In Italy, given that the internship is not a contract or a fixed-term employment relationship, it is not possible to define the sum paid by the Host organization as «salary» or «wage», but we are talking about amounts paid as benefit, study grant, award or reimbursement of costs.
Host organizations almost always refer to the sum paid to interns as “expense reimbursement,” meaning a monthly sum. This is actually a misnomer, and it would be more correct to refer to it as “allowance” (as provided for in the regulations on extracurricular internships), “bonus,” or “study grant,” and to use the term “expense reimbursement” only upon presentation of supporting documents (e.g., train tickets) relating to previously agreed expenses incurred on behalf of the host organization.
For taxation, benefits, study grants and awards must be considered as income from salaried employment (see Article 50 par. 1, letter c), Presidential Decree n. 917/1986 TUIR - Internal Revenue Office resolution n. 95/E/2002). However, “allowances/bonuses or study grants” and “expense reimbursements” are two different things, and the tax treatment they receive is also different.
Gross IRPEF deduction is applied to allowance/bonus or study grants with a minimum rate of 23% for amounts up to €15,000, as well as deductions from gross tax in proportion to the period of employment during the year. Host entities must first request a declaration (self-certification) from recipients in order to calculate the deductions correctly. The host organization already withholds tax (IRPEF plus any other local taxes) at the time of payment.
Regarding expense reimbursements, these do not give rise to any tax implications (Articles 51 and 52 of the aforementioned TUIR). “Allowances/bonuses or study grants” and “expense reimbursements” are not subject to social security contributions. For example, for an intern who receives a total bonus of €5,000 for a 12-month internship, the 23% income tax should reduce this amount by €1,150, but thanks to the deductions provided for in the aforementioned TUIR, the amount remains unchanged. Therefore, up to a sum of €8,500 per year (i.e., approximately €708 per month), no tax deductions are made. At the end of the internship or at the end of the year the tax substitute (Host organization) must provide the compensation for tax purposes pursuant to Article 23 of the Decree of the President of the Republic 600/1973 and within the 28 of February of each year must provide CUD Certification to the employee, with indication of payments provided and withholding taxes. Scholarships for Erasmus internships are not subject to taxation.
In case of internships abroad, the fiscal treatment depends on the local regulations of the host country where the internship takes place. The host organization is responsible for verifying and applying the regulatory framework.