Tucked in the heart of Italy, the Republic of San Marino is one of the world’s oldest and smallest republics. For international companies and skilled workers, San Marino offers a stable, high-income base in Europe with simpler and more flexible tax rules than its larger neighbors. 

San Marino’s economy includes thriving manufacturing, finance, and tourism industries. These sectors support about 5,200 businesses, employ around 18,000 local workers, and have around 8,000 cross-border employees from Italy. 

San Marino’s fiscal rules rest on two main pillars: a general income tax called the Imposta Generale sui Redditi (IGR) and a social security program funded by mandatory contributions. 

Employers who want to hire workers in San Marino must understand this system clearly to stay on the safe side of the law. 

What is Payroll Tax in San Marino?

In San Marino, payroll taxes are collected by the National Social Security Institute (Istituto per la Sicurezza Sociale, ISS). Almost all healthcare and pension spending in San Marino is financed through payroll contributions and general revenues. ISS-administered medical benefits cover doctor visits, hospital care, and medications at no direct cost to beneficiaries. 

Employer and Employee Responsibilities

Employers calculate both sides of the social contributions on each salary. Employers pay roughly 27.4% of gross wages. Key rates for employees under 50 with permanent contracts include:

Contribution TypeRate (%)
Pension (first pillar)16.6%
Fondiss (supplementary pension)2.0%
Unemployment insurance (indennità di disoccupazione)1.90%
Health and accident insurance (sicurezza sociale)4.0%
Social Services Fund (assistenza sanitaria e famiglie)1.0%

In total, employers contribute roughly 27—28% of payroll to social funds. This figure can vary slightly by contract type and incentives. 

Employees contribute about 8.3% and pay a much lower payroll tax than in many EU countries. All contributions are charged on the full gross wage.

Contribution TypeRate (%)
Main pension pillar5.90%
Fondiss (supplementary pension)2.00%
Total7.90%

The remaining comes from a 0.50% contribution toward unemployment insurance. Additionally, 0.5% of wages is deducted for family allowance contributions, but these are treated as a payroll withholding rather than a benefit accrual, so they are usually combined into the 8.3% figure. 

All health and medical coverage is funded through the social insurance fund. Contributions are assessed on the full gross salary up to certain statutory thresholds. Since 2023, the annual minimum taxable wage base is about €28,000; above that, pension contributions continue on all income, and Fondiss contributions are capped.

Managing payroll taxes and compliance in San Marino can be frustrating for international companies. Partnering with an International Recruitment Agency can help find top Sammarinese professionals and skilled cross-border workers. Our recruitment service at Remote People sources, vets, and delivers qualified candidates with a 6-month placement guarantee. If a hire decides to leave within 12 months, we replace them at no additional cost to you. 

We also offer a Professional Employer Organization (PEO) service, which will handle employment contracts, social security registration, payroll withholding, and employer and employee contributions. Remote People also handles local filings and labor-law compliance, protecting your business from mistakes and penalties. 

Remote People also provides a Free Global Payroll Calculator, a user-friendly tool that automates cost projections. You select the country, mark the worker as local or expatriate, choose a calculation period, enter the gross salary, and pick your currency. The calculator instantly estimates net pay, tax deductions, and employer-side costs, making budget planning clear and accurate.

These services provide a seamless, end-to-end solution to help you hire faster, pay accurately, and remain fully compliant with San Marino’s tax system.

Personal Income Tax in San Marino

Residents and nonresidents pay the income tax (known as IGR) on different bases (Table 1). The current rates and brackets are:

Taxable Income (EUR)Tax Rate
Up to €10,0009%
€10,000 – €18,00013%
€18,000 – €28,00017%
€28,000 – €38,00021%
€38,000 – €50,00025%
€50,000 – €65,00028%
€65,000 – €80,00031%
Over €80,00035%

Taxpayers must file an annual return by April of the following year, reconciling any additional income and receiving credit for withholdings. Individuals resident in San Marino are taxed on their worldwide income, while nonresidents are taxed only on San Marino–source income. 

