Table of Contents
The Italian Pension Environment
In Italy, social security is mandatory and provides pension and welfare benefits across several areas. For employees in the public and private sector social security contributions are mainly managed by INPS (Istituto Nazionale della Previdenza Sociale) — the National Institute for Social Security. The self employed generally also make contributions to INPS, with the exception of professionals who are covered by welfare schemes under the aegis of their professional bodies, and of some other limited categories of independent worker.
These contributions to INPS and other institutions are mandatory – i.e. due by law, based on income and according to legal rates and thresholds. These mandatory contributions represent by far the main bulk of Italian retirement benefit provision. The private sector, although seeing an ever increasing role, still accounts for a small part of the overall pension and welfare provision. The private sector is mainly involved in pension provision in the form of “supplementary” pension schemes either pursuant to national collective labour agreements for employees, in specific sectors, and for senior management. recent years have seen the growth of regulated pension schemes offered by financial institutions to the public generally.
Accident At Work Insurance
Injury and Occupational Disease Insurance is managed by INAIL, a separate body from INPS, by way of mandatory insurance premiums generally pad by the employer.
Tax Treatment of Pension Contributions
The tax regime applicable to the making of contributions and the receipt of pensions is designed to be a mirror image. Mandatory pension contributions are generally deductible by workers in calculating taxable income. Employers contributions are generally also tax deducible in computing business profits liable to corporate income tax (IRES) and do not represent taxable income for the employee.
Pension benefits thus formed from tax exempt contributions, are then liable to income tax in the hands of the pensioner and treated more or less as if they represented income from employment.
Complementary and supplementary contributions can benefit from a tax credit within certain limits. Pension benefits will be liable to tax, in correspondence with the amounts paid in which qualified for tax deduction. The remaining part is generally liable to flat tax on at rates of between 9% and 15% reflecting the fact that contributions were paid without deduction of tax and the fact that the regulated Italian pension schemes are themselves liable to tax on the yield deriving from funds under investment.
Who Pays?
Employers are responsible for withholding and remitting both their and the employee’s share of the total social security liability.
The state pension system was subject to major reform effective at the start of 1996, Up to that date contributions were based mainly on final salary. For people entering into the Italian welfare system for the first time after the end of 1995, retirement benefits are based principally on the total of contributions made over the years. A mixed system applies to contributions straddling the effective date of the reform.
Complexity
The calculation of contributions and of retirement and other benefits is extremely intricate, being the result of a rigorous rule based system.
This blog post is intended to provide only a general introductory overview. If you are thinking of moving to Italy for work, an exact calculation of social security security is, on the whole a join for a “consulente di lavoro”, a recognized profession in Italy who offer payroll management services and professional advice on payroll taxes and social security. The applicable social security regime will depend primarily on
- whether you are engaged under
- a contract of employment; or
- you are providing independent professional services; or
- or carrying on a craft, trade or business
- the economic sector in which you are working – special rules apply for example to the agricultural and sporting sectors
- if employed, the terms of employment
- if self employed the type of services you are providing as classified within the ATECO code system
- your age and seniority
- if employed, the terms of your individual contract and applicable national collective labour agreement (CCNL)
- whether you entered into the Italian social security system before 1996, or entered into the social security system of an EU Member State or country which has a social agreement with Italy before 1996. An important element is whether you had “contributions seniority” before 1996
The Italian Pension Environment
In Italy, social security is mandatory and provides pension and welfare benefits across several areas. For employees in the public and private sector social security contributions are mainly managed by INPS (Istituto Nazionale della Previdenza Sociale) — the National Institute for Social Security. The self employed generally also make contributions to INPS, with the exception of professionals who are covered by welfare schemes under the aegis of their professional bodies, and of some other limited categories of independent worker.
These contributions to INPS and other institutions are mandatory – i.e. due by law, based on income and according to legal rates and thresholds. These mandatory contributions represent by far the main bulk of Italian retirement benefit provision. The private sector, although seeing an ever increasing role, still accounts for a small part of the overall pension and welfare provision. The private sector is mainly involved in pension provision in the form of “supplementary” pension schemes either pursuant to national collective labour agreements for employees, in specific sectors, and for senior management. recent years have seen the growth of regulated pension schemes offered by financial institutions to the public generally.
Accident At Work Insurance
Injury and Occupational Disease Insurance is managed by INAIL, a separate body from INPS, by way of mandatory insurance premiums generally pad by the employer.
Tax Treatment of Pension Contributions
The tax regime applicable to the making of contributions and the receipt of pensions is designed to be a mirror image. Mandatory pension contributions are generally deductible by workers in calculating taxable income. Employers contributions are generally also tax deducible in computing business profits liable to corporate income tax (IRES) and do not represent taxable income for the employee.
Pension benefits thus formed from tax exempt contributions, are then liable to income tax in the hands of the pensioner and treated more or less as if they represented income from employment.
