In its Circular no. 90 of 4 October 2024, the INPS has provided the long-awaited clarifications on the amendments to the penalty regime for social security contribution irregularities contained, in particular, in Article 116 of Law no. 388/2000, introduced by Legislative Decree no. 19/2024.

The amendments, which has come into force on 1 September 2024, concern in particular the civil penalties applicable in the event of irregularities in the payment of contributions, omissions due to regulatory uncertainties and spontaneous regularization by the employer.

Civil sanctions for omission and contribution evasion

Contribution omission, provided under Article 116 (paragraph 8, lett. a) of Law no. 388/2000, occurs in the event of non-payment or delayed payment of contributions or premiums, whose amount is determinable from the compulsory reports and/or registrations submitted within the statutory deadline.

In this respect, the above-mentioned decree has modified the civil sanctions regime provided for by article 116, paragraph 8, letter a) of Law no. 388/2000, relating to the non-payment or late payment of pension contributions, providing that “the surcharge shall not apply if the contributions or premiums are paid within one hundred and twenty days, in a single instalment, spontaneously and before any dispute or request by the tax authorities”. The legislator’s intention is to extend the institution of voluntary settlement, already provided for in cases of evasion of contributions, to cases of non-payment of contributions, in order to facilitate and accelerate the credit recovery.

Without prejudice to the ordinary measure of a civil sanction equal to the official reference rate increased by 5.5 points per year, up to a maximum of 40 per cent of the amount due, in order to encourage compliance, it introduced a facilitating measure whereby, if payment is made in a single instalment within one hundred and twenty days of the legal due date, in a spontaneous manner, i.e. before any disputes or requests by the tax authorities, the 5.5 points increase in the official reference rate does not apply.

Article 116 (paragraph 8, lett. b) of Law no. 388/2000 establishes that the hypothesis of tax evasion arises in the case of non-payment of contributions or premiums due in connection with registrations, reports or compulsory declarations that have not been submitted or that are not truthful.

With regard to the civil sanctions applicable in this case, if the taxpayer does not spontaneously take steps to regularize his/her situation regarding the obligation to pay contributions, the provision provides, without any change with respect to the previous regime, for a sanction equal to 30 per cent of the amount of the contributions or premiums not paid on the due dates established by law, on an annual basis, up to a maximum of 60 per cent of the amount due.

On the other hand, in the case of the active regularization “i.e. ravvedimento operoso”, already regulated by the second part of Article 116 (paragraph 8, lett. b) of Law no. 388/2000, has been subject to a rescheduling of the deadlines for the payment of the contributions due. In fact, it is confirmed the provision according to which, in the event of a report made spontaneously, prior to disputes or requests by the tax authorities, of the debt situation within twelve months of the deadline for the payment of contributions and premiums, the civil penalties for evasion are downgraded to an omission calculated at the official reference rate increased by 5.5 points if the payment is made as a lump sum within the term of thirty days from the notification and, furthermore, the further provision is introduced that, where the payment is made as a lump sum within the longer term of ninety days from the notification, the measure of the civil sanctions due is equal to the official reference rate increased by 7.5 points.

For both omission and evasion of contributions, INPS clarifies that the new rules introduced by the decree are applicable with respect to contribution violations related to periods starting from 1 September 2024.

Civil sanctions for omissions resulting from regulatory uncertainties

The decree under review also amended the regime of civil sanctions in the event of non-payment or late payment of contributions or premiums due to regulatory uncertainties and, in particular, in relation to conflicting case law or administrative guidelines on the recurrence of the obligation to pay contributions, subsequently recognized in judicial or administrative proceedings.

The provision for a sanction equal to the official reference rate increased by 5.5 points, with the application of the ceiling of 40% on the amount of contributions or premiums not paid by the legal deadline, which will continue to apply until the end of the accrual period in August 2024, has been replaced by the lower amount consisting only of the legal interest pursuant to Article 1284 of the Italian Civil Code, provided that the contributions or premiums are paid within the deadline set by the tax authorities.

In this case too, the changes are effective as of 1 September 2024.

