Prepared by Marzio Scaglioni, Francesca Tironi, Giulia Spalazzi, Leila Rguibi and Antonio Giardina
On December 29th, 2023, it has been issued Law No. 213/2023 (“Budget Law 2024”), entitled “State Budget for the Financial Year 2024 and Multi-Year Budget for the Three-Year Period 2024-2026.“
This article summarizes some of the main Payroll and Labor Law updates contained in the aforementioned Law in addition to reminding the change in personal income tax rates (“IRPEF”) as reported in the previous and specific News Alert.
Partial exemption of employee social security contributions – Art. 1 Paragraph 15
Paragraph 15 reintroduces, for the period from January 1st, 2024 to December 31st, 2024, an exemption on the quota of social security contributions due by public and private employees (excluding domestic workers) already provided for the years 2022 and 2023.
This exemption of the employee’s quota of social security contributions will be equal to:
- 6%, provided that the taxable remuneration, adjusted on a monthly basis for no. 13 monthly payments, does not exceed the monthly amount of €2,692, net of the accrual of the 13th month;
- 7%, provided that the taxable remuneration, adjusted on a monthly basis for no. 13 monthly payments, does not exceed the monthly amount of €1,923, net of the accrual of 13th month’s salary.
The above provision also specifies that the increases in the percentage of exemption provided therein are recognized without effect on the accrual of 13th monthly pay.
Benefit in Kind 2024 – Increase of the exemption threshold – Article 1, paragraphs 16 – 17
Paragraphs 16 and 17 provide, limited to the 2024 tax period, an improved regulation – compared to the ordinary one and several times interested by temporary amendments – regarding the exclusion from the computation of the employee’s taxable income for goods and benefits in kind given by the employer. The more favorable transitional regime consists of raising the aforementioned exemption limit from €258.23 (for each tax period):
- to €2,000 for employees with dependent children for tax purposes under Article 12, paragraph 2 of the Presidential Decree no. 917/1986 (“TUIR”) provided that the employee declares to the employer that he or she is entitled to it, indicating the children’s tax code;
- to €1,000 for all other employees or equivalent income recipients;
Also included in the above limit, for all employees (with or without children), are amounts disbursed or reimbursed by the employer for the payment:
- of household utilities of water service, electricity and natural gas;
- of expenses for renting the main home or interest on the mortgage related to the primary home.
The exemptions granted under the transitional scheme at hand also concern the taxable base for social security contributions purposes.
Reduction of the flat tax’s percentage related to private employees and applicable to productivity bonuses and forms of profit-sharing in business – Art. 1, Paragraph 18
Paragraph 18 extends – as was already provided for year 2023 – the transitional reduction from 10% to 5%, already set for the corresponding disbursements in the year 2024, of the dedicated personal income flat tax rate, concerning performance bonuses and forms of participation in Company’s profits disbursed in the year 2024.
Special supplementary treatment for employees of tourist-hotel facilities – Article 1 paragraphs 21 – 25
Article 1, paragraphs 21-25 provides for a measure that was already in force last year; more in detail, for the period from January 1st to June 30th, 2024, in favor of employees of food and beverage establishments and the tourism sector with an income up to €40,000, a sum is granted as a special supplementary economic treatment, equal to 15% of the gross wages paid in relation to night work and overtime work performed on holidays.
Renewal of the so called “ISCRO” for the year 2024 – Art. 1, paragraphs 142 – 155
The Extraordinary Income and Operational Continuity Allowance (“ISCRO”), intended on an experimental basis for the support of self-employed workers subject to the payment of social security contributions to the Special Fund of the Italian Social Security Institute (“INPS”) which was introduced on an experimental basis by Article 1, paragraph 386, of Law 178/2020 (i.e. Budget Law for 2021) is still granted for the entire year 2024.