Complementary and supplementary contributions can benefit from a tax credit within certain limits. Pension benefits will be liable to tax, in correspondence with the amounts paid in which qualified for tax deduction. The remaining part is generally liable to flat tax on at rates of between 9% and 15% reflecting the fact that contributions were paid without deduction of tax and the fact that the regulated Italian pension schemes are themselves liable to tax on the yield deriving from funds under investment.
Who Pays?
Employers are responsible for withholding and remitting both their and the employee’s share of the total social security liability.
The state pension system was subject to major reform effective at the start of 1996, Up to that date contributions were based mainly on final salary. For people entering into the Italian welfare system for the first time after the end of 1995, retirement benefits are based principally on the total of contributions made over the years. A mixed system applies to contributions straddling the effective date of the reform.
Complexity
The calculation of contributions and of retirement and other benefits is extremely intricate, being the result of a rigorous rule based system.
This blog post is intended to provide only a general introductory overview. If you are thinking of moving to Italy for work, an exact calculation of social security security is, on the whole a join for a “consulente di lavoro”, a recognized profession in Italy who offer payroll management services and professional advice on payroll taxes and social security. The applicable social security regime will depend primarily on
- whether you are engaged under
- a contract of employment; or
- you are providing independent professional services; or
- or carrying on a craft, trade or business
- the economic sector in which you are working – special rules apply for example to the agricultural and sporting sectors
- if employed, the terms of employment
- if self employed the type of services you are providing as classified within the ATECO code system
- your age and seniority
- if employed, the terms of your individual contract and applicable national collective labour agreement (CCNL)
- whether you entered into the Italian social security system before 1996, or entered into the social security system of an EU Member State or country which has a social agreement with Italy before 1996. An important element is whether you had “contributions seniority” before 1996
Click on the button below for a very high level summary of Italian social security rates. It is not intended to be an accurate forecast of actual applicable rates, just a general guide to the most common applicable regimes.
| Category | Applicable Regime | Approx. Rate (2024) | Contribution Base | Notes |
|---|---|---|---|---|
| Employees (private sector) | INPS Employees | ~33% | Gross salary | Employer pays ~23-24%, employee ~9-10% |
| Self-employed (artisans/traders) | INPS IVS (Artisans & Traders) | ~24%–25% | Net income (min. threshold) | Minimum income applies; exact rate varies slightly |
| Freelancers without own Professional Welfare Scheme ("Cassa") | INPS Gestione Separata | 26.07% – 33.72% | Net professional income | 26.07% subject to reduction if covered elsewhere |
| Company Directors involved in the business | INPS Gestione Separata | 24% – 33.72% | Remuneration | Rate depends on whether they have other coverage |
| Company Directors not involved in the business | INPS IVS (Artisans and Traders) | 33.72% | Net income of the business excluding any specific remuneration | For owner-managed businesses contributions generally apply to profits after remuneration |
| Co.Co.Co. (collaboratori) | INPS Gestione Separata | 33.72% | Gross compensation | Shared: 2/3 "employer", 1/3 worker |
| Professionals with Professional Welfare Scheme | Private Pension Fund | Varies (12–30%) | Fund-specific rules | E.g. Cassa Forense, INARCASSA, ENPAM etc. |
| Public sector employees | INPS / State-managed funds | ~33% | Gross salary | Similar to private sector but managed differently |
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Rates of Social Security
Both employers and employees contribute to INPS by way of social security. Contributions for the most part represent contribution toward retirement benefits, although a small part is destined to funds covering e.g. unemployment benefit (NASpI), maternity/paternity benefits, sickness and other welfare benefits solidarity contributions, housing and other general funds.
- On average employer contributions range from 25–35 % of gross salary.
- Employee contributions range from 9% to 11% of gross salary.
These percentages can vary depending on e.g. employer’s economic sector, applicable national collective agreements, company size, and age, seniority and level of the employee.
Cap on Contributions
- enrolled after December 31, 1995 in a mandatory pension regime in a EU member state or country with which Italy, or the EU, has a bilateral social security agreement; or
- those enrolled before that date who opt for calculation of retirement benefits under the Italian contributory system
is Euro 120,607 for the year 2025. This means that, if applicable, no social security is due on salary above that threshold.
Minimum Contributions
There are rules requiring a minimum amount contributions as well as rules .setting out the minimum contribution to qualify for certain social security benefits.
Exemptions
There are also limited exemptions from social security contributions such as remuneration paid to employees by way of share or stock related benefits.
Employers are responsible for withholding and remitting both their and the employee’s share.
Background
The IVS regime is part of the INPS pension system and applies to self-employed individuals on a continuous and regular basis, in certain categories, specifically:
- Artisans (Artigiani)
- Traders (Commercianti)
These are individuals are generally registered with the Chamber of Commerce and running their own independent artisan or trading business.
Contributions are mandatory, regardless of income, and consist of:
- a fixed minimum amount (based on presumed income).
- a percentage of declared income (above a certain threshold).
- paid quarterly to INPS.