Regularization agreed with the INPS

The taxpayer who regularizes anomalies, omissions and errors, in the manner and within the terms that will be defined by an appropriate resolution of the Institute’s Board of Directors, shall be liable to pay a civil sanction:

• in case of contribution omission, equal to the official reference rate and, in any case, not exceeding 40 per cent of the contributions or premiums not paid by the due date,
• in the event of contribution evasion, equal to the official reference rate increased by 5.5 points and, in any event, not exceeding 40 per cent of the contributions or premiums not paid by the statutory due date.

The Court of Cassation expresses its opinion on the role of the figurative contribution in achieving the requisite for access to retirement. 

The Court of Cassation, in its recent sentence no. 24916, published on 17 September 2024, has ruled on the subject of pension benefits, expressing its opinion on the role of imputed contributions in achieving the requisite access to retirement. 

The fact 

The case in question concerned an appeal by a worker to the Supreme Court following the decision of the Court of Appeal of Lecce, in judgement no. 39 of 24 January 2002, in favour of a measure taken by the Social Security Institute (i.e. “INPS”) to the detriment of the plaintiff. 

The appellate judges, in sentence no. 39, had in fact considered as correct the rejection of the application for an early retirement pension submitted by the worker pursuant to Law no. 214 of 2011, since she did not meet the actual minimum contribution requirements for access to the pension, in view of the presence of figurative contributions due to periods of sickness and unemployment in the amount of the contributions accrued by the applicant. The Court of Appeal thus pointed out the absence of the 35 years of effective contributions required by the old legislation for early retirement, a provision which, according to the judges, is still in force. 

Against the decision of the second instance, the employee appealed to the Court of Cassation. 

The worker challenged the decision on the grounds of infringement of Article 24, paragraphs 10 and 11, of Decree-Law no. 201 of 6 December 2011, converted into Law no. 214 of 2011, known as the “Monti-Fornero” reform, arguing that what the territorial judges had provided for was not contained in the above-mentioned legal provision and that the reform had modified the conditions for access to the early retirement scheme. 

The reasons of the decision 

Law no. 214 of 2011, as the Court of Cassation’s ruling states, radically changed the old-age and seniority pension systems in force until then and intervened in the second case by introducing stricter limits on access to the pension treatment, which from then on was called “early retirement pension”. 

In this respect, Article 24 (paragraph 10) of Law no. 214 provided that, from 1 January 2012, in the absence of the normal age requirements for access to the old-age pension, the right to an early retirement pension would be granted only if the contribution period was 42 years and one month for men and 41 years and one month for women, regardless the type of contribution accrued, whether as a result of effective payment or merely as a figurative contribution. The provision also provided for a gradual increase in the number of months of pensionable service for the years following the entry into force of the law, as a result of the adjustment of the pension requirements to the increase in life expectancy, pursuant to Article 12 of Decree-Law no. 78 of 31 May 2010, converted into Law no. 122 of 30 July 2010. 

The second provision referred to, i.e. paragraph 11 of Article 24, regulates the new conditions of eligibility for the early retirement pension for workers whose first contribution credit comes into effect after 1 January 1996, recognizing their right either (i) on completion of the contribution period referred to in paragraph 10 above, or (ii) on reaching the age of 63, provided that at least 20 years of effective contributions have been paid and credited to the insured person and that the amount of the first pension instalment is not less than a certain minimum monthly amount, revalued annually, and in any case not less than 2.8 times the monthly amount of the social allowance fixed for the reference year. 

The Supreme Court, after analyzing the legal provisions governing early retirement, found nothing that could lead to the exclusion of the figurative contribution from the contribution requirement for entitlement to a pension and upheld the worker’s arguments, stating that (i) “the exclusion of the figurative contribution within the scope of application of paragraph 10 (as relied on by the “INPS”) would have little justification and would lead to a substantial non-application of the case, (ii) “moreover, on the basis of the literal criterion of interpretation of the provisions in question, the worker’s request for an early retirement pension on the basis of the additional calculation of the notional contribution accrued appears to be well founded, since only paragraph 11 requires the effective contribution, whereas paragraph 10 is silent”. 

The Court of Cassation ruled that the contribution requirement for access to the early retirement pension under Article 24, paragraph 10, of Law no. 214 of 2011, consisting of a contribution period of 42 years and 10 months for men and 41 years and 10 months for women, is also supplemented by the figurative contribution, confirming also that the requirement of 35 years of actual contributions under the previous legislation does not apply to the new system reformed by the so called “Fornero” Law. 

