Prepared by Marzio Scaglioni and Alice Martinis
Finally operational the possibility of taking advantage of tax relief for workers employed in the regions of Southern Italy, in the year 2021.
Through Circular no. 33 of the 22nd of February, INPS (National Institute of social security) provided the operating instructions for the use, limited to the period 1 January 2021 – 31 December 2021, of the tax relief for employment in disadvantaged areas – “Decontribuzione Sud”, originally established by article 27 of Law Decree 104/2020 (so-called “August Decree”), and extended until 31 December 2029 by article 1, c. 161, of Law 178/2020 (so-called Budget Law 2021). As regards the use for the period 2022 – 2029, the relief will be subject to the rules on State aid and therefore it will be necessary to await further approval by the European Commission.
The facilitating measure, which takes the form of State aid, was approved by the European Commission on the 18th of February, until 31 December 2021 and is compatible with the internal market if it meets the following conditions:
- it is for an amount not exceeding 1,800.000 EUR (per company and gross of any taxes or other charges);
- is granted to companies that were not already in difficulty as of 31 December 2019;
- by way of derogation from the previous point, is granted to micro or small companies that were already in difficulty as of 31 December 2019, provided that they are not subject to insolvency proceedings under national law and have not received rescue aid or aid for restructuring;
- is granted by 31 December 2021.
The incentive is granted to private employers in relation to employment relationships, with the exclusion of the agricultural sector and domestic work, having their place of work – meaning the operational unit at workers are reported in Uniemens – in one of the following regions: Abruzzo, Basilicata, Calabria, Campania, Molise, Puglia, Sardinia and Sicily.
With specific regard to the hypothesis of administration, for the purpose of recognizing the deduction, the workplace of the employer and not of the user is taken into account.
In concrete terms, the incentive leads to a significant saving for the cost of labor, resulting in an exemption from social security contributions (excluding INAIL insurance premiums), differently modulated over the years, in an amount equal to:
- 30% until 31 December 2025;
- at 20% for the years 2026 and 2027;
- at 10% for the years 2028 and 2029.
The relief is of considerable importance if we consider that there is no maximum monthly ceiling and therefore the same applies regardless of the amount of contributions due. The incentive relates only to the employer’s contribution charge (with saving of labour costs) while the employee’s contribution remains unchanged; however, the retirement calculation will be without detriment to the employee.
The National Institute of social security specifies that, since the “Decontribuzione Sud”, not having the nature of an incentive to hiring, but of a contributory benefit, is not subject to the application of the general principles on employment incentives. The use of the incentive is subject to the possession of the following requirements:
- the regularity in the fulfillment of the contribution obligations (attested by the possession of the DURC);
- the absence of violations of the fundamental rules for the protection of working conditions and compliance with other legal obligations;
- compliance with national collective agreements and contracts, as well as regional, territorial or company agreements, signed by the trade union organizations of the comparatively most representative employers and workers on the national level.
In addition, INPS provides clarifications about possibility of bonuses cumulation, specifying that the cumulation is applied, both with reference to other contributory benefits (such as the incentive to hire over 50 unemployed for at least 12 months), and with reference to economic incentives (such as, for example, an incentive to hire disabled people, or an incentive to hire NASPI beneficiaries). Where it is intended to cumulate the “Decontribuzione Sud” with other facilitations concerning the same workers, the incentive in question will be applied in a residual way on the residual employer contribution.
Finally, it should be noted that the incentive will be usable by means of an adjustment in the monthly contributions reports, up to the month of December 2021. It should be noted that the amount of the exemption relating to the month of January 2021 can be managed as arrears and recovered exclusively in the Uniemens flow February 2021.
For a deeper discussion please contact:
PwC TLS Avvocati e Commercialisti