Find out how your Italian payslip is structured and all the important information you can find there.
5 min read
Picture this—your salary has finally arrived in your account, but it’s significantly less than you expected. Sound familiar? We thought so. When you’re an Italian employee, taxes and social contributions are deducted from your paycheck each month, which is why you receive less than your gross salary on payday. But payslips are often full of off-putting acronyms and complicated numbers, making it hard to sort out what’s what. However, understanding these deductions is still important—so to help you out, we’ve prepared a short guide on what’s on your payslip so that you can get a clear understanding of your monthly withholdings.
How payslips are structured in Italy
Payslips are documents that employers issue monthly to their employees to confirm payment of the work performed during that pay period. In general, it will show two distinct categories:
Earnings (the money the employee is due), divided into fixed and variable amounts
Withholdings (taxes and contributions), divided into taxes and social security payments
The amount you earn is usually established on the basis of the CCNL (National Collective Labor Agreement), and depends on both your salary level and duties you perform.When reviewing your payslip, check to see if your salary corresponds to the amount listed on your contract. Then, verify the following points:
How many hours of work you performed
The amount of social contributions you’ve paid
Whether you have taken advantage of any of the temporary leave you’re entitled to
How many days of vacation you’ve used or accrued
Any bonuses you’ve obtained
Both your gross and net salary
Generally speaking, most payslips have three sections:
The header, which contains information on you and your company
The body, which gives you an overview of your gross salary
The summary, which contains the progressive annual and monthly amounts of social security and tax deductions, severance pay, and net salary
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In the payslip header, you’ll find the following information:
The month or payment period
Company information. Here, you’ll see the company code, tax code/VAT number, company name, address of the registered office, the INAIL (National Institute for Insurance against Accidents at Work) position number, and INPS (National Institute for Social Security) registration number.
Employee information. Here, in addition to your personal details, you’ll find your hiring date and possible termination of the relationship (for fixed-term contracts).
In this section you’ll also see your fixed salary amount, consisting of:
Base pay`–the minimum remuneration to be paid to the employee based on the collective agreement for the job category and level, or their qualifications
Contingency allowance—theamount required to adjust the base pay to inflation (note that this has remained unchanged since 2001)
EDR (Distinct Component of Pay)—the ERD is equal to €10.33 gross per month for 13 months. This is paid to all employees, except for managers
Tax deduction days
Any indicators envisaged by the relevant national collective bargaining agreements
Any seniority increments—these are salary increases based on the employee's length of service at the company. They are established by the CCNL and are calculated on the basic pay plus contingency allowance as either a fixed amount, or as a percentage
Superminimo, or extra allowance over minimum pay (if applicable)—this is an additional amount that can be established both at the time of individual hiring (individual superminimo) or by collective agreements (collective superminimo).
Understanding the body of your payslip
In this section, you’ll find the calculation of the gross salary for the month, which includes the variable portion of the salary. These indicate your performance throughout the month and any subsequent payments.Here’s a breakdown of what you might see:
Overtime worked
Work performed on bank holidays or at night
Indemnity or indirect remuneration, namely work permits, sick days, maternity leave, accidents, used up vacation days, etc.
Productivity bonuses
A TFR advance, or severance pay
Vacation pay
These earnings together with those in the header, define your gross salary, or your total earnings.
Understanding the withholdings on your payslip
In the third section of your payslip, you’ll find the figures that summarize your progressive withholdings, which consists of both social security and taxes. Your employer deducts these withholdings from your salary and pays them to the appropriate institutions. In this section, you’ll also find figures relating to your accrued severance pay and net salary.
Social security contributions are shared between you and your employer, and are used to finance the National Institute of Social Security (INPS) and the National Institute of Insurance for Accidents at Work (INAIL). Your payslip will only show you the contributions that you’ve paid—both the taxable amount and the total contributions.
By subtracting the social security contributions from the gross salary, you’ll get to the taxable income. Tax contributions are then calculated by applying your personal income tax rate to this taxable amount. To calculate your tax contributions (IRPEF), a given percentage must be applied to your taxable income, and calculated according to your income level. On your payslip, you’ll find the taxable amount, the gross IRPEF tax, the net IRPEF tax, tax withholdings, the total withholding taxes, and additional IRPEF.
Severance pay—when applicable, this includes your gross annual severance pay, which is equal to the sum of all gross monthly salary payments you’ve accrued divided by 13.5—as well as the taxable severance pay, equal to the sum of all the accrued portions year by year.
Net salary—this is the last item on your payslip and represents your take-home salary after all tax and social security deductions.
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