With regard to the judgment under review, nothing has changed relating to the contribution requirements provided for in Article 24 (paragraph 11) in the case of access to early retirement pension by persons with contribution years prior to 1 January 1996, set at 20 years, in this case of actual contributions, and the retirement age now raised to 64 years. 

Continue reading the full article on Norme e Tributi Plus Lavoro. 

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During the Covid-19 pandemic, there has been a significant increase in the use of remote working. We provide an overview of regulatory developments and the positive impact of this way of working, including national protocols and international agreements, such as the one between Italy and Switzerland, and the tax implications for cross-border workers.

Especially during the Covid-19 pandemic, remote working has revolutionized the world of work. In Italy, this modality was formally introduced by Law No. 81 of 2017, but its diffusion has raised new regulatory challenges, especially in the tax field.

This is an overview of the main Italian and European tax regulations that need to be known for an optimal management of remote working, with a focus on international agreements and the implications for cross-border workers.

Remote working in Italy

Remote working was introduced into the Italian legal system by Law No. 81 of 22 May 2017, which aimed to regulate a different way of carrying out work activities, while increasing the competitiveness of companies and supporting employees in the balancing of work and private life, thanks to technological advances in the work environment.

The increase in remote working during Covid

However, as is well known, remote working saw its greatest use and spread during the pandemic of Covid-19, a period when forced closures and distancing made this mode of working the only one possible for many businesses.

The persistence of remote working in companies, even after the end of the state of emergency, and the increasingly widespread use of remote working show its benefits, not only in terms of improving the quality of life of employees, but also in terms of environmental sustainability and collective well-being.

The legislative provisions

Therefore, in response to the increased use of remote working, the legislator has also intervened by introducing a series of provisions aimed at simplifying and facilitating the use of this working modality. For example, fragile workers (i.e. “lavoratori fragili”) and parents have long had the right to use remote working without having to sign an agreement with their employer, or, at an operational level, the simplification of the way in which individual agreements are notified to the Ministry of Labour, as well as the simultaneous inclusion of remote working in national and second-level collective labor agreements.

The “National Protocol on remote working” in the private sector

The “National Protocol on remote work” in the private sector is of particular importance in this respect: it was signed on 7 December 2021 by the Ministry of Labour and the social parties, aiming to set out the guidelines to be implemented through national, company and territorial collective labor agreements for the proper management of remote work, in accordance with the legal framework and collective agreements.

The key points of the Protocol are: (i) the completely voluntary nature of the Protocol in companies making use of it, without any disciplinary measures being taken against workers who do not adhere to it, (ii) the requirement of the signing of an individual agreement between the parties, employer and employee, for the performance of remote work, in accordance with Law No. 81 of 2017, (iii) the recognition of the right for remote workers to disconnect, (iv) protection in terms of health and safety, (v) equal treatment in terms of regulations and remuneration with respect to colleagues who perform the service exclusively within the company premises.  

With the growth of remote working at European and international level, it was felt that there was a need for joint intervention by the countries concerned to better regulate, especially regarding tax treatment, the simultaneous performance of work by remote workers in two or more countries.

Read the full article on Agendadigitale.eu

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From 1 September it will be theoretically possible to hire young people, women without regular paid employment and workers employed in the regions of southern Italy who benefit from the recruitment incentives provided by Law Decree No. 60 of 7 May 2024, the so-called “Cohesion Decree” (i.e. “Decreto Coesione”), converted by Law No. 95 of 4 July 2024.

Among the hiring incentives in force from 1 September 2024, the “Youth Bonus” (i.e. “Bonus Giovani”) provided by Article 22 of the aforementioned Decree is certainly the most awaited, due to the wide range of beneficiaries it addresses.

“Youth Bonus” (i.e. “Bonus Giovani”)

The relief in question, which is of a contributory nature and is called “Bonus Giovani” (Youth Bonus), was introduced with the aim of encouraging an increase in the stable employment of young people and is aimed at private employers who, in the period between 1 September 2024 and 31 December 2025, hire young people under the age of 35 for their first stable employment, i.e. without a previous open-ended employment relationship. Employers who convert fixed-term employment contracts into open-ended contracts are also included in the group of beneficiaries, subject to the age and employment requirements at the time of conversion (under 35 without previous open-ended contracts). The exemption still excludes the recruitment of managerial staff, domestic workers and apprentices.

