Contribution rates

Social security contributions insure workers against events that may result in them being unfit for work. There is a correlation between benefits and contributions (the notion of insurance in the social security relationship), therefore certain benefits available to dependent workers in a specific sector may not be available to those in other sectors. Social security contributions therefore consist of an 'insurance premium' that is paid in to insure the worker against a specific event, such as illness, maternity leave, unemployment or a pension.

Contribution rates affect both workers and employers. However, employers are required to pay contributions for themselves and for their dependent workers.

The law establishes which insurance policies the employer is required to take out and the contributions to be paid, and also sets out which insurance policies are applicable or otherwise to the various business sectors. This is why the INPS accurately classifies the company in a sector, as this is what gives rise to all the social insurance policies applicable to workers.

The contribution amount is a percentage value applied to taxable wages. The sum of all the applicable insurance policies for each category of worker (invalidity, old age and survivors [IVS], unemployment [DS], illness, wage compensation fund [CIG]) is what determines the total rate.

The factors that contribute to determining the contribution rate are:

• the business of the company (industry, commerce, construction, stone, agriculture, fishing, mining, etc.);
• the size of the company (size limitations for craft companies, approximately 15 dependent workers for the Extraordinary Wage Compensation Fund (CIGS);
• the legal structure of the company (partnerships, limited companies, cooperatives, public-law institutes, etc.;
• the worker's title (workman, employee, sales representative, manager, apprentice, etc.);
• the worker's legal status (shareholder of the cooperative, homeworker, friar, relative of the policy holder, tenured and non-tenured dependent workers, etc.).

A portion of the contributions are at the expense of the worker, whereas the employer is the only entity required to pay in the contribution due. The employer pays in contributions to cover both its own portion and the portion borne by the worker. The employer then recovers the worker's share by deducting it directly from the payslip when calculating their monthly wages (right to reimbursement).

Employers can only exercise their right to reimbursement for the share borne by the worker at the end of the current pay period. Reimbursement of contributions in arrears is not permitted, unless these arrears are owed under contract or by law. For example, if an employer has to pay contributions in arrears on behalf of an unreported worker following inspection or voluntary regularisation, it must allocate all the contribution debt to itself and cannot withhold from the employee the portion of contribution that would have been at the employee's expense, had the employee been employed legally from the outset.

To find out how much a company needs to pay to the INPS every month by way of contributions, either for itself or for an employee, the following information is required:

• the contribution rates to apply to the taxable social security base;
• the amount of the employee's taxable income (taxable social security base);
• any contribution benefits (reductions and exemptions) that apply;
• the amount of benefits paid out to the worker in advance on behalf of the INPS.

The contribution payment is calculated as follows: the contributions owed in principle (amounts debited to the employer) are calculated by multiplying the contribution rates (born by the employee and the employer) by the taxable social security base, divided by 100.

Contribution benefits and advance benefit payments (amounts credited to the employer) are given by the sum of contribution benefits, the advance benefit payments, and contribution rebates and exemptions.

The actual contributions to be paid (amounts debited to the employer) are calculated by subtracting the amounts credited to the employer from the amounts debited to the employer.

It should be noted that contribution benefits for subsidised employment are generally given by a direct reduction of the contribution rate (netting).