As reported in Il Sole 24 Ore on 10 August 2026, the Italian Supreme Court confirmed that variable commissions paid to former sales managers after resignation, but relating to sales closed during their employment, constitute employment income (reddito di lavoro dipendente) subject to standard payroll withholding tax and social security contributions. The case involved a company that paid bonuses in the month the customer paid the invoice, which occurred after the manager’s departure. The Court ruled that the economic link to the employment relationship prevails over the timing of payment. This principle aligns with Article 51 of the TUIR, which taxes all compensation arising from the employment relationship regardless of when it is paid.
Key Takeaways
- Withholding Obligation: The employer must operate PAYE withholding on such commissions at the time of payment, even if the beneficiary is no longer an employee. The former employee receives a certification (Certificazione Unica) for the tax year of payment.
- Social Security Contributions: Contributions are due on the commission amount, calculated at the rates applicable at the time the right to the commission accrued (during employment). Late payment triggers interest and penalties.
- Contractual Clarity: Employment contracts should specify the treatment of deferred commissions upon termination, including whether they remain payable and the tax gross-up provisions. Ambiguity leads to disputes and tax assessments.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement