents an array of opportunities. It boasts robust sectors in manufacturing and services - making it a fertile ground for businesses looking to establish a reliable base in Europe.

Nestled in the heart of Europe, Italy serves as a strategic gateway to 500 million European consumers and Middle Eastern and North African markets. This offers a considerable advantage to businesses seeking a regional hub.

Italy's population is highly educated, skilled, and adaptable. Thoroughly prepared by first-rate educational and vocational systems, this talent pool can give businesses a competitive edge.

Italy's manufacturing industry is proven to excel in areas such as fashion, machinery, and automotive, backed by a pool of talented craftsmanship and cutting-edge technology. Another key industry is the renewable energy sector, which has been gaining momentum due to Italy's commitment to sustainable practices. Furthermore, the agri-food and tourism sectors benefit from Italy's rich cultural heritage and globally revered cuisine.

Italy continues to prioritise research and development, offering attractive incentives to businesses that are innovation-driven.

Italy presents a compelling investment proposition for businesses aiming to foster their global footprint. Tapping into the economic prowess and well-established industries of this vibrant nation can yield significant benefits. 

Italy's economy is one of the largest and most robust not only in Europe, but also in the world. With key sectors in manufacturing, technology, and services alongside a thriving SME sector, businesses get access to a comprehensive and diverse market ecosystem. This vibrant economic backdrop facilitates growth and diversification, making Italy an advantageous destination for multinational businesses.

Italy’s labor force is known for its versatility, adaptability and high educational level - key assets for businesses seeking to excel in a dynamic business environment. No matter the industry, Italy offers an impressive pool of ready talent truly capable of driving innovation and competitiveness.

Italy’s infrastructure is top-notch, ranging from advanced digital technologies to well-established transport networks. Its geographical position in the heart of Europe offers easy access to the wider European, North African and Middle Eastern markets, a strategic benefit for businesses aiming for broad reach and impact.

Italy has exhibited a remarkable receptivity to foreign direct investment (FDI), a trend underscored by the promising data from recent years. The allure of Italy for investors is multifaceted, with several opportunities arising from its economic resilience and strategic initiatives.

Recent reports have indicated a surge in foreign investment projects in Italy. Specifically, the Europe Attractiveness Survey 2023 published by EY highlighted that the number of investment projects had more than doubled in comparison with pre-pandemic levels. In 2022, Italy announced 243 FDI projects, marking a 17% increase from the previous year. Such growth reflects international confidence in Italy's market potential and is a testament to the country's capacity to attract diverse kinds of investment.

Italy's government has identified key sectors for FDI which are critical to the nation's security and economic progress. These include defense, national security, energy, transport, communications, high-tech, and finance, among others. Focusing on these sectors, foreign investors can benefit from a country that is committed to innovation and industrial excellence.

To assist in the facilitation and development of foreign companies in Italy, the Italian Trade Agency has established a dedicated Foreign Investments Attraction Department. This body concentrates on promoting business opportunities and extending support to foreign investors seeking to establish or expand their operations within Italian borders. The existence of such a department eases the entry barriers for new investors and simplifies the complexities of setting up a business in a new market.

There are a wide range of investment opportunities available in Italy, with incentives provided at European, National and Regional levels. In most cases, foreign and local investors are treated equally and are both eligible for investment incentives.

The European Regional Development Fund (ERDF) provides monetary assistance to safeguard sustainable jobs and the European Social Fund (ESF) provides monetary assistance to encourage enterprise and job creation. Central and Regional Government incentives include:

• Contratto di Programma which provides investors with large scale industry incentives.
• Localisation agreements which provide Foreign Investors with Financial, Administrative and Procedural support.
• The Nation Programme for Research and Competitiveness which aims to support investors interested in research, innovation and business development.
• Grants and Subsidised loans for SMEs (Sistema Monetario Europeo).

Banks in Italy are usually open to the public Monday to Friday from 8:30am to 13:00 pm, and for 1 hour in the afternoon, between 3:00pm to 4.00pm. On working days before a public holiday, banks are open only from 8:30am to 13:00 pm.

It is mandatory to make the F24 form payments (which cover social contribution, insurance contribution and taxes) to the authorities from an in-country bank account. All other payments can be made from anywhere.

It is equally important and mandatory to remind that employers must pay wages, as well as any advance thereof, using traceable payment methods, in accordance with the provisions of Law N. 205/2017.

The RiBa (Ricevuta Bancaria) is a commonly used Italian electronic bank draft. It includes a bank receipt which is issued by the creditor on the basis of an invoice and submitted to the debtor for approval. All RiBas are processed electronically and the use of cheques is in decline but they remain an important means of business payment.