The allowance under consideration is granted to the aforementioned self-employed workers who:
- do not hold direct pension benefits and are not enrolled with other mandatory social security funds;
- are not beneficiaries of the Inclusion Allowance (so called “Assegno di Inclusione”);
- have had a self-employment income, in the year preceding the submission of the application, less than 70% of the average self-employment income earned in the 2 years prior to the year preceding the submission of the application;
- have declared, in the year preceding the submission of the application, an income not exceeding €12,000, annually revalued on the basis of the change in the Italian Statistical Institute (“ISTAT”)’s index of consumer prices for blue- and white-collar households compared with the year preceding the submission of the application;
- are compliant with their mandatory social security contributions;
- have been an active VAT number holder for at least 3 years, as of the date of application submission, for the activity that entitled them to the current social security registration.
The said provision then establishes that:
- the requirements of not owning direct pensions, not being insured with other mandatory social security forms and not being a beneficiary of Inclusion Allowance must be maintained even while receiving the allowance;
- the ceasing of the VAT number during the disbursement of the ISCRO determines its immediate termination, with recovery of any monthly payments disbursed after the date on which the activity ceased.
The application for access to ISCRO must be submitted by the worker to INPS electronically by October 31st of each year of use, self-certifying the income produced for the years of interest.
The disbursement of such allowance is subject to the recipients’ participation in professional refresher courses.
The ISCRO is disbursed for six monthly payments and is equal to 25%, on a six-monthly basis, of the average self-employment income declared by the individual in the two years prior to the year preceding the submission of the application. The relevant amount cannot, in any case, exceed the limit of €800 per month and cannot be less than €250 per month.
The above amount limits are annually revalued on the basis of the change in the ISTAT consumer price index for blue- and white-collar households from the previous year.
The benefit is payable from the first day following the date of application, does not result in the crediting of figurative social security contributions and constitutes income in accordance with the TUIR.
Extension of social shock absorbers through use of the Social Fund for Employment and Training – Art. 1, paragraphs 168 – 176
Paragraphs 168 to 176 extend some income support measures, placing the related charges at the expense of the Social Fund for Employment and Training.
The above measures concern:
- the allowance for workers employed by companies in the call center sector;
- the allowance for compulsory and non-compulsory fishing ban;
- the allocation of additional resources for the recognition of extraordinary wage subsidy and redundancy treatment in derogation in favor of workers of companies operating in areas of complex industrial crisis;
- the employment income support treatment in favor of workers employed by seized and confiscated companies under judicial administration; the extension of the extraordinary wage integration treatment for business crisis for companies that cease production activities;
- the extension of the economic integration of the extraordinary wage supplement treatment in favor of workers employed by companies of the “Ilva Group”;
In addition, for companies of national strategic interest that have company reorganization plans underway and employ at least 1,000 workers, it is established that, by decree of the Ministry of Labor and Social Policies, an additional period of extraordinary wage supplementation fund is authorized, upon request, exceptionally and as an exception to Articles 4 and 22 of Legislative Decree No. 148/2015 (in continuity with the protections already authorized) until December 31, 2024, in order to safeguard the employment level and the skills heritage of the company itself.
Finally, for the year 2024, it is planned to increase by 50 million euros (from 50 million to 100 million) the expenditure authorization under current regulations for social shock absorber (“CIGS”) for company reorganization or crisis.
Parental leave’s provisions – Art. 1, Paragraph 179
Paragraph 179 provides, for parents who alternately benefit of parental leave, in addition to the current provision of an allowance equal to 80% of pay for one month within the sixth year of the child’s life, the recognition of an allowance equal to 60% (instead of the current 30%) for one additional month to the first above.
In addition, for the year 2024 only, the measure of the allowance recognized for the month additional to the first is equal to 80% of pay, instead of 60%.
Finally, it is specified that this provision applies with reference to workers who end, after December 31st, 2023, the period of maternity leave or, alternatively, paternity leave.
