For Italian tax residents, income earned abroad falling under the category governed by paragraph 8-bis of Article 51 of the Italian tax Code /TUIR) is subject to taxation. This is an exception to the ordinary criteria for determining the taxable base and is based on conventional wages defined annually by a special interministerial decree. In Italy, personal income taxation is based on the conventional salary, which is a lump-sum taxable amount that includes any additional compensation paid to employees who are sent abroad. The conventional salary serves as a reference point for taxation purposes, regardless of the actual remuneration package received by the employee.
To apply conventional remuneration, the employee must work abroad continuously and exclusively as the object of the relationship. Additionally, the employee must be a tax resident in Italy for at least 183 days during a 12-month period.
For companies that establish conventional remuneration by bands, the applicable conventional remuneration should be determined by referring to the amount of remuneration that the employee would receive if they performed their work in Italy, divided by twelve.
The conventional remuneration is also the basis for the calculation of the social security contributions due for the compulsory insurance of Italian workers operating abroad pursuant to DL 317/87 (law 398/87) in non-EU countries with which social security agreements are not in force.
Conventional salaries are issued each year by Decree of the Ministry of Labour and Social Policy.