HReview – A digest of Italian HR Management

The Italian Revenue Agency (Agenzia delle Entrate) has clarified how a new “substitute tax” works from 1 January 2026. In short, certain pay rises paid during 2026 to private-sector employees can be taxed at a flat 5% rate (instead of ordinary IRPEF income tax and regional/municipal surtaxes), if those increases result from collective bargaining renewals signed between 1 January 2024 and 31 December 2026.

Who can benefit
The 5% substitute tax is intended only for employees who, in tax year 2025, had gross employment income of no more than EUR 33,000.

Which renewals qualify
Although the law refers generally to “agreement renewals”, the Revenue Agency adopts a restrictive reading: the benefit applies only to pay rises due to renewals of national collective bargaining agreements (NCBAs) signed in the 2024–2026 window. Increases stemming from territorial or company-level collective agreements are excluded.

Which pay rises are covered (timing rules)
The key requirement is that the relevant increase is paid between 1 January and 31 December 2026.

• If an agreed pay rise was paid entirely in a single instalment by 31 December 2025, it cannot benefit.
• If the renewal spreads the increase over several instalments, the 5% tax applies to the instalments paid in 2026, including instalments paid in 2026 even where the “effective date” of the increase is earlier than 1 January 2026 (for example, backdated amounts paid during 2026).

What parts of pay are included/excluded
Included (where they reflect the contractual increase and are paid in 2026):

• ordinary monthly pay,
• the 13th month and any additional monthly payments,
• indirect pay items affected by the increase (e.g., amounts paid during sickness, injury, maternity/paternity leave).

The benefit can apply even if the contractual increase is absorbed by an existing, absorbable “superminimo” (personal salary), meaning the worker’s net salary does not actually rise.

The following items are, instead, NOT included:

• seniority pay increases,
• extra amounts linked to additional working time (e.g., shift allowances, night/holiday work premiums),
• one-off payments (una tantum) even if linked to a renewal, because they are considered extraordinary,
• severance pay (TFR).

Interaction with special tax regimes and tax credits
If the employee benefits from the special regimes for “inpatriates” or for returning researchers/teachers, the 5% substitute tax can apply only to the taxable portion of the pay increase.
The Revenue Agency also notes that income taxed under a substitute regime does not form part of the employee’s overall taxable income under the general rule, but it must still be taken into account when checking eligibility for the “trattamento integrativo” (EUR 1,200) to avoid penalising employees in a way that would conflict with the measure’s purpose.

Practical steps and payroll handling

• The employer (as withholding agent) applies the 5% substitute tax in payroll and pays it via the F24 form using specific tax codes (including separate codes for certain regions such as Sicily, Sardinia and Valle d’Aosta, and a code for cases where payment is made in one of those regions but the tax is due elsewhere).
• Employees with more than one employer in 2025 must inform their current employer of employment income earned with previous employers, by providing the CU certificates or a statutory self-declaration.
• In the annual tax return, the employee must correct any improper application of the substitute tax (by including the relevant amounts in ordinary taxable income). The employee may also choose ordinary taxation instead of the substitute regime and may waive the benefit explicitly in writing.

Legal references

• Agenzia delle Entrate, circular message no. 2/2026.
• Law no. 199/2025, art. 1, paras. 7–12 (substitute tax at 5% on qualifying pay increases).
• Legislative Decree no. 209/2023, art. 5 (special regime for “impatriates”).
• Decree-Law no. 78/2010, art. 44, converted (with amendments) by Law no. 122/2010 (returning researchers/teachers).
• TUIR, art. 3, para. 3, letter (a) (effects of substitute-taxed income on overall income).
• Decree-Law no. 3/2020, art. 1, converted (with amendments) by Law no. 21/2020 (trattamento integrativo of EUR 1,200).
• Presidential Decree no. 445/2000, art. 47 (self-declaration in lieu of sworn statement).
• Agenzia delle Entrate, Resolution no. 3/2026 (establishing F24 tax codes for the substitute tax).