The two-year relief is available for a maximum of 24 months from the day of recruitment and is equal to 100% of the employer’s contributions up to a maximum of EUR 500 per month. According to Article 22, paragraph 3, this amount is increased to EUR 650 per month if the hiring or conversion to an open-ended contract of under 35s, in their first permanent job, takes place in premises or production units located in one of the regions included in the so-called Single Economic Zone (ZES), the Special Economic Zone for the South of Italy, more precisely Abruzzo, Molise, Campania, Basilicata, Sicily, Apulia, Calabria and Sardinia.

The exemption in question is also granted on a residual basis for the hiring of workers who, at the date of commencement of employment, were employed on an indefinite-term basis by a different employer, which has partially benefited from the contribution relief.

Paragraph 5 of Article 22 of the “Cohesion Decree” (i.e. “Decreto Coesione”) reminds that, in addition to the possession of the DURC certifying the regularity of the employer’s contributions, the use of the exemption is subject to the observance of the general rules for the use of incentives under Legislative Decree No. 150/2015, including the provisions on health and safety at work and the collective agreements applied. In addition to the general principles mentioned above, the provision makes the benefit of the exemption from contributions conditional on the absence of collective or individual dismissals for justified objective reasons in the six months preceding the recruitment in the same production unit where the employment relationship with the young worker begins. At the same time, the same provision provides for the cancellation and recovery of the exemption in the event of dismissals for justified objective reasons of workers recruited with the two-year exemption or of workers with the same qualification, which occur in the six months following the recruitment in the same production unit.

In order to receive the incentive in question, which, as mentioned above, is still hypothetical for the time being, employers will have to wait for the approval of the European Commission and the subsequent instructions from the Inps on the modalities for the use of the relief and the recovery of arrears for the months prior to the Commission’s approval.

Under-30 structural exemption

It is the uncertainty associated to the waiting period for utilisation, as has already happened in the past for the under 36 exemption, that has induced possible beneficiary employers to opt for the under 30 structural exemption, introduced by Law 205/2017, with a similar scope to the Youth Bonus and for a long time present among the structural incentives for hiring workers.

It should be recalled that the above-mentioned three-year exemption provides the possibility for private employers, in the case of permanent recruitment or conversion of fixed-term contracts of young people under 30 in their first stable employment, to benefit from a contribution relief equal to 50% of the employer’s contributions, up to an annual limit of EUR 3,000.

Women’s Bonus (i.e.“Bonus Donne”) and Zes Bonus (i.e. “Bonus Zes unica”)

Among the incentives introduced by the “Cohesion Decree” starting from 1 September 2024, in addition to the Youth Bonus, there are two measures aimed at promoting equal opportunities in the labour market and the development of employment in the southern areas of Italy, called “Women’s Bonus” (i.e. “Bonus Donne”) and “Zes Bonus” (i.e. “Bonus ZES unica”).

The first, provided by Article 23 of Legislative Decree No. 60/2024, is addressed to private employers who, during the period from 1 September 2024 to 31 December 2025, hire on an open-ended basis: (i) women of any age who have not been in regular paid employment for at least six months and who reside in the regions of the Mezzogiorno; and (ii) women of any age who have not been in regular paid employment for at least 24 months and who reside anywhere. The exemption is valid for two years, for a maximum of 24 months, and allows for a reduction in contributions equal to 100% of the employer’s contributions, up to a maximum of EUR 650 per month for each worker.

On the other hand, the Zes Bonus, provided by Article 24 of Decree-Law 60/2024, is directed to private employers with up to 10 employees who, between 1 September 2024 and 31 December 2025, hire workers with a permanent contract, of at least 35 years old, who have been unemployed for at least 24 months and who are employed in one of the offices or production units located in the regions of the Special Economic Zone. The incentive is granted for a maximum period of 24 months, up to a maximum of EUR 650 per month.