Social contribution exemption for female workers with children – Article 1, paragraphs 180 – 182
Article 1, Paragraphs 180-182, for pay periods from January 1st, 2024 to December 31st, 2026, recognizes a 100% exemption of social security contributions payable by female workers who are mothers of three or more children with permanent employment relationships, excluding domestic work relationships, until the youngest child reaches the age of 18, up to an annual maximum limit of €3,000 prorated on a monthly basis.
On an experimental basis, for the year 2024, the above exemption is also granted to working mothers of two children with permanent employment relationships, excluding domestic work relationships, until the month of the completion of the tenth year of age of the youngest child.
Social Security exemptions for hiring women victims of violence in the private sector – Art. 1, paragraphs 191 to 193
Paragraphs 191 to 193 provide for the recognition of a total social contribution relief in favor of private employers (excluding premiums and contributions to National Institute for Insurance against Accidents at Work “INAIL”), who, in the three-year period 2024-2026, hire unemployed women victims of violence, beneficiaries of the so called “reddito di liberà”. This relief is granted up to a maximum amount of €8,000 per year and for the duration of (i) 24 months, if the hiring is on a permanent basis, (ii) 12 months, on the other hand if it is placed on a fixed-term base, and (iii) 18 months, if the relevant employment contract is converted from a fixed-term to permanent one.
Funding for training inherent to apprenticeship and soft skills – Art. 1, Paragraph 202
Paragraph 202 provides for an increase for the year 2024, in the amount of €50 million, of the resources allocated both to the financing of training courses inherent (i) to the type of apprenticeship for professional qualification and diploma, upper secondary education diploma and certificate of higher technical specialization and (ii) to the financing of courses for cross-skills and career counseling (courses inherent to the institution originally called school-to-work alternance).
Provisions on retirements
Paragraphs 125-140 contain provisions on old-age pension, early retirement, “APE Sociale”, “Quota 103” and “Opzione Donna.”
Specifically, the right to an old-age pension (where the age requirements under current legislation are met), in the presence of a minimum contribution period of at least 20 years, can be achieved provided that the gross monthly amount of the pension is at least equal to the amount of the social allowance. In addition, the right to early retirement (subject to a minimum contribution period of at least 20 years) may be achieved if the gross monthly amount of the pension is at least:
- 3 times the amount of the social allowance;
- 2.8 times the amount of the social allowance, for women with one child;
- 2.6 times the amount of the social allowance, for women with two or more children.
A window of 3 months from the date of accrual of the overall conditions for access to early retirement was inserted.
For 2024, the age requirement for access to the so-called “APE Sociale” is raised to 63 years and 5 months, compared with the previous requirement of 63 years.
New conditions for access to so-called “Opzione Donna” have also been set for the year 2024. As of January 1, 2024, 61 years of age will be required, compared to the previous requirement of 60 years, confirming what was foreseen in the previous version of the benefit about the seniority contribution requirements and the reduction of the age for access to the instrument, parameterized on the presence of children.
Also confirmed for 2024 is the so-called “Quota 103” measure, but with changes for those who accrue the requirements in the year 2024, namely:
- fully contributory calculation of the allowance;
- amount of the allowance payable in an amount equal to a maximum of 4 times the minimum INPS treatment (until the attainment of the old-age pension);
- window of 7 months for private sector workers and 9 months for public sector workers.
Finally, paragraph 141 provided for an extension of contribution benefits for workers in the polygraphic sector (so-called “printers”). Indeed, an additional maximum expenditure of 10.4 million for 2024, 10.5 million for 2025 and 2026, and 2.4 million for 2027 has been authorized for access, as an exception to the ordinary requirements, with contribution seniority of at least 35 years for polygraph workers of newspaper and periodical printing companies, and of companies publishing newspapers, periodicals and news agencies with national circulation that have submitted to the Ministry of Labor and Social Policy plans for corporate reorganization or restructuring in the presence of crisis by December 31, 2023.
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