Since 1 January 2008, the Italian Banking System has stipulated that the IBAN (International Bank Account Number) is the sole and exclusive standard for identification of the current account to be used in the execution of payments national payments.

The IBAN is the international code used to uniquely identify a bank account.

It is composed of the following elements: Country + EUR CIN + ABI code + CAB code + current account number.

Here's an example:

To process payroll in Italy, a foreign company needs to be registered with the following Italian authorities, before hiring employees and starting any activity:

• INPS (Social Security)
• INAIL (Labour Insurance)
• Sistema Regionale COB (Labour Office)

These obligations are due with a permanent establishment or a simple social security representative office.

In the event of a permanent establishment (PE), there will be additional potential tax implications for the company (corporate taxation) and the employees (the company will be obliged to perform the role of the tax-withholding agent). If the company has a stable presence in Italy the nature of the activity conducted as well as the level of autonomy and responsibility of the people involved in the activity may trigger some tax implications for the company.

A preliminary tax analysis is suggested to confirm if there is an Italian Permanent Establishment (PE) in Italy in order to set the right structure for carrying out the business in Italy. If from the analysis it arises that your Company is not putting in place any PE, a suitable solution could be the domiciliation of a Social Security Representative (SSR) in Italy in order to comply relevant domestic duties via domestic payroll. The Legal Representative of the mother Company, as well as the company needs to be fiscally domiciled in Italy in order to receive a Company Identification Number (so called “codice fiscale”).

The company will need to decide if they wish to set-up a PE or a legal entity and this may be based on the type of involvement and cost structure required Italy. This can be a branch (with an Italian VAT code) or a limited liability company (SRL or SPA).

The main types of entity in Italy are:

Partnerships (società di persone)

Assets and Liabilities are only partially segregated from the assets and liabilities of their members.

There are 3 types of partnerships available:

• Simple Partnership (Società Semplice)
• General Partnership (Società in Nome Collettivo)
• Limited Partnership (Società In Accomandita Semplice)

Companies (società di capitali)

Assets and liabilities are completely segregated.

There are 3 types of companies:

• Stock Companies (società per azioni or SpA)
• Limited liability companies (società a responsabilità limitata or Srl)
• Partnerships limited by shares (società in accomandita per azioni)

Company Registration in Italy

A company must be registered t0:

• The Tax Agency (Agenzia delle Entrate): An Italian company tax code is needed; the legal representative of the Italian entity should also have a tax code. Registration could take up to 2 weeks.
• The Social Security Body (Istituto Nazionale Previdenza Sociale): Require the same data for registration as the Tax Agency, plus core business information. This should be completed by the 16th day of the following month in which the first employee has been hired in order to pay the social security contribution.
• Insurance Against Accidents at Work (mandatory) (Istituto Nazionale per l'Assicurazione contro gli Infortuni sul Lavoro): The same data as above is required, as well as the line of work (to define risks). This should be completed within the first working day of the first employee. Within 30 days from the date the complaint is filed, Inail issues the certificate of insurance and a part premium statement.
• The Employment Agency (Centro per l’impiego): Requires new starters and leavers information. This should be completed the day before the first working day for each new employee. Regarding transformations (e.g. fixed-term contracts becoming permanent contracts or transformations) and terminations (e.g. resignations or dismissals) the deadlines change: they must be reported within 5 days of the event.

To work in Italy individual requirements are defined subject to citizenship. An individual is either an EU Citizen or a Non-EU citizen for classification purposes.

EU Citizens

Residence: EU citizens may reside in Italy but beyond 90 days, they are required to register with the local town hall.

Employment: EU citizens are free to work in Italy with no permit being required.

Non-EU Citizens

Business Visits: Non-EU citizens will be required to obtain a business/tourist visa. The application should be made prior to travelling to Italy. Applicants should make their request for a visa to the Italian Embassy in their country of origin or current residence. A visa may not be required by citizens of countries that have specific arrangements with Italy, including America and Japan for example.

Employment: A foreign national must hold a Work Visa to work in Italy. The number of foreign nationals that can work in Italy is decided by the Government on an annual basis. There is an exception that can allow additional foreign nationals to be issued with a permit out-with the Government limit if a relationship exists between the Italy entity and a foreign holding or subsidiary company or in other rare cases.

All companies must have:

• A tax codes
• An employment agency access code
• An INAIL code
• An INPS code

The Tax Year usually runs from 1st January to 31st December. Companies may however choose a different fiscal year.

