# Superannuation and PAYG vs INPS and IRPEF: The Real Cost of an Employee in Italy

> Super guarantee 12% and Payday Super, PAYG withholding and state payroll tax vs Italian INPS, IRPEF, TFR and the 13th month. Employer cost compared.

An Australian finance team usually costs an employee as salary plus **12% super**, plus **payroll tax** if the business is above the state threshold, plus workers' compensation premiums. Italian on-costs are bigger and structured differently: **INPS** social security of roughly 30% for the employer, **INAIL** insurance, the **13th month** (often a 14th) and **TFR**. Full comparison on [Italy vs Australia](/italy-vs-australia.html).

## Australia: super, PAYG and payroll tax

**Superannuation guarantee.** The ATO table sets the SG at **12%** from 1 July 2025 onwards. From **1 July 2026, Payday Super** applies: SG is calculated on each employee's **qualifying earnings** and must reach the fund within **7 business days** after payday (the QE day), or the super guarantee charge applies. The **maximum contribution base** for 2026–27 is **$270,830** a year; above that, employers need not pay SG.

**PAYG withholding.** Employers withhold income tax each pay. Resident rates for 2026–27 (ATO) are nil to $18,200, **15%** to $45,000, **30%** to $135,000, **37%** to $190,000 and **45%** above, plus the **2% Medicare levy**. Tax is the employee's cost, withheld by the employer.

**Payroll tax.** A state and territory tax on wages above a tax-free threshold, with rates and thresholds that differ by state (Revenue NSW, for example, requires registration when monthly Australian wages exceed the monthly threshold). <!-- review: current rates and thresholds by state -->

**Workers' compensation** premiums are paid to the state scheme or an insurer.

## Italy: INPS, INAIL, IRPEF, TFR

**INPS** is levied on the whole salary with no low-income threshold:

- **Employee:** **9.19%**, plus 1% on pay above **€56,224** in 2026 (INPS circular 6/2026).
- **Employer:** about **30%**, from 29% to 32% depending on sector and size. <!-- review: exact rate by CCNL and size -->
- **Ceiling:** the massimale of **€122,295** applies only to employees first insured from 1996 onwards.

INPS funds pensions, unemployment (NASpI), sickness and maternity benefits, so Italy's equivalent of super is part of a single public system. **INAIL** (work injury insurance) is usually below 0.5% for office roles.

**IRPEF** for 2026 (Law 199/2025): **23%** up to €28,000, **33%** up to €50,000, **43%** above, plus regional and municipal surcharges. The employer withholds it monthly, like PAYG.

**TFR** adds about **6.91%** of pay each year (see [notice and redundancy pay vs TFR](/articles/australia-redundancy-pay-notice-vs-italy-tfr.html)). Salary is usually paid in **13 or 14** instalments, and the 13th and 14th are already in the annual RAL figure.

## Side by side

| Item | Australia | Italy |
|---|---|---|
| Retirement contribution | SG 12% to a private fund | INPS pension within ~30% employer + 9.19% employee |
| Contribution cap | Max base $270,830 (2026–27) | €122,295 (post-1996 insured only) |
| Timing | Payday Super, within 7 business days from 1 July 2026 | Monthly via F24 by the 16th of the following month |
| Income tax | PAYG, 0–45% + 2% Medicare | IRPEF 23–43% + local surcharges |
| Payroll tax | State tax above threshold | None separate (INPS plays that role) |
| Injury insurance | Workers' comp | INAIL |
| Deferred pay | None | TFR ≈6.91% |
| Instalments | 12 or 26 | 13 or 14 |

## Employer cost example

A gross annual salary (RAL) of **€60,000** in Italy costs roughly **€82,000–84,000** a year: INPS about 30%, INAIL below 0.5%, TFR about 6.91%, with the 13th/14th already inside RAL. The multiplier is about **1.36–1.40 × RAL**.

In Australia a $120,000 salary costs about $134,400 with 12% super, plus payroll tax and workers' comp if they apply: a multiplier closer to 1.12–1.18. The Italian net salary is also lower for the employee at the same gross, because of the 9.19% INPS deduction and IRPEF. Try both in the [cost calculator](/calculator.html).

## The Australia–Italy social security agreement

Australia and Italy have an **international social security agreement**, listed by Services Australia among the European agreements. It mainly helps people claim Australian or Italian pensions using periods spent in both countries.

It does **not** remove double super/social security coverage for workers. Italy is **not** in the ATO's list of countries with a bilateral agreement that allows a **certificate of coverage** to exempt an employer from the other country's contributions (the list includes Austria, Germany, Ireland, Portugal, Switzerland and others, but not Italy). In practice:

- An employee working in Italy for an Italian employer or EOR is in **INPS** from day one, whatever their nationality.
- An Australian employer that **sends** an Australian employee to Italy may face **SG in Australia and INPS in Italy** at the same time. <!-- review: confirm with ATO/INPS whether any posting rule applies under the 2000 agreement -->

## Common questions from Australian companies

**Can the employee keep contributing to their Australian super fund?** Voluntarily, yes, but it does not replace INPS, which is mandatory.

**Is there a tax-free threshold like $18,200?** Not as such. IRPEF has employment income deductions that reduce tax on lower salaries.

**Who pays payroll tax for Italian staff?** No Australian payroll tax applies to wages paid for work performed in Italy by an Italian employer; check your state's rules if you pay them from Australia. <!-- review: nexus rules for wages paid outside Australia -->

## How to read an Italian payslip

The Italian payslip (busta paga) will look busy to an Australian finance team. From the top, it lists the CCNL, the employee's level and seniority, then the gross elements: minimum pay, any superminimo, seniority increments and allowances. Next come the employee's INPS contributions, then the IRPEF calculation with deductions and the regional and municipal surcharges. At the bottom you find the net pay, the TFR accrued in the month and the running balances of leave and ROL. The 13th month normally appears in December and the 14th, where it applies, in June or July. Employer contributions are not shown on the employee's payslip; they appear in the employer's cost report and in the monthly F24 payment. If you compare an Australian salary package with an Italian RAL, compare total cost to total cost, not salary to salary.

## What this means if you hire through an EOR

The EOR registers with INPS and INAIL, withholds IRPEF and pays everything monthly, so your invoice shows the full cost including TFR and the 13th month. No Italian entity, no Payday-Super-style deadlines on your side. See the [Italian employment contract](/italy-employment-contracts.html), [other countries](/italy-vs-your-country.html) or [contact us](/contact.html).

## Related guides for Australian companies

- [Modern awards and the NES vs the Italian CCNL](/articles/australia-modern-awards-nes-vs-italian-ccnl.html)
- [Notice and redundancy pay vs TFR and collective dismissal](/articles/australia-redundancy-pay-notice-vs-italy-tfr.html)
- [Paid Parental Leave vs Italian maternity and parental leave](/articles/australia-paid-parental-leave-vs-italy-maternity.html)

*General information, not legal advice.*

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Source: https://hiringitaly.com/articles/australia-superannuation-payg-vs-inps-irpef-employer-cost.html · 2026-11-10