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An Employer’s Guide to Social Security in Italy

There are a wide variety of social security programs around the world, which differ depending on how each country approaches offering and funding employee benefits and pensions.  Countries that rely on free-market approaches to items like health care and pensions will have lower rates than countries that have a more nationalized or subsidized system.

Like many EU countries, Italy has relatively high social security contribution rates, totaling 40% of employee salary.  This could be a surprise for companies that are used to lower rates in their home country and will have to be calculated into the overall cost of hiring Italian employees.

What are the social security rates in Italy?

Both employees and employers do contribute to social security, although the percentage is weighted more heavily on the employer side.

Employee Social Security Rates: The employee rate is 10%, but the majority of the contribution goes to the National Pension Fund, and contributions are capped at EUR 47,379 of annual income.

Employer Social Security Rates: The employer rate is 29-32%, depending on the seniority of position and number of employees.

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Client Case: What is included in the social security funds in Italy?

We had a client based in the UAE who was hiring Italian employees and wanted to know what was included in social security funds to benefit employees.

We shared the following breakdown and told them that two-thirds of all social security contributions are paid into these funds:

  • Unemployment fund.
  • Sickness fund (not applicable for executives).
  • Maternity fund.
  • Temporary unemployment compensation fund (ordinary and extraordinary, not applicable to executives).
  • Social mobility fund (not applicable to executives).
  • Other minor funds.

Do you need more information about Italy?

If you are new to hiring in Italy, you may have other questions such as:

Are employer contributions capped at any income level?

How are employer contributions made?  Through payroll or paid separately?

Are there different rates if an employee is an expat in Italy?

We help our clients understand the nuances of questions like these, that relate to running payroll, providing entitlements, and calculating employee social contributions. We make international employment simple.

 Need more information about employing in a new country? Learn more about:

 

 

Looking to hire an employee in Italy? Get in touch.

 

The information in this article is subject to changes in local legislation.

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