In Italy, taxable income is subject to Personal Income Tax (IRPEF). Furthermore, a Regional Tax and a Municipal Tax are applicable, which vary according to the Regional and Municipal authorities.

Further information is available on the Government Websites:

• INPS - Social Security Authority
• INAIL - Social Security Authority
• Italy Tax Department

Income Tax

The Company Identification Number (“codice fiscale”) is required for any operation involving local authorities.

For companies without an In-Country presence: The in-country payroll office may obtain the company tax code number on behalf of the company by obtaining Italian Personal Fiscal Code and the company code. It normally takes 15 business days to process and the legal representative will be required to sign the necessary documents.

Any delays in the process will affect the hiring for a new employee as no employees can commence employment before this process is successfully completed.

A tax advisor is required to support the clients in setting up an Italian Branch, a Capital Company or a Subsidiary. They must obtain a VAT and Fiscal Code by requesting it from the local VAT Office.

The employer is obliged to act as withholding agent and therefore withholds income tax from the employee, but must pay it to the tax authorities (Agenzia delle Entrate) by the 16th of the following month.

The Italian Tax Card

The Budget Law 2024 (Law No. 213/2023) changed the IRPEF tax rates.

The 2024 Income Tax rates are: 

All the employees pay Regional and Municipal Tax according to their effective residence. An additional 10% for specific cases in the Financial Sectors on Bonuses and Stock Options.

MOD.F24 is the payment order form used by the employer to pay local authorities and is used for:

• Employer and Employee Contributions
• Work Related Accident Insurance Payments
• Withheld Taxes for Employees and Company/Employer liabilities for local taxes and other charges

The MOD F24 form must be completed, signed for approval and paid within the 16th of each month. The amounts will then be debited from the account. For local authority payments, wire transfers cannot be made from abroad but must be done from an Italian bank account.

For omitted, late or insufficient payment beyond the deadline for submission of the declaration for the year following the year in which the violation was committed, or, if there is no declaration beyond 2 years from the omission or error 5.00% (1/6 of 30%) (Art. 13, c. 1, Legislative Decree 472/97). After ascertainment of the violation with a dispute report (2) Regularisation of errors and omissions, including those affecting the determination or payment of the tax, after ascertainment of the violation with a dispute report 1/5 of the minimum penalty (Art. 13, c. 1, Legislative Decree 472/97):

1. Occurs, for example, when the employer delays the payment of IRPEF withholdings that he has regularly made on wages paid to employees.
2. Only for taxes administered by the Internal Revenue Service.

The employer must submit their Annual Declaration by submitting:

• CU form to the tax agency
• 770 forms to the tax agency

The Social Security body is named INPS (Istituto Nazionale Previdenza Sociale). A company must register with the Labor Office, the Social Security Institute and the Insurance Institute, all of which are public authorities. The core business of the company will define the “class of activity” to determine the contribution rate.

The Legal Representative of the company is required to sign the relevant documents which are then delivered to the relevant Institutions by the In-Country Payroll at the agreed schedule.

The pre-agreed schedule dates for the process:

• Insurance Institute (INAIL): Registration must be completed no later than the first day of employment.
• Social Security Institute Registration: By the 16th of the month after commencing the employment.
• Labor Office Registration: Must be completed at least 1 day prior to the start date of employment.
• Penalties: In the cases of delay, fines and interest are due to the respective authorities.

Here an example of social security contributions (INPS) (commerce sector) up to 15 employees for open-ended contracts.

Social Security Contributions (INPS) for blue and white-collar workers (commerce sector)

Social Security Contributions (INPS) for Dirigente (commerce sector)

Only blue and white-collar workers have to pay the FIS in the Commerce sector. Always refer to your payroll specialist for more information.

All the employees registered to Social Security from the year 1996 onward are limited to the maximum salary of € 119,650.00 euro for the year 2024. Each year this ceiling may vary according to government decisions. Any further eligible salaries are subject to the minor contributions (employer charge only) depending on their sector of activity.

The MOD.F24 payment order form must include details of all Social Security deduction and payments to the Local Authorities.

Insurance policies: it is common to grant heath care policies; collective agreements provide mandatory policies for managers or officers and employees. When policies are put in place by an employer it must add an additional social security contribution equal to 10% on the policy itself.

Social Contribution: delayed payment cannot be remedied directly by the employer as sanction and interest will be required by the body.

Social contributions also cover the statutory pension contribution. To obtain information regarding an employee's retirement age and how many years of social contributions he or she has paid, one should always refer to social security consultants (CAAFs and patronages), always with the employee's authorization to do so.