Magazine

Agenzia delle Entrate published its instructions on the one-off tax relief introduced by the Budget Law for 2026 on night worl, holiday work and shift-based work. The relief measure allows certain wage premiums and allowances linked to night work, work on public holidays or weekly rest days, and shift work (where provided by the applicable national collective agreement) to be taxed at a flat 15% rate, instead of ordinary IRPEF and regional/municipal surtaxes.

Who can benefit
The relief applies only to employees whose gross employment income for tax year 2025 did not exceed EUR 40,000. If the employer applying the relief did not issue the employee’s 2025 CU, the employee must provide written evidence of their 2025 employment income (e.g., a self-declaration or the CU(s) from previous employers).

What is covered (and the EUR 1,500 annual cap)
For 2026 only, the employer (as withholding agent) may apply the 15% substitute tax—unless the employee expressly opts out—to the relevant premiums/allowances paid in 2026, up to an overall annual maximum of EUR 1,500; amounts above that cap are taxed under ordinary rules.

The pay items that may fall under the relief include:

• premiums/allowances for night work,
• premiums/allowances for work performed on public holidays and on the weekly rest day (the rest day is the one identified by the applicable national collective agreement, regardless of whether it is Sunday),
• shift allowances and other payments connected with shift work (in the broad sense used in working-time rules),
• on-call/stand-by allowances, if provided by the applicable national collective agreement and connected to the above work patterns,
• any additional amounts linked to these items, provided they are expressly regulated by the applicable national collective agreement.

Key condition: the items must be regulated by the national collective agreement (CCNL)
The favourable tax treatment is available only if the relevant premiums/allowances are expressly provided for by the CCNL applied by the employer; the document gives examples of CCNL clauses setting specific night-work or shift-work percentages.

Main exceptions and special cases
The relief does not apply to amounts paid under territorial or company-level collective agreements. It also does not apply to overtime pay in general, except where overtime is (i) at night, (ii) performed under a shift system, or (iii) worked on a public holiday.

In addition, workers in the food & beverage and tourism sector (including spas) are excluded because a different special “integrative treatment” equal to 15% of gross pay is available for night work and overtime for the period 1 January 2026 to 30 September 2026.

Timing rules and interactions with other substitute regimes
The ordinary “extended cash basis” rule applies to employment income, meaning that amounts paid by the employer by 12 January 2027 can still be treated as paid in tax year 2026 for these purposes.

When calculating the EUR 1,500 cap, performance-related bonuses and profit-sharing amounts that are already subject to a different substitute tax regime are not counted.

Multiple employers in 2026
If during 2026 the employee had more than one employment relationship and already benefited from the substitute tax with a previous employer, the employee must inform the current employer to avoid the relief being applied incorrectly (for example, because the EUR 1,500 cap has already been reached).

Interaction with the “trattamento integrativo” (EUR 1,200)
Even if the 15% substitute tax is applied, the relevant amounts must still be counted when checking eligibility for the annual “trattamento integrativo” of EUR 1,200.

How the tax is paid (payroll and F24)
The employer applies the substitute tax through payroll and pays it via the F24 form using specific tax codes introduced by the Revenue Agency (including codes for special regional situations involving Sicily, Sardinia and Valle d’Aosta).

Legal references

• Agenzia delle Entrate, circular message no. 2/2026.
• Law no. 199/2025, art. 1, paras. 10–12; and reference to para. 7.
• Legislative Decree no. 66/2003, art. 1, para. 2; and art. 1, para. 2, letter (f).
• TUIR, art. 51, para. 1, last sentence (extended cash basis).
• Law no. 208/2015, art. 1, para. 182 (performance bonus/profit-sharing substitute tax).
• Presidential Decree no. 445/2000, art. 47 (self-declaration).
• Decree-Law no. 3/2020, art. 1, converted (with amendments) by Law no. 21/2020 (trattamento integrativo).
• Agenzia delle Entrate, Resolution no. 2/2026 (F24 tax codes: 1076, 1610, 1929, 1933, 1311).
• Tertiary sector NCBA of 22 March 2024, art. 151 (example on night-work premium).
• Electrical sector NCBA  of 11 February 2025, art. 29, para. 1 (example on shift allowance).

