Spain vs Italy: salary after tax and cost of living

Do you take home more in Spain or Italy?

The same salary, shown in US dollars and converted to each country at market exchange rates, so take-home is compared on the same real money.

How much tax do you pay on $80,000 in Spain vs Italy?

Is Italy cheaper than Spain, and what is your pay really worth?

On World Bank price levels (United States = 100), Spain sits at 63.7 and Italy at 67.7, so Italy costs about 6.3% more to live in. Adjusted for those prices, a €73,912 salary in Spain has the same buying power as about €78,521 in Italy. After both tax and cost of living, take-home on an $80,000 salary is worth more in Spain.

Same income tax, different social security

Strip the numbers apart and the income tax lines are almost twins: €20,417 in Spain, €20,985 in Italy, only €568 apart. The whole gap lives in social security. A Spanish employee pays 6.50% (4.70% common contingencies, 1.55% unemployment, 0.10% training and 0.15% for the intergenerational equity mechanism), but only on a contribution base capped at €5,101.20 a month, or €61,214.40 a year. Everything above that ceiling is free of contributions, so on €73,912 the bill is €3,979, about 5.4% of gross.

Italy charges 9.19% for INPS and adds a further 1% on pay above €56,224, and the €122,295 ceiling that applies to newer enrolees is far out of reach at this salary. That makes €6,969, nearly €3,000 more than Spain. IRPEF then runs at 23% on the first €28,000 of taxable income, 33% to €50,000 and 43% beyond, which is why the Italian income tax figure edges past Spain's combined state and regional IRPF. Effective rates land at 33.0% for Spain and 37.8% for Italy, and Italy's regional and municipal surtaxes are not included in these figures, so the true Italian rate sits a little higher.

How the lead grows from $40,000 to $150,000

The two start almost level. At $40,000 (€36,956) Spain keeps €27,677 and Italy €27,582, 74.9% against 74.6%. At this level both employees are well under the Spanish contribution ceiling, so both pay full-rate social security and Italy's cuneo fiscale credit is still doing its job. At $60,000 (€55,434) the lead is already €2,252: Spain nets €38,746 (69.9%), Italy €36,494 (65.8%).

Past €61,214 the Spanish social bill stops growing, so every extra euro faces IRPF alone. Italy keeps taking 9.19% plus the extra 1% and taxes the rest at 43%. At $100,000 (€92,390) Spain keeps €59,679 and Italy €55,416, 64.6% against 60.0%. At $150,000 (€138,585) the figures are €85,086 and €80,011, 61.4% against 57.7%, a €5,075 gap. Spain leads at every point and the margin widens with income. There is no crossover.

Prices: cheaper in Spain, and by enough to matter

Spain's price level is 63.7 and Italy's 67.7, so Italy is 6.3% dearer for the same basket. Combine that with the higher Spanish net and the real-terms gap is wider than the payslip suggests: $53,595 of Spanish net pay buys $84,136 worth at world prices, while $49,743 of Italian net buys $73,475.

A salary of €78,521 in Italy has the same purchasing power as €73,912 in Spain. In reverse, €69,573 in Spain matches €73,912 in Italy. An Italian offer needs to be about 6% higher just to stand still on prices, and closer to 15% higher to match Spain's position after tax and prices together. The usual caveats apply: Madrid and Barcelona cost more than the national figure, Milan costs more than Italy's, and Spain's regional IRPF scale varies by autonomous community (Madrid's is lower than the default scale used here).

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