INAIL is in charge of company enrollments and providing indemnity to employees that have had accidents during their employment or, companies must inform INAIL about their core business and the main activities of employees to assess the risk, this is to establish the insurance amount to pay for each kind of risk. This may be reviewed based on the accidents.

All deadlines when they fall on Saturday, Sunday or on a holiday on a must be postponed to the first working day.

Yearly  

CU Form

The Certificazione Unica (CU) is the tax document with which tax withholding agents certify employment and assimilated income, but also self-employment income, commissions and miscellaneous income.

Annual Certificates of Salaries for Tax & Social Security (for previous year) should be submitted by 31 March each year to all the employees by the payroll provider and submitted to the agency by 16 March.

Autoliquidazione INAIL

The employer subject to compulsory insurance against accidents at work and occupational diseases and the craftsman without employees pay the premium each year by means of self-assessment.

This procedure allows for the direct determination and payment of the occupational accident and illness premium as well as the special craftsman premium. The other 'special unit premiums' (pupils/students, X-ray and radioactive substances, millers, fishermen, porters, horse transporters and coachmen) are excluded from self-assessment.

With the annual self-assessment of premiums, Inail also collects membership contributions on behalf of the affiliated trade associations.

For the 2023/2024 self-assessment, the deadline for submitting the declaration of wages actually paid in 2023 is 29 February 2024. However, by 16 February the employer must: calculate the advance premium for the current year (instalment) and the adjustment for the previous year (adjustment), so even if the deadline for self-declaration is at the end of the month, the payment deadline is 16 February 2024.

The premium can be paid in full or in 4 instalments (16 February, 16 May, 20 August, 16 November).

Disabled Persons Annual Report as provided for in Law No. 68 of 12 March 1999 (Prospetto Informativo)

The Disabled Persons Annual Report is required to be submitted by 31 January of each year to the labor office for Employers with 15 Employees or more. The Disabled Persons Annual Report must necessarily be filled in electronically by the deadline indicated each year by the Ministry of Labour, under penalty of the sanctions provided for in Article 15 of Law 68/99.

The administrative penalty shall be EUR 702,43, increased by EUR 34,02 for each additional day of delay in complying with the obligations.

Attention: it is mandatory to hire a disabled person as you reach 15 employees to within the next 60 days. The administrative penalty shall be EUR 196,05 for each day the company is not hiring a disable person.

If there are no changes affecting the compulsory quota, the prospectus may not be forwarded.

Always consult your payroll specialist or your trusted labour consultant to submit it to the appropriate bodies.

Annual Withholding Tax Return (770 form)

Form 770 is an annual tax declaration to summarise paid contributions, severance pay and withholding taxes, and company income. The declaration to be filled in by tax substitutes, i.e. those entities that take the place of the taxpayer in dealing with the tax authorities

The tax withholding agent declaration, Form 770/2024, must be submitted by 31 October 2024, exclusively by telematic means.

Normally, for correct compilation, all tax codes and the corresponding debit and credit amounts of all MOD.F24 paid during the year are retrieved.

There is no indication per individual employee as with the CU forms, but rather an overview of the company.

Temporary employees (Lavoratori somministrati): Annual communication

Companies which, during the current year, have used temporary agency workers, must submit, by 31 January of the following year, the obligatory annual communication with the data on temporary agency contracts concluded during the current year.

The communication will have to be made to the company trade union representatives (RSA) or to the unitary trade union representation (RSU) or, failing that, to the territorial trade union bodies of the comparatively most representative trade union associations at national level.

The mandatory data required, and which must be entered in the attached form are:

• The number of employment contracts concluded
• The duration of the contracts
• The number and qualification of employees used
• The reference period is the current year and the communication must not include the name of the employees, but only the numerical data

The submission may be made by:

• Hand delivery
• Registered letter with acknowledgement of receipt
• Certified electronic mail (PEC)

Ordinarily, it is the temporary employment agencies that are responsible for communicating the data to the company.

Sanction

Please note that a fine of between EUR 250 and EUR 1.250,00 is provided for in the event of failure to comply or incorrect compliance with the reporting obligation.

To set up a new employee the following is required:

• A completed New Employee contract – written working contract signed by the employer and the employee. During the year 2022, the so-called Transparency Decree was adopted in Italy. The Transparency Decree came into force on 13 August 2022 and applies with regard to 'all employment relationships already established as of 1 August 2022'. With specific reference to employment relationships already established as of 1 August 2022, the regulation provides for the possibility for employees to request in writing from the employer (and the principal) an integration of the required information, a request that must be responded to within the next sixty days, under penalty of sanctions. The Transparency Decree point will explain the new regulations in detail.
• On the day before the start date, it is mandatory to send a communication (called COB) to the Labour Office. In order to do it, the employer must be enrolled with Centro per l’Impiego (Labour Office).
• The employee is required to produce a complete list of personal data, including Address, Place of Birth, Fiscal Code, Family Status (Wife\Husband Occupational Status, Age of Children), Date of Employment, and Former Employment Income from the same Year.
• appropriate forms (TFR – Tax Deduction Form and Privacy form) are given to the employee to collect information.