One is considered a tax resident in San Marino by having a registered address there or staying in the country for over six months. Any Italian cross-border employee would refer to the Italy–San Marino tax treaty.

Corporate Tax and Other Taxes in San Marino

While this guide focuses on employment taxes, employers should also note that San Marino imposes a corporate income tax if you incorporate a local subsidiary. The corporate income tax applies at a flat 17%on taxable profits. This rate is lower than in neighboring Italy and below the European Union average. To encourage investment, the government provides a generous 50% reduction in corporate tax for a new company in the first five years, lowering the effective rate to 8.5%. 

Unlike EU countries, the republic also does not use a Value Added Tax (VAT). Instead, it applies a single-stage import tax called the Monofase. This levy is charged once, at the point when goods and related services enter San Marino. 

Because the tax is applied only at import, businesses do not need to manage VAT reporting on transactions with other local firms. For companies that depend on imports, however, the Monofase is a central factor in cost planning. Other relevant levies include property taxes and a small withholding on dividends to nonresidents (5% for individuals).

San Marino International Laws and Agreements

San Marino maintains bilateral tax and social agreements to coordinate with other countries.

Double Taxation Treaties (DTA)

San Marino has signed DTAs with many countries (including Italy, Switzerland, and many EU and OECD states) to prevent double taxation of cross-border income.

Employers and employees should review any applicable treaty when an Italian resident works for a Sammarinese employer (or vice versa).

Social Security Agreements

San Marino has a comprehensive social security treaty with Italy (in force since 1996).

Under this agreement, work periods in Italy and San Marino can be combined (“totalized”) for pension and benefit eligibility, and workers pay into only one system at a time. It covers pensions, health, family benefits, unemployment, and work-injury insurance. For example, an Italian worker sent to San Marino remains insured under the SM regime but will have credits counted by the National Institute of Social Security (INPS) in Italy.

San Marino also follows EU labor principles by recognizing posted workers and, under its new EU Association Agreement, will align many of its labor laws and regulations with EU standards. If an employer transfers an existing employee to San Marino, they must know the governing rules. 

San Marino’s tax system may be simple on paper, but entering the market and staying compliant is a real challenge with ups and downs. The first major obstacle is the legal requirement to create a local entity, such as a limited liability company, before you can hire directly. As an employer, you must understand corporate law, register with the San Marino Chamber of Commerce, the Social Security Institute, and the Tax Office. It often takes months to complete and can cost thousands of euros.

Once established, the company is responsible for managing payroll and compliance. Employers must calculate and remit monthly social security contributions and income tax withholdings, follow collective labor agreements, and keep up with changes in San Marino’s regulated labor system. This workload creates financial and legal risk, and many mistakes are made trying to figure it all out. 

Companies that value their time and money don’t do trial and error; they hire experts in the field who can get the stress off them and allow them to focus on revenue generation. That’s what an Employer of Record does.

How an Employer of Record (EOR) Helps in San Marino

A San Marino Employer of Record is a service provider that becomes the legal employer for your local hires. An EOR lets you hire and pay workers without setting up your own company. This model shortens the hiring timeline from months to days and reduces the cost of market entry.

Remote People’s EOR service covers every critical employer function:

  • Compliant hiring: Drafts and manages local employment contracts that protect both employer and employee.
  • Payroll management: Runs payroll in euros with accurate salary, tax, and contribution calculations.
  • Tax and social security: Withholds and remits payments to the ISS and Tax Office on schedule.
  • Benefits administration: Provides all mandatory benefits, including pensions and paid leave.
  • Risk mitigation: Takes on legal liability for labor law compliance so your business stays protected.

Through this model, your company keeps full control over your team’s projects and daily work while Remote People manages the legal and HR framework. This is the fastest, safest, and most cost-effective way to grow a team in San Marino. Our EOR services begin at about USD 199 per employee per month, far less than it costs to establish a brick-and-mortar presence. 

Get your business moving faster and safer in San Marino. Contact us today.