These payments fund:
- Old-age pensions
- Disability pensions
- Survivors’ pensions (for family members in the event of death)
Minimum Income Threshold
For 2025 the minimum annual income to be considered for calculating the IVS (Invalidity, Old Age, and Survivors) contribution is €18,555.
Contribution Rates on the Minimum Threshold
- Artisans:
- Titolari (owners) of any age and coadiuvanti/coadiutori (co-workers) over 21 years: 24%.
- Co-workers aged 21 or younger: 23.70%.
- Traders:
- Owners of any age and co-workers over 21 years: 24.48%.
- co-workers aged 21 or younger: 24.18%.
The reduced rates for co-workers aged 21 or younger apply until the end of the month in which they turn 21.
That gives the following minimum annual contributions. These contributions are due, even if actual profits fall below the minimum threshold. Everyone enrolled in the INPS artisan and traders scheme must pay at least the fixed minimum contributions, regardless of income.
- Artisans:
- Owners and co-workers over 21 years: €4,427.04 annually.
- Co-workers aged 21 or younger: €4,371.80 annually.
- Traders:
- Owners and co-workers over 21 years: €4,515.43 annually.
- Co-workers aged 21 or younger: €4,460.19 annually.
Contributions on Income Exceeding the Minimum:
- Income up to €55,008:
- Artisans: 24%
- Traders: 24.48%
- Income exceeding €55,008:
- Artisans: 25%
- Traders 25.48%
An additional 1% contribution is applied to income over €55,008.
Maximum Taxable Income Threshold
- For individuals with contributory seniority before January 1, 1996, the maximum annual taxable income is €91,680.
- For those without contributory seniority before December 31, 1995, and enrolled from January 1, 1996, the maximum is €119,650.
Who pays?
For self employed professionals in the IVS scheme, the social security liability is generally a personal liability. In respect of directors of an Italian company part of the liability may be an obligation of the company.
Payment Deadlines
The fixed contributions are to be paid in four installments due on:
- May 16
- August 20
- November 16
- February 16 (of the following year)
Reduced Contributions for Regime Forfettario:
Artisans and merchants under the regime forfettario can apply for a 35% reduction in INPS contributions. This reduction applies to both fixed and variable contributions. The application is voluntary and must be submitted to INPS withing the due deadlines.
Background
The Gestione Separata (“Separate Management Fund”) is a special INPS pension scheme created in 1996 to include self-employed professionals and other categories of workers not covered by pension schemes such as those for employees or artisans/traders, or by a pension scheme set up by their specific professional bodies (e.g lawyers, accountants, accountants, engineers, medical professionals).
The Gestione Separata scheme is thus a catch-all scheme which seeks to embrace workers who are not required to make contributions to other schemes. The scheme therefore applies to directors/managers of corporate and non corporate entities who are not, under Italian law, considered to be, or actually engaged under a contract of employment. It also also extends to individuals engaged under arrangements for “co-ordinated and continuous collaboration” a type of quasi-employment relationship where mandatory contributions under the rules for employees do not apply. This type of relationship is referred to as one of “co-co-co” or co-co-pro” and recent Italian employment law reforms have been focused on phasing out this type of relationship, with exceptions for specific sectors such as the sporting sector. It also applies to occasional workers earning above the minimum threshold for payment of social security contributions.
Contribution Rates
Maximum Rates applicable to “co-co *” arrangements, company officers (directors) and others – 35.03% of remuneration paid
Professionals without other pension coverage: The contribution rate is 26.07% of profits as calculated under tax rules
Professionals with other pension coverage: A reduced rate may apply.
Income Thresholds
Minimum Income for Full Contribution Credit: To receive credit for a full year of contributions, a minimum income threshold is applied. If your annual income is below this threshold (18.555 for FY 2025), INPS may not credit you with a full year of contributions.
Maximum Income Subject to Contributions: Contributions are calculated up to a certain income ceiling, beyond which no additional contributions are required. The specific ceiling for 2025 is Euro 120.607. Social security, under the Gestione Separata contributions are not due above that ceiling.
Who pays?
For self employed professionals in the gestione separata scheme, the social security liability is generally a personal liability for self-employed professionals. For directors and people on “co-co” arrangements, the payment liability generally falls on the payer, with two thirds of the total being due in the same way as an “employers” contribution on top of salary, and one third to be withheld from remuneration, similar to “employee’s” social security contributions.
Payment Deadlines
Contributions to the Gestione Separata are typically paid through the F24 form, with deadlines aligned with tax payment schedules. It is essential to adhere to these deadlines to avoid penalties. Typically a self employed individual or company director will thus be paying their social security some six months after the year end, but making payments on account of the current year liability. Social security contributions are deductible in computing taxable profits on a paid basis.
Important Considerations
No Fixed Minimum Contributions: Unlike other INPS schemes for the self employed the Gestione Separata does not require fixed minimum contributions. Contributions are calculated solely based on actual profits.
Impact on Pension Benefits: Earning below the minimum income threshold may result in not accruing a full year of pension contributions, potentially affecting future pension benefits.
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