Failure by the labour office to comply will result in a penalty for each employee. Each labour office by province has its own website where this form must be submitted, which is forwarded to INAIL and INPS by the labour office.

Collective agreements provide for probationary periods, when a new employee is hired, ranging from a few days to several calendar months, during which either party may terminate the employment relationship without notice. These periods are defined according to the levels agreed upon within the collective bargaining agreements.

In case the employee is not an Italian national but is hired/assigned in Italy

The documentation required of new expatriate employees includes the same data as above just outlined (date and place of birth, address in Italy, Italian tax code). Also required are an employment contract and an Italian tax code and, depending on the expatriate's origin, a residence permit.

For a new expatriate employee, the following information must also be provided:

• Salary and contract information
• Letter of posting
• Residence permit for all non-EU citizens
• Form A1 in Europe (if applicable)

The deadline for registering new expatriate employees with the authorities is one day prior to the start date of employment.

Note that for expatriates working in Italy, a new requirement has been introduced in addition to reporting to the labor office via the Cliclavoro online website.

In Italy, the concept of 'smart working' has been solidified into law, transforming the traditional workplace into a flexible and modern environment. The legal framework for smart working—which facilitates remote or teleworking arrangements—was solidified by Law No. 81 on May 22, 2017.

Businesses wishing to adopt smart working should know this law articulates specific obligations they must abide by.

Firstly, a written agreement between employer and employee is required, identifying the terms of smart working, including the information on the employee's rights to disconnect. Secondly, employers are under an obligation to ensure the health and safety of remote workers, even outside the traditional work environment.

Employers should provide appropriate tools for remote work and the reimbursement of expenses incurred by employees due to smart working. Businesses are also required to respect equal treatment principles, which underline that terms and conditions for smart workers should be comparable with those performing their duties at the company's premises.

The shift to smart working, when done in compliance with Italian law, can offer a range of benefits including improved work-life balance, increased productivity and innovative management approaches.

Since March 2016, voluntary redundancy and consensual resolutions have been made by electronic submission. Appropriate forms will be made available on the website of the Ministry of Labour and then automatically sent to the competent territorial directorate of the Labour Authority and the employer. In addition, the online communication of termination to the Labour Office must also be completed within 5 days from the termination.

Previously the employer had to receive the resignation and provide the online communication of termination to the Labour Office within 5 days from the termination.

The procedure and the form of termination of employment by the employee is provided for by the Ministerial Decree of 15 December 2015 in implementation of the provisions of Article 26 of Legislative Decree No. 151/2015, which requires the validation of the resignation by directly accessing the website of the Ministry of Labour and Social Policies at www.cliclavoro.gov.it or through qualified intermediaries.

The Employees have 7 days from the day of request to withdrawn the notice given.

The resignation must be validated by the labor inspectorate with jurisdiction over residence:

• For the female worker within 1 year of the marriage publications
• For workers who are parents, within 3 years of the child's age

For regulations on the terms of notice, procedures and duration in the event of withdrawal by the employee or the employer, please refer to the CCNL in force at the time of withdrawal.

It is legally acceptable in Italy to provide employees with online payslips.

Reports

In Italy, employers are required to keep payroll records for 10 years from the date of the payroll processing. This duration accounts for the period within which the tax authorities can audit a company

Italian Payslip Example

Holiday Accrual and Calculations in Italy

The length of an employee’s annual leave entitlement is determined by the contractual agreement or may be defined by the National Collective Agreement applied. Leave entitlement ranges from 5 to 6 weeks per annum and the law defines that the minimum must be 4 weeks.

Usually, untaken leave cannot be exchanged for payments in lieu unless the employee’s employment ends. Any remaining leave can be carried forward to the following year until 18 months after the end of the year and these remaining leave balances cannot be taken from the employee. However, the “18 months” rule might vary depending on the relevant NCLA.

Employees are entitled to be paid at the normal rate during their leave.

Payments in lieu of untaken leave can only be made at the termination of employment.

Important: If employees carry any annual leave allowance over, they will be subject to the social security charge in accordance with Italian legislation in July for the accrued days which have been held for more than 18 months.

