Revenue Agency operating instructions on substitute taxation for contract renewals, night work, holiday work, and shift work
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News . 8/2026
With News . 2/E of February 24, 2026, the Revenue Agency provided clarification on the changes introduced by Budget Law No. 199/2025 relating to the application of substitute tax on salary increases in contract renewals and on bonuses and allowances for night work, holidays, weekly rest days, and shift allowances.
The changes in this regard stem from the legislator's desire to adjust wages to the cost of living and strengthen the link between productivity and wages themselves.
In this News clarifications, dividing the two topics of interest:
1) Salary increases for contract renewals
2) Surcharges and allowances for night work, work on public holidays, work on weekly rest days, and shift allowances
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Taxation of salary increases in contract renewals
Article 1, paragraph 7, of the Budget Law for 2026 provides that salary increases paid to private sector employees in 2026 are subject to a substitute tax of IRPEF and regional and municipal surtaxes, equal to 5%, unless the employee waives this right in writing.