Magazine

The draft renewal agreement for the national collective bargaining agreement (NCBA) covering employees in the paper, pulp and related industries, and in paper converting/packaging companies, was signed on 10 February 2026. The renewed rules would generally apply from 1 April 2026 to 31 December 2028, subject to worker approval to be ratified by 31 March 2026.

Job classification
The parties plan to redesign the job classification system. It will be based on 4 broad categories and 10 professional levels, to reflect skills, autonomy/responsibility, complexity and organisational interaction. The conversion to the new levels is intended to be “horizontal”, meaning no automatic pay rises or cuts solely due to the re-mapping. Health and safety compliance is treated as a key cross-cutting assessment factor. The new system should enter into force by 1 September 2028, supported by training and information for workers.

Fixed-term contracts and “seasonal” work
While the general statutory framework remains applicable, the agreement lists specific reasons that allow fixed-term contracts up to a maximum of 24 months (e.g., temporary production increases, business growth, launch of new activities/products, investments to reduce environmental impact, and training linked to innovation or organisational change). It also defines certain activities as seasonal (for instance, peak workloads in specific periods and various packaging/notebook production cycles), which affects how fixed-term hiring can be managed.

Probation periods
For permanent contracts, the maximum probation periods are confirmed by level (from 1 month to 6 months). For fixed-term contracts, the probation length is aligned with a statutory rule effective from 12 January 2025: broadly, one day of actual work for every 15 calendar days from the start date, with minimum/maximum limits depending on contract length (with a specific confirmation that for level E the maximum remains one month).

Interruptions/suspensions due to force majeure
The agreement clarifies that urgent, extraordinary maintenance and technological interventions on machinery can count as “force majeure” events that interrupt or suspend work. In those cases, the worker still has the right to normal pay for the current day.

Overtime
Overtime may be requested for temporary urgent needs, with subsequent notice to the workplace union body (RSU). Examples include non-structural production/organisational needs, exceptional maintenance to protect plant efficiency, and meeting tax or administrative deadlines. From 1 April 2026, the annual overtime hours that can be requested increase from 70 to 72 per worker.

Public holidays
Following the introduction of the national holiday of Saint Francis of Assisi (4 October), the CCNL holiday list is updated accordingly. In continuous-cycle operations, the enjoyment of that holiday may be replaced at company level with a day off on Easter.

Pay increases
The agreement provides a gross monthly minimum-pay increase totalling EUR 275 (parameterised on level C1), paid in instalments: EUR 125 from 1 April 2026; EUR 45 from 1 January 2027; EUR 45 from 1 January 2028; and EUR 60 from 1 September 2028. These increases also cover (and absorb) the “contractual gap” period from 1 January 2025 to 31 March 2026.

Pension and supplementary healthcare
From 1 January 2027, the employer contribution to the sector pension fund (Byblos) increases by 0.2%, and the annual contribution to the supplementary healthcare scheme (Salute Sempre) increases by EUR 3.

Additional paid time off for continuous-cycle shift workers
From 1 January 2027, workers on continuous-cycle schedules (three shifts, seven days a week) receive 8 additional hours of annual compensatory rest, increasing the total from 32 to 40 hours.

References

• NCBA 28 July 2021 (paper and paper converting sector) and its provisions referenced in the summary (including art. 30-bis on classification; art. 28b on fixed-term contracts; art. 19 on probation; art. 41a on overtime).
• Legislative Decree no. 81/2015, arts. 19–29 (general rules on fixed-term contracts).
• Law no. 203/2024, art. 13 (statutory rule on probation for fixed-term contracts, effective from 12 January 2025).
• Law no. 151/2025, art. 1, para. 1 (establishing the national holiday of Saint Francis of Assisi on 4 October).

Magazine

Deadline and filing obligation
By 31 March 2026, any employer who, during 2025, assigned employees to lavorazioni usuranti (“strenuous work”) must submit the annual declaration electronically to the Ministry of Labour, by completing the LAV_USform (directly or via an authorised intermediary).