Maternity Leave

Art. 16 e ss. D.Lgs. 151/2001

All Pregnant Employees possess the right to abstain from working. This leave is paid at 80 % of the last salary by the Social Contribution Body. National Collective Agreements defines an integration allowance to cover 100% of the salary.

Maternity Leave Policy

The maternity leave period covers:

• The two months before the expected date of confinement

• The period between the expected date of confinement and the actual date

• The three months following the confinement

An arrangement known as “flexible maternity leave” has recently been introduced. This allows the worker to put off her maternity leave until one month before the expected date of confinement and then continue it up to four months after the birth of her child.

In addition, it will be possible to continue until the expected date of birth or the effective date of birth then enjoy the next five months for leave

• During the first 12 months following the birth of the child, the Employer must allow the Employee 2 rest periods of one hour each working day if the working day is, at least, equal to 6 hours (otherwise, one hour is allowed). The remuneration of these rest periods is doubled in the case of a multiple birth and can be granted, as an alternative, to the father

• The payment of the rest periods is advanced by the employer and adjusted when the social charges to INPS are paid

Both parents are entitled to unpaid leave for a period of sickness of the child with the policy being as follows:

• The parent can stay off work during the whole period of sickness if the Child is under 3 years

• Each parent can remain off work for up to of 5 working days per year if the child’s is under 8 years

Paternity Leave

Art. 27 bis e ss. D.Lgs. n. 151/2001

The father employee from two months before the presumed date of birth and within five months thereafter abstains from work for a period of 10 working days, not divisible into hours, to be used also not continuously. The leave is also available within the same time frame in the case of perinatal death of the child. In the case of multiple births, the duration is increased to 20 working days, this leave is also available to the father during the employee mother's maternity leave. The leave also applies to the adoptive or foster father. The leave is also granted to a father taking paternity leave. In order to exercise his right, the father notifies his employer in writing of the days on which he intends to take leave, no less than 5 days in advance, where possible in relation to the birth event on the basis of the expected date of birth.

Parental Leave

Art. 32 D.Lgs. n. 151/2001

For each child, during its first twelve years of life, each parent has the right to abstain from work by requesting parental leave. Such parental leave may not exceed a total of ten months.

Where the father employee exercises his right to take leave from work for a continuous or fractioned period of not less than three months, the total limit of parental leave for parents is raised to eleven months.

Following the amendments made by Legislative Decree No. 105/2022, the paid periods of parental leave under Article 34 T.U. are as follows:

• To the mother, up to the twelfth year (and no longer up to the sixth year) of the child's life (or from the child's entry into the family in the case of adoption or foster care) is entitled to an indemnifiable period of 3 months, non-transferable to the other parent

• To the father, until the twelfth year (and no longer until the sixth year) of the child's life (or from entry into the family in the case of adoption or foster care) is entitled to an indemnifiable period of 3 months, not transferable to the other parent

• Both parents are also entitled, alternatively, to an additional paid period of a total duration of 3 months, for a maximum total paid period of 9 months (and no longer 6 months)

• The lone parent is entitled to a paid period of 9 months (and no longer 6 months) (INPS msg. no. 3066/2022)

Leave for Disabled Child

Art. 33 L.104/1992, Art. 42 L.D. n. 151/2001

The mother or, alternatively, the employee or father, including adoptive parents, of a person with an ascertained severity handicap, may take advantage of the following benefits:

• Extension of the period of parental leaves up to three years

• As an alternative to the previous point, two hours of paid daily leave up to the child's third birthday

Disability Care Leave

Art. 7 Legislative Decree No 119/2011

Civilian invalids with a reduction in working capacity of more than 50 per cent are entitled to 30 days paid annual leave, even in installments, for treatment.

The 30 days of absence from work for treatment must be used within the calendar year from 1 January to 31 December.

Extraordinary Leave

Art. 42 Legislative Decree No. 151/2001

Extraordinary leave has a maximum total duration of two years over the applicant's entire working life for each disabled person. The leave may be taken continuously or in installments.

