Summary

Italy operates a comprehensive social security system which provides a range of old age, invalidity, sickness, unemployment and other social benefits, including family allowances and income guarantees. Entitlement to benefits generally derives from and individual’s contribution history, although some benefits arise due to residence in Italy.

The Italian social security system is extremely bureaucratic – it has industry and regional differences and various branches overseen by difference government institutions, which add a further layer of complexity.

Details

Contributions

Individual contributions vary according to industry and qualification level, but are generally around 10% of total remuneration, uncapped. Employer contributions are around 30%, again uncapped.

Treaties

Italy has social security agreements with all European Economic Area countries and more than 25 non EEA countries. These agreements determine which country has the right the levy social security contributions, has the obligation to provide benefits, and prevent social security being levied twice on the same income. The US/Italian agreement differs slightly in that it is not time limited and not all branches of social security are covered.

Most businesses sending individuals to Italy avoid paying local contributions through having a certificate of coverage or A1 – this is beneficial from both cost and administrative points of view. Certificates under the US/Italian agreement do not prevent all Italian contributions from being payable.

Exemptions

A reduction in total social security contributions of up to €50,000 per year can be obtained by companies with certificated gender pay gap status. There are reductions to the employer social security contributions due on certain approved bonus schemes, and some approved ‘in-kind’ bonus schemes can be completely exempt from social security.

Administration

All contributions to the social security system are made through payroll for those employed in Italy – mainly to INPS (the Italian Social Security authority), but also to other institutions for occupational insurance and the state severance fund. The different contribution rates payable for different employees under the various collective bargaining agreements adds an extra level of complexity.

Benefits

Although benefits for the various branches of Italian social security are administered by different institutions, INPS provides access to and pays most of the amounts due. 20 years of total contributions (in Italy or a treaty partner) are required to access Pension benefits in Italy.

Other

Employee social security contributions are generally tax deductible in Italy, as are contributions to certain complementary pension funds.

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