Skip to content With Ruling No. 5/2026, the Italian Revenue Agency clarifies how social security and welfare contributions paid abroad may be deducted by taxpayers resident in Italy who apply the deemed remuneration regime under Article 51(8-bis) of the Italian Income Tax Code (TUIR).
In particular, the Agency explains that such contributions cannot be deducted from employment income determined on a deemed basis; rather, they must be reported separately as deductible expenses in the relevant section of the income tax return pursuant to Article 10 of the TUIR.
The case
The applicant states that he is tax resident in Italy and has been performing employment activities abroad since 2024. For the purpose of determining his taxable income, the taxpayer applies the deemed remuneration regime provided for under Article 51(8-bis) of the TUIR.
During 2024, the foreign employer withheld and paid mandatory social security and welfare contributions in compliance with the legislation in force in the foreign jurisdiction.
In light of these circumstances, the taxpayer requested confirmation as to whether such contributions could be deducted from his total income and, if so, how they should be reported in the income tax return.
The question submitted
Referring to the principles established by the Italian Supreme Court in judgment No. 17747 of 27 June 2024, the applicant argued that the mandatory social security and welfare contributions paid abroad in 2024 should be deductible from total income pursuant to Article 10(1)(e) of the TUIR.
According to the taxpayer, these expenses should be claimed as deductions in line E21 of Form 730/2025, notwithstanding that employment income is determined on a deemed basis.
Opinion of the Italian Revenue Agency
The Italian Revenue Agency first reconstructs the relevant regulatory framework, focusing on the scope of Article 51(8-bis) of the TUIR.
This provision applies to workers who, while performing their activities abroad, maintain their tax residence in Italy and determine their employment income in derogation of the ordinary analytical criteria set forth in Article 51(1)–(8) of the TUIR.
More specifically, the rule applies to employees who carry out their work abroad exclusively and continuously for more than 183 days over a twelve-month period while retaining Italian tax residence. In such cases, employment income is determined under special rules rather than the ordinary analytical criteria provided by Article 51(1)–(8).
As clarified by Circular No. 207 of 16 November 2000, the deemed remuneration regime operates as an exception to the ordinary rules governing the determination of employment income and entails, inter alia, the inapplicability of Article 51(2)(a) of the TUIR, which allows social security contributions to be deducted directly from category income.
However, the Agency refers to the position expressed by the Supreme Court in judgment No. 17747/2024, according to which the provisions governing individual categories of income and those regulating the determination of total income are characterized by a relationship of reciprocal specialty.
In the absence of an express provision excluding the deductibility of the expenses referred to in Article 10(1)(e) of the TUIR, such expenses must in any event be deducted from total income, even if they are not relevant for the determination of employment income.
The Agency’s conclusions
In light of the above considerations, the Italian Revenue Agency concludes that:
- Mandatory social security and welfare contributions paid abroad by the employer in accordance with foreign law are deductible from the total income of a taxpayer resident in Italy;
- Deductibility applies within the limits and subject to the conditions set forth in Article 10(1)(e) of the TUIR, based on the documentation issued by the foreign employer;
- For income tax filing purposes, such contributions must be reported in line E21 of Form 730/2025 as deductible expenses and cannot be deducted from employment income determined on a deemed basis.
Final remarks
Ruling No. 5/2026 is particularly relevant for taxpayers resident in Italy who work abroad and apply the deemed remuneration regime, as it definitively clarifies the correct method for deducting foreign social security contributions.
The clarification confirms that the application of deemed remuneration affects only the determination of employment income and does not preclude the deductibility of social security expenses from total income, provided that they are reported separately in the dedicated section of the income tax return.
This operational aspect requires particular attention when filing tax returns in order to avoid reporting errors and ensure the correct determination of the taxable base.
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