Who is entitled to extraordinary leave:

• Cohabiting spouse/ the cohabiting party to the civil partnership/ the de facto cohabitee of the severely disabled person

• Father or mother, including adoptive parents, if spouse/cohabiting civil partner/de facto cohabitee of severely disabled person is missing or deceased or suffers from a disabling condition

• One of the severely disabled person's cohabiting children, if the spouse/domestic partner/cohabiting partner and both parents, including adoptive parents, of the severely disabled person are absent or deceased or suffer from a disabling condition

• One of the disabled person's cohabiting brothers or sisters, if the disabled person's cohabiting children the disabled person's cohabiting spouse/cohabiting civil partner/cohabiting de facto partner, both parents, and the disabled person's cohabiting children are missing, deceased, or suffer from disabling conditions

• One of the relatives or relatives-in-law within the 3rd degree of cohabitation of the severely disabled person, if the cohabiting spouse/cohabiting civil partner/cohabiting de facto partner, both parents, including adoptive parents, cohabiting children, and cohabiting brothers or sisters are missing, deceased, or suffer from a disabling condition

Leave for Women Victims of Gender-based Violence

Art. 24, para. 1, Legislative Decree No. 80/2015

Employees included in protection pathways related to gender-based violence, duly certified by the social services of the municipality of residence, anti-violence centres or shelters have the right to abstain from work for reasons related to protection pathways for a maximum period of 3 months.

Marital Leave

Interconfederal Collective Agreement 31/05/1941

The employee is entitled, on the occasion of a civil marriage, to fifteen days' paid leave.

Sickness

With the exceptions of certain circumstances, the employee must inform the employer of any illness. The failure to do so in the event of absence will lead to disciplinary measures (penalty, lay-off from work and salary).

The employer is entitled to control the illness by requesting the local Health Institutes for a medical evaluation report. The employee is obliged to remain home between 10:00am -12:00pm and 5:00pm - 7:00pm for the Medical Inspections as requested by the employer.

If the employee is not in their probationary period, the employer will not re-fill the job for a maximum period of 180 days (according to the NCLA “Terziario Confcommercio”)

NCLA “Terziario Confcommercio”

An employee can request for an extension of sick leave for a maximum period of 120 days; this will remain an unpaid period.

If the Employee does not return to work after the authorised periods, they may be dismissed.

During their sickness, the employee is entitled to be paid as follows:

• First three days called "carenza": 100% of salary to be paid by the employer; NCA can state a different percentage over a certain number of sickness periods (for example the NCLA “Terziario Confcommercio” states that for the first two periods of sickness, the employee is due 100% of the salary, for the third one 66.66% of the salary, for the fourth period 50% of the salary. By the fifth sickness event, nothing is due to the employee by the employer for the period named carenza)

• From the 4th to the 20th day:

  • 25% of their salary to be paid by the employer (according to the NCLA “Terziario Confcommercio”)

  • 50% to be paid by INPS (Social Security). This amount will be advanced by the employer who will then adjust it when paying the social charges to INPS in the same month

• From the 21st to the 180th day:

  • 33,33% of their salary will be paid by the employer according to the NCA “Terziario Confcommercio”

  • 66,66% to be paid by INPS, with the same formalities and adjustments as indicated above.

National Service

In 2004, the Italian Parliament approved the suspension of the mandatory military with effect starting from 1 January 2005.

The leave listed above and sickness could be regulated by the various collective bargaining agreements in the sector, which could make changes (always respecting current legislation and not making things worse) or take over what is set out in the law.

As of 2024, Italy does not have a government-regulated national minimum wage. Instead, minimum wage rates in Italy are determined through collective bargaining agreements on a sector-by-sector basis. These agreements are negotiated between unions and employers within each industry, and they set the minimum pay rates for workers in that sector.

NCLA – The National Collective Labor Agreement (CCNL)

The National Collective Bargaining Agreement (NCLA) is the regulatory source through which employee representative organisations and employer associations (or an individual employer) agree on the rules governing the employment relationship.

The NCLA defines many employment rules and regulations in Italy in addition to the Italian labour laws. Different industries are governed by different NCA’s depending on their scope of business; e.g. the NCLA is different for food, chemical, engineering sectors, etc. The NCA defines salaries for different levels of employment.

NCLA is generally contain 2 parts:

• The normative part, with the pay scales and the basic rules of the employment relationship (hours, leave, overtime, holidays, etc.)
• The mandatory part, with the rules that will govern future relations between the (collective) counterparts to the contract, i.e. the trade unions and employers' associations that are signatories to it

Normally NCLAs regulate both the regulatory aspects of the relationship, as well as those of an economic nature. There is also almost always a part intended to regulate certain aspects of the trade union relationship between signatory organisations and employers' associations, as well as the company relationship between the employer and company trade union representatives.

The essential purposes of the collective agreement are:

• To determine the content regulating labour relations in the sector to which it belongs (e.g., transport, engineering, commerce, chemicals, etc.);
• To regulate relations between the signatories to the agreement.

