Following the initial guidance already provided (Agenzia delle Entrate, circular message No. 2/2026), by circular message No. 3/2026 the Revenue Agency provided further clarifications, in question-and-answer form, concerning the application of substitute tax for IRPEF and regional and municipal surcharges at the rate of:
– 5% with reference to pay increases paid during 2026 to private-sector employees who, in the 2025 tax period, had employment income not exceeding EUR 33,000.00 gross, as a result of contract renewals entered into between 2024 and 2026 (art. 1, para. 7, of Law No. 199/2025);
– 15%, up to an overall annual limit of EUR 1,500.00, with reference to supplements and allowances paid in 2026 to workers who, in 2025, had employment income not exceeding EUR 40,000.00 gross and who perform night work, shift work or work on public holidays or weekly rest days (art. 1, paras. 10 and 11, of Law No. 199/2025).
Without prejudice to the matters confirmed by the Revenue Agency in the aforementioned circular message No. 2/2026, this Nova highlights the further guidance provided on the application of the above tax reliefs in specific cases.
Substitute tax regime for pay increases
With regard to substitute tax for IRPEF and regional and municipal surcharges on pay increases deriving from contract renewals, the Revenue Agency clarifies that the relief also applies with reference to pay increases:
– connected with allowances paid monthly to the worker in relation to the performance of their duties, such as, e.g., cash-handling or variable allowances;
– the instalments of which, although recognised with effect from a date prior to 1 January 2026 pursuant to NCBA renewal agreements signed in the three-year period 2024-2026, are paid from 1 January to 31 December 2026;
– which absorb the amount already recognised to the worker as an individual salary supplement based on an individual agreement between the worker and the employer;
– relating to ordinary pay recognised to the worker i) on days of holiday, ii) for the use of PTO leave hours, or iii) as a holiday bonus.
Substitute tax for supplements and allowances
The above substitute tax regime introduced for supplements and allowances recognised to workers for the performance of night work, shift work and work carried out on public holidays and weekly rest days applies with reference to:
– supplements for work performed on Sundays, including where the contractually provided weekly rest day is different;
– supplements provided in the event of work performed on the rest day established by the parties for a worker under vertical part-time arrangements;
– supplements paid to the worker for performing night overtime or overtime on public holidays;
– on-call allowances, including where the worker has not actually performed the work compensated by that allowance;
– the overnight stay allowance provided for by art. 117 of the NCBA of 23 November 2023 for employees of credit, financial and instrumental undertakings.
Substitute tax for “inpatriates” and lecturers and researchers
The Revenue Agency has clarified that, where the pay increase, or the supplement or allowance, is paid to an “inpatriate” worker (art. 5 of Legislative Decree No. 209/2023) or to a lecturer or researcher benefiting from the special tax regime (art. 44 of Decree-Law No. 78/2010, converted, with amendments, by Law No. 122/2010), those amounts must be subject to substitute tax on their full amount, without therefore taking account of the reductions provided for by the respective reliefs.
We remain available for any further clarification.