Work activities treated as “strenuous work”

Night work

• Shift workers performing at least 6 hours between midnight and 5 a.m., for a minimum of 64 nights per year (for those reaching early-pension eligibility from 1 July 2009). Nights beyond 64 progressively reduce the “quota” (age plus contribution years) needed for early retirement.
• Other night workers performing at least 3 hours between midnight and 5 a.m. for working periods lasting the full working year.

Work on a production line (“linea catena”)
Employment in serial production with a set pace and sequential tasks, limited to companies falling within the INAIL tariff items listed in Annex 1 to Legislative Decree no. 67/2011 (the list includes, among others, food production, plastics processing, automotive manufacturing, household appliances, clothing and footwear production).

Other particularly strenuous duties
Activities listed in art. 2 of the Ministerial Decree of 19 May 1999, including work in confined spaces, asbestos removal, high-temperature work, work in compressed-air caissons, tunnels/caves/mines, work by divers, and hollow-glass processing.

Public transport drivers
Drivers of vehicles used for public collective transport with a total capacity of at least 9 seats.

Early-retirement access: key conditions for employees
Employees performing the activities above may access early retirement provided that:

• the specific age and contribution requirements are met,
• the lavorazioni usuranti were performed for at least 7 of the last 10 working years, or for at least half of the employee’s overall working life,
• INPS recognises the activity as “especially fatiguing and heavy work”: the recognition request must be sent electronically to INPS (using form AP45) by 1 May of the year preceding the year in which the employee will meet the retirement requirements, following INPS’s annual instructions.

In addition, the increases to pension-access requirements introduced by Law no. 199/2025 do not apply to employees with at least 30 years’ contributions who perform “strenuous work”.

Information needed for the LAV_US form

• type of strenuous work performed,
• address of each relevant production unit and the related INPS and INAIL data,
• each employee’s name, surname and tax code,
• number of days actually spent performing the attività usurante (which may coincide with the whole working year).

Only days of actual work are counted. The following periods are excluded: sickness, holidays/leave, maternity/paternity leave, workplace injury, and absences due to subsidised furlough.

Sanctions
Failure to submit the annual declaration triggers:

• an administrative fine between EUR 500 and EUR 1,500; and
• an inspectorate diffida under art. 13, paras. 2–7 of Legislative Decree no. 124/2004.

The same sanctions also apply where the employer fails to notify MLPS of the assignment of employees to linea catena work within 30 days from the start of the activity.

Legal references

• Legislative Decree no. 67/2011, arts. 2, para. 5, and 5; and art. 1, para. 1 and para. 2 (early-retirement conditions; annual declaration; definitions).
• Ministerial Decree of 20 September 2011, art. 6 (LAV_US form and submission framework).
• Legislative Decree no. 66/2003, art. 1, para. 2, letter (g) (night work definition for shift workers).
• Ministerial Decree of 19 May 1999, art. 2 (list of particularly strenuous duties).
• Law no. 199/2025 (pension-access requirement increases; non-applicability in the case described).
• Legislative Decree no. 124/2004, art. 13, paras. 2–7 (diffida procedure).

Magazine

What changed from 1 January 2026
Employers may have to pay to the Fondo di Tesoreria (“treasury fund”) a monthly amount equal to the TFRaccrued by employees who have not allocated their TFR to a supplementary pension fund. The new rules apply from 1 January 2026 and amend the previous framework.

Who is affected

• Private-sector employers (excluding domestic work).
• Public bodies involved in privatisation processes, and entities classified as “public economic bodies”.
• Employers with staff working abroad, provided the employee is entitled to TFR (including through more favourable contractual clauses), regardless of social security conventions or the pension scheme applied.

When the duty arises: workforce threshold
For employers that are not newly established, the duty starts when the employer reaches or exceeds an average annual workforce threshold, calculated on employees for whom art. 2120 of the Italian Civil Code (the TFR rules) applies.

Thresholds:

• 60 employees for 2026 and 2027,
• 50 employees from 1 January 2028 to 31 December 2031,
• 40 employees from 1 January 2032 onwards.