Collective bargaining can take place at different levels:

• Inter-confederal, whose task is to define general rules affecting all employees regardless of the production sector to which they belong
• National category (the already mentioned CCNL)
• Territorial interconfederal and sectoral
• Company category

The NCLA, depending on the industry, also stipulates the number of extra months that an employee must be paid and the payment date, i.e. The 13th month salary is paid in December (within Christmas) and the 14th month is usually paid in June.

n Italy, the average working week typically involves working from 9:00 am to 1:00 pm, and then resuming from 2:30 pm to 6:00 pm, from Monday to Friday.

The average working week totals around 36 hours.

This can changes from job to job, but it is always regulated by the relevant collective labour agreement.

There are multiple statutory holiday schedules within Italy. Below are the statutory national holidays in Italy for 2024.

General expenses incurred by an employee associated with their employment are fully reimbursed upon submission of the receipt. All the original receipts should be submitted with the relevant Expense Claim Form completed in full.

In Italy meal vouchers are normally provided to employees. This is a benefit in kind; it isn’t subject to social contributions or taxes if the daily amount is less than €4,00. If it is over this amount, then the component that exceeds €4,00 is subject to social contributions and taxes. The threshold is increased to €8,00 per day, since 2023, if the vouchers are issued electronically.

The employer can pay the employee a fixed conventional value for every kilometer traveled by an employee using their own car where their job function required them to use their own car. The kilometer reimbursement has a conventional value depending on the model of the car. In this conventional value all expenses (such as fuel, insurance or mechanic) are included except motorway and parking charges. The values are published annually by the ACI.

Another benefit, can be the car: the Agenzia delle Entrate publish each year the national tables, prepared by the ACI. The tables show the mileage costs of operating cars and motorcycles for the purpose of identifying income in kind (Art. 51, c. 4, Presidential Decree 917/86, as amended) of company vehicles (owned, leased, rented, etc.) granted to employees (and coordinated collaborators) for mixed use (i.e., granted both for job service and private use).

In addition, the employee could be entitled to travel expense reimbursement; these expenses must be strictly in connection with his job function (fuel, motorway and parking). The employee must provide the employer with the correct receipts.

All benefits in kind, apart from meal vouchers, are not taxable in the year up to a maximum amount of EUR 258.23. Above this limit, the total of the benefits is taxed. This value may be changed during the year by the government. Always refer to your payroll specialist or dedicated labour advisor in case of changes.

Agile Working/smart working

Vulnerable employees and those with children under 14 in the private sector can work remotely until March 31, 2024.

Fringe Benefit Threshold

The maximum amount, normally EUR 258.23, for taxable income reduction through fringe benefits is set at EUR 1,000, or EUR 2,000 for employees with children.

De-taxation of the Company Performance Bonus

Confirmed for 2024 is the 5% tax rate - with a subsidized income limit of 3,000 euros gross.

On sums paid as corporate performance bonus (not individual performance bonus), participation in company profits for private sector employees who hold contracts of subordinate employment (fixed-term or permanent), who have received income from employment in the previous tax year of an amount not exceeding €80,000.

Reduction in Social Security Contributions

Employees are exempt from paying certain social security contributions for 2024. The 2024 budget law provided for employees, with the exclusion of domestic work, an exemption from social security contributions for disability, old age and survivors, relating to the payment periods ranging from 1 January to 31 December 2024. The exemption is recognised:

• by six percentage points, if the taxable salary, calculated on a monthly basis for 13 months, does not exceed 2,692 euros per month
• by seven percentage points, if the taxable salary, calculated on a monthly basis for 13 months, does not exceed 1,923 euros per month

Parental Leave

• Modified compensation for maternity or paternity leave. In 2024, parents can enjoy the increase in parental leave benefit to 80% for one of the 9 eligible months.
• For 2024 only, it is also possible to take advantage of a second month of leave, with an allowance maintained at 80%. However, starting from 2025, the percentage of the allowance for the second month will be reduced to 60%, while the following months will maintain the usual percentage of 30%.
• It is now possible to access parental leave up to the child's age of 12.

Contribution Exemption for Working Mothers

Available for mothers with three or more children under a permanent employment contract, with specific conditions. Only for 2024 this exemption is extended for mothers with two or more children. There is the employee who has to ask with a form to the company to apply this exemption. The exemption concerns INPS contributions up to a maximum of EUR 3,000 per year.

Early Retirement Options

Adjustments to the "Quota 103", "Opzione Donna" and "Ape sociale" retirement schemes.

Please note that this document gives general guidance only and should not be regarded as an authoritative or complete statement of the law, regulations or tax position in any country. You should always seek specific advice for each specific situation. This document should not be relied upon as professional advice and activpayroll accepts no liability for reliance on its contents.