Operational Guidelines from the Italian Revenue Agency on the substitute tax applicable to contract renewals, night work, holiday work, and shift work
- Feb. 25
- Reading time: 6 min
News . 8/2026
In News . 2/E of February 24, 2026, the Italian Revenue Agency provided clarification on the changes introduced by Budget Law No. 199/2025 regarding the application of the substitute tax on salary increases resulting from contract renewals and on premiums and allowances for night work, holidays, weekly rest days, and shift allowances.
These changes stem from the legislature’s desire to adjust wages to the cost of living and strengthen the link between productivity and wages.
In this News clarifications, breaking down the two topics of interest as follows:
1) Wage increases resulting from contract renewals
2) Premium pay and allowances for night work, work on holidays, work on weekly days off, and shift allowances
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Taxation of Pay Increases from Contract Renewals
Article 1, paragraph 7, of the 2026 Budget Law provides that wage increases paid to private-sector employees in 2026 are subject to a substitute tax in lieu of IRPEF and regional and municipal surtaxes, equal 5%, unless the employee waives this in writing.
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