How the “average annual workforce” is measured

• The relevant average is based on the calendar year (1 January–31 December) preceding the year of the pay period for which the TFR contribution is due. Example: for pay periods starting on 1 January 2026, the reference is the average workforce in 2025.
• Only months of actual business activity are counted (periods of business suspension are excluded).
• Once the duty arises, a later drop in headcount does not cancel it.

Who is included (and who is not) in the workforce calculation

Included (as employees):

• part-time staff, counted proportionally to hours worked (full-time equivalent),
• staff on secondment (distacco),
• absent employees and their replacements, whatever the reason for absence.

Excluded:

• fixed-term contracts shorter than 3 months,
• certain seasonal workers in the agri-food sector where the end date depends on an event,
• home workers (lavoro a domicilio),
• employees for whom the applicable CCNL (including via second-level bargaining) requires TFR accrual to be held by third parties.

Agency workers (somministrati) are counted in the average workforce of the agency, not the user company.

Newly established businesses: special rule remains
The revised thresholds do not apply in the year a business starts. In that first year, the duty arises only if the employer reaches an average of 50 employees; if so, the contribution is due on the TFR accrued in that first year. The new thresholds apply only “in the years following the start year”.

Start date and first-time compliance timing
Where, due to the new rules, an employer becomes subject to the duty from 1 January 2026, INPS allows (for the initial implementation phase) payment by 16 May 2026.

Corporate transactions and transfers

• If an employee moves to an employer already subject to the duty, the receiving employer must pay to the Fondo di Tesoreria for that employee from the pay period in progress at the time of transfer.
• If an employee already covered by the duty moves to an employer not otherwise subject to it, the receiving employer must still pay for that employee from the transfer date.

Administrative procedure: declaration and authorisation code
Employers that verify they have reached the applicable threshold must file a declaration to INPS using form SC34 (available on INPS’s website). This is necessary to obtain authorisation code ‘1R’.

How the monthly contribution is calculated

• Basis: the employee’s pay for the relevant pay period as considered for TFR purposes, applying the general “all-inclusive” principle (all non-occasional amounts due in connection with employment, including benefits in kind, excluding expense reimbursements).
• Rate: 7.41% (1/13.5) of that basis.
• Additional deduction: 0.50% (linked to statutory pension indexation costs).

Compensatory contribution reliefs for employers
Employers paying to the Fondo di Tesoreria benefit from:

• an exemption from contributions to the Fondo di Garanzia, equal to the TFR portion allocated to supplementary pension schemes and to the Fondo di Tesoreria,
• an exemption from contributions to the Gestione prestazioni temporanee ai lavoratori dipendenti equal to 0.28% of the TFR portion allocated to supplementary pension schemes and to the Fondo di Tesoreria.

Legal references

• INPS, circular message no. 12/2026.
• Law no. 199/2025, art. 1, para. 203.
• Law no. 296/2006, art. 1, para. 756.
• Italian Civil Code, art. 2120 (TFR).
• Legislative Decree no. 81/2015, art. 9 (part-time proportional counting).
• Law no. 297/1982, art. 3, last paragraph (0.50% deduction).
• Law no. 297/1982, art. 2 (Fondo di Garanzia).
• Legislative Decree no. 252/2005, art. 10 (exemption linked to TFR allocations).
• Law no. 88/1989, art. 24 (Gestione prestazioni temporanee ai lavoratori dipendenti).
• Decree-Law no. 203/2005, art. 8, converted (with amendments) by Law no. 248/2005 (0.28% exemption).
• INPS, circular message no. 70/2007 (workforce-average calculation instructions, still applicable unless superseded).

Magazine

Scenario
A company applies the NCBA for employees of the Tertiary sector and, when preparing the 2026 INAIL self-assessment (premium due by 16 February 2026), notices that the premium calculated for its only part-time employee (24 hours per week) appears disproportionate. The employee is classified at level 3, earns EUR 29,000 gross per year, and is assigned to risk code 0723 (electrical risk) with a 2025 rate of 7.26‰.

Question
For part-time employees, should the annual INAIL premium be calculated on the full amount of wages actually paid in the previous year, or should it be recalculated using a method that reflects the reduced working hours?

