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Insurance-related employee benefits in Italy and beyond

The tax treatment of insurance premiums paid by employers on behalf of employees varies in Italy depending on the primary purpose for the payment. Other countries approach the issue differently.


The pandemic has made people more risk averse and, in parallel, workers are increasingly viewing insurance coverage as a desirable incentive. In this article, we provide a summary of the regulations and opportunities connected with insurance benefits.

With specific reference to insurance policies, the Italian administrative authorities have identified ‘taxable cases’ (i.e. those that are treated as income from work). They have clarified that premiums for health, life and non-occupational accident insurance paid by the employer are subject to taxation. Conversely, amounts relating to occupational accident insurance are excluded from taxation.

The Italian authorities have also specified that to determine the correct tax framework that applies to these benefits, it is necessary to distinguish the basis on which the payment in question is made. They have stated that if the payment derives from fulfilling an obligation under a contract, agreement or company regulation, the contributions are considered an integral part of remuneration and, therefore, part of the employee’s income.

If, on the other hand, the contract, agreement or company regulations only impose an obligation on the employer to provide certain welfare benefits (e.g. public indemnity due in the event of an accident), the employer can freely choose to provide cover for these payments through insurance or wait for the event to occur and bear the entire associated cost. The authorities have clarified that:

‘in the first case, signing an insurance policy or enrolling in an entity or fund responds to an exclusive interest of the employer and any payment of the premium or contributions, not constituting a salary element, must not contribute to forming the income of employees.’

In particular, payments made exclusively in the employer’s interests are not taxable. If the employer’s obligation is imposed by law or by the employment contract, establishing a policy in favour of employees is one of the methods that the organisation may choose to fulfil its obligations (again this is in the exclusive interests of the employer, which would otherwise be called upon to pay, directly or indirectly, for the damages caused and/or suffered by the employee).

Based on the legal provisions and administrative interpretation described above, in order to understand which insurance-related sums must be included in an employee’s income, it is necessary, in the first instance, to distinguish between:

  • goods or services that the employer provides to the employee for its own benefit or interest, which are not part of the employee’s income;
  • goods or services that the employer provides to the employee for the employee’s benefit or interest, which are included in the taxable base for calculating the employee’s income.


In practice, with reference to an accident policy, in order to assess the tax treatment to be applied to the premium, it is necessary to understand the purpose for which the policy is taken out. If its purpose is purely to serve employer’s interests, the payment of the premium may not constitute a salary element and would not be part of employee income. Conversely, if the payment is for the employee’s benefit, it would contribute to employee income.

Therefore, for example, an accident policy for professional reasons where the employer insures itself against the risk of injury to the employee for reasons connected with the employment relationship would fall within the first category: the overriding benefit to the employer would be decisive in establishing these premiums are not taxable for the employee.

On the other hand, insurance cover for non-professional risks providing the employee with compensation or reimbursement of expenses incurred in the event of accidents that happen outside the working environment that are solely in the employee’s interests, could fall within the employee’s taxable base meaning the value of the premium should be subject to tax and social security contributions for both the company and the employee.

Employees’ increased interest in these forms of benefit as well as the economic efficiency of this approach suggest these reward mechanisms will continue to prove popular, and can act as an important lever for the attraction and retention of talent.

For more information about employee compensation and benefits

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Written by
Toffoletto de Luca Tamajo, working in employment law since 1925.
Emanuela Nespoli
Partner - Italy
Toffoletto De Luca Tamajo
Lorenzo Gelmi
Partner - Italy

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