Bituach Leumi and Pensia Hova vs INPS: The Real Employer Cost in Israel and Italy

An Israeli employer cost model is familiar: gross salary, Bituach Leumi, pension and severance deposits, often keren hishtalmut. Moving the same role to Italy changes the shape of the cost. Italian social security (INPS) is much heavier than Bituach Leumi, but there is no separate mandatory private pension, and TFR replaces Section 14. Overview on Italy vs Israel .

Israel: Bituach Leumi and health tax in 2026  

The National Insurance Institute publishes the 2026 rates for salaried employees:

• Reduced rate on the part of monthly pay up to NIS 7,703 (60% of the average wage): employer 4.51%, employee 4.27% (1.04% National Insurance plus 3.23% health insurance).
• Full rate on the part from NIS 7,703 up to the maximum insurable income of NIS 51,910 a month: employer 7.6%, employee 12.17% (7% plus 5.17% health).
• Nothing is due above the ceiling.

Source: Bituach Leumi rates for salaried employees .

Israel: mandatory pension and Section 14  

Under the pension extension order, every employee must be insured in a pension arrangement, with employer contributions of 6.5% for benefits plus 6% for severance (often 8.33% under full Section 14) and an employee contribution of 6%, on salary up to a cap linked to the average wage. Many tech employers add keren hishtalmut (typically 7.5% employer, 2.5% employee), which is contractual.

A typical Israeli employer cost is therefore salary plus roughly 20–25%.

Italy: INPS, INAIL, TFR  

• INPS employee: 9.19%, plus 1% on pay above €56,224 in 2026; contributions stop at a ceiling of €122,295 only for those first insured after 1996 (INPS circular 6/2026).
• INPS employer: about 30% (29–32% by sector and size).
• INAIL (work injury): under 0.5% for office work.
• TFR: about 6.91% of pay, paid on every exit.
• 13th (and often 14th) month: included in the RAL, so not an extra on top of RAL, but remember it when converting a monthly Israeli salary.

Rule of thumb: employer cost ≈ 1.36–1.40 × RAL. A RAL of €60,000 costs about €82,000–84,000.

Income tax  

Israel taxes employment income at progressive rates from 10% to 47%, plus surtax on high incomes, with credit points. Italy’s IRPEF in 2026 is 23% up to €28,000, 33% up to €50,000 and 43% above, plus regional and municipal surcharges. Italian net pay is often lower than Israeli net pay at the same gross, which matters when negotiating.

Side by side  

The Israel–Italy social security convention  

Israel and Italy have a comprehensive social security convention in force since 1 December 2015. According to the National Insurance Institute, it covers old age, survivors and disability, but not maternity, work injury, children or unemployment ( Bituach Leumi list of conventions ).

What it means in practice:

• An Israeli employee posted temporarily to Italy by an Israeli employer can stay in the Israeli system for a limited period with a certificate of coverage, instead of paying INPS.
• A person hired locally in Italy, including through an EOR, is insured with INPS from day one.
• Contribution periods in both countries can be counted together for pension eligibility.

A worked comparison  

Take a senior engineer at a gross of NIS 35,000 a month in Israel. Bituach Leumi for the employer is 4.51% on the first NIS 7,703 and 7.6% on the rest, about NIS 2,422 a month. Add pension and severance deposits and keren hishtalmut, and the monthly employer cost is roughly NIS 42,000–44,000.

The same role in Italy at a RAL of €70,000 costs roughly €95,000–98,000 a year to the employer: about €21,000 of INPS, a few hundred euros of INAIL and about €4,800 of TFR. The employee pays 9.19% INPS (plus 1% on the part above €56,224) and IRPEF with regional and municipal surcharges.

Common questions from Israeli finance teams  

Do we need to register with INPS ourselves? Not with an EOR. Without one, you would need an Italian entity or to register as a foreign employer with INPS and appoint a payroll provider.

Can the employee keep an Israeli pension fund? A locally hired Italian employee pays INPS; an Israeli pension fund is not a substitute. They can join an Italian supplementary fund and send TFR there.

Are options and RSUs subject to INPS? Equity plans have specific tax rules in Italy and may be partly exempt from contributions; plan them with your adviser.

Does the employee see the employer contributions? Yes. The Italian payslip shows gross pay, employee INPS, IRPEF and surcharges, net pay and the TFR accrual; the employer cost is in the payroll summary you receive. Israeli finance teams used to the tlush maskoret will find the format different but the logic familiar: gross, deductions, net, plus employer charges that do not appear in net pay.

What this means if you hire through an EOR  

An EOR runs Italian payroll: it withholds IRPEF and employee INPS, pays employer INPS and INAIL, and accrues TFR. You receive one monthly invoice with the full employer cost plus the EOR fee, €250 per employee per month at HiringItaly. There is no Israeli Bituach Leumi or pension deposit for a locally hired Italian employee.

Model the numbers in the cost calculator , read about Italian employment contracts , compare Italy vs your country or contact us .

Related guides for Israeli companies  

• Pitzuim and Section 14 vs TFR
• Annual leave, sick pay and havra’a
• Maternity and parental leave

General information, not legal advice.