Core rule for part-time employment
For employees hired on a part-time basis, INAIL allows the taxable base to be determined using the conventional hourly remuneration. The premium base is calculated by multiplying that conventional hourly amount by the total number of hours that must be paid by the employer over the insured period.

How the conventional hourly remuneration is set
The hourly amount to use is the higher of:

• the INAIL minimum hourly wage; and
• the hourly salary under the applicable NCBA.

INAIL minimum hourly wage
It is obtained by taking the daily minimum for employees (EUR 57.32 for 2025), multiplying by 6 (the conventional weekly days, even if the working week is on 5 days), and dividing the result by the full-time weekly hours set by the CCNL (or other applicable bargaining).

NCBA hourly wage
It is obtained by dividing the annual, collectively determined minimum salary (including additional monthly payments) by the annual hours of a full-time worker. Only the basic contractual pay is included; other items (e.g., contingenza even if absorbed into basic pay, seniority increases, and any amounts set by territorial/company/individual bargaining) are excluded.

Which hours are counted
The multiplier is the total paid hours for the year, including paid absences (e.g., holidays, recognised public holidays, paid leave, compulsory maternity absence, etc.). Only actual paid hours are counted; periods such as sickness and other non-work time are treated according to the general rules indicated.

Applied example

• NCBA hourly wage: EUR 10.09 (derived from a monthly pay reference including 13th and 14th months, divided by the collectively determined divisor 168).
• INAIL minimum hourly wage: EUR 8.60 (EUR 57.32 × 6 ÷ 40 weekly hours).
  The higher figure is EUR 10.09; this is the hourly value to use. The premium base is then obtained by multiplying EUR 10.09 by the total paid hours in the year (including paid absences).

Legal references

• D.P.R. 30 June 1965, no. 1124, art. 28.
• D.P.R. 30 June 1965, no. 1124, art. 41.
• Law 9 March 1989, no. 88, art. 49.
• INAIL Circular no. 29 of 20 May 2025.
• INAIL Circular no. 48 of 18 September 2025.

Magazine

Who must file and when
Employers with more than 50 employees must prepare a biennial report on the employment of male and female personnel. For the 2024–2025 period, transmission to the Ministry of Labour is due by 30 April 2026.

Optional filing for smaller employers
Employers with up to 50 employees may file the report voluntarily. This may be useful, for example, where the company intends to participate in public tenders, or in procurement/concession procedures where such reporting is relevant.

What information the report contains
The report is structured to show employees by:

• Gender,
• occupational category,
• grading/level,
• contract type.

It also includes annual pay levels and headcounts relating to: hires; training (including total training hours); changes in category/qualification/level and other mobility; conversions from fixed-term to open-ended contracts; conversions between part-time and full-time; use of social safety nets; collective/individual dismissal procedures; early-retirement schemes; and retirements.

How it is filed and shared

• Electronically submitted to the Ministry of Labour, using the official template made available by the Ministry.
• The data must not identify individual employees: only gender is indicated.
• If the submission shows no errors or inconsistencies, a receipt is issued confirming correct filing and saving in the system.
• The report and the submission receipt must also be sent to workplace union representatives by the same deadline.

After filing
Regional equality councillors process the submitted reports and forward results to several bodies, including the territorial offices of the Ispettorato nazionale del lavoro, Ministry of Labour and ISTAT (National Statistics Institute). The Ministry of Labour publishes on its website both the list of employers who filed and those who did not.

Sanctions

• Late or missing filing: the Regional Labour Directorate invites the company to comply within 60 days; if non-compliance continues for more than 12 months, contribution benefits may be suspended for one year.
• False or incomplete report: INL may apply an administrative fine between EUR 1,000 and EUR 5,000.

References mentioned

• Legislative Decree no. 198/2006, art. 46, paras. 1, 4 and 4-bis.
• Law no. 162/2021, art. 3, para. 1, letter (b) (introducing art. 46, para. 1-bis).
• Decree-Law no. 77/2021, art. 47, para. 3.
• Legislative Decree no. 36/2023, art. 61, paras. 1–2, and Annex II.3.
• Interministerial Decree of 29 March 2022, art. 2, paras. 3, 4 and 7.

Magazine