As stated in the last paragraph of Article 24 of the “Cohesion Decree”, it will also be necessary to wait for the European Commission’s authorisation in order to benefit from the Zes Bonus contribution exemption.

With message No. 2844 of 13 August 2024, the Italian National Social Security Institute “i.e. INPS” provides some clarifications concerning the method of transmission of requests for exemption from contributions for private sector employers in possession of a gender equality certification.

Contribution relief and certification

Article 5 of Law No. 162 of 5 November 2021 provides an exemption from the payment of 1% of social security contributions, up to a maximum of EUR 50,000 per year for each beneficiary, in favour of private employers who are in possession of the gender equality certification referred in article 46-bis of Legislative Decree No. 198 of 11 April 2006 (hereinafter, “Code of Equal Opportunities for Men and Women”, i.e. “Codice delle pari opportunità tra uomo e donna”), introduced by article 4 of the same law.

Pursuant to the Decree of the Minister for Equal Opportunities and Family Affairs of 29 April 2022 implementing the aforementioned Article 46-bis, the gender equality certification is issued in accordance with the reference practice UNI/PdR 125:2022, by conformity assessment bodies accredited in this field pursuant to Regulation (EC) 765/2008 of the European Parliament and of the Council of 9 July 2008.

The INPS circular No. 137 of 27 December 2022 explained the exemption from contributions introduced by the aforementioned Article 5 and has provided employers with operational instructions, in order to enable them to obtain the exemption measure in question, on condition that they obtain the gender equality certificate until 31 December 2022.

The compilation of the remuneration data in the application form

With regard to the actual compilation of the employer’s application for exemption, INPS had clarified in its previous circulars and notices that the total average monthly wage refers to all the wages paid or to be paid by the employer concerned in order to benefit from the exemption in question, and not to the average wage of each employee. Therefore, it refers to the amount of wages paid or to be paid to all the workers employed by the company.

With this message, and in order to correctly process the applications for exemption of the amount due, INPS has informed the employers who have obtained the relevant certificate by 31 December 2023 and who have incorrectly completed the field relating to the estimated average monthly global remuneration, that they may correct the data entered by withdrawing the application containing the incorrect information.

Once this renunciation has been made, the employer may submit a new application, providing precise information and, in particular, the average monthly total remuneration, to be calculated in accordance with the specified indications.

The abovementioned renunciation and the subsequent submission of a new application must be made, in accordance with the instructions of the Ministry of Labour and Social Policy, before the mandatory deadline of 15 October 2024.

When the deadline expires, all applications in “transmitted” status and relating to certifications obtained by 31 December 2023 will be massively processed by the Institute according to the indications already provided in circular No. 137/2022.

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In its Response to Application no. 154 of 15 July 2024, the Italian Revenue Agency ruled again on employees’ obligations to give notice to supplementary pension funds (hereinafter “Pension Fund”), following the decision to make additional Pension Fund contributions, which, in this case, derived from the conversion of performance bonuses.

The Application, submitted by a Pension Fund, follows previous clarification from the Italian Revenue Agency contained in Resolution no. 55/E of 2020. In that earlier resolution which related to employees choosing to pay amounts deriving from a company welfare plan to the Pension Fund, the Italian Revenue Agency stated that “as the payment is made directly by the employer to the Supplementary Pension Fund, as well as set out in the Certificate of Income issued to the employee, the latter is not required to give notice to the supplementary pension fund in relation to the welfare credit intended for this purpose”.

The Applicant’s question

On the basis of the Resolution cited, the Applicant requested confirmation that the employee was under no obligation to give notice of amount of contributions paid to the Pension Fund, even if they derived from the conversion of the performance bonus, notice of which was in fact given by the employer at the time of payment of the contribution, with subsequent registration of the amounts also provided in each worker’s Certificate of Income.

In the question the Applicant recalled the advantages identified by the legislation in the event of conversion of the performance bonus into additional contributions to the Pension Fund, such as: i) the recognition of the same as deductible charges under Article 10 letter e – bis) of the TUIR, (ii) their exclusion from the annual deductibility limit of EUR 5,164.57 of pension fund payments on the basis of an increase of this limit by a maximum of EUR 3,000 in cases of performance bonus conversion, (iii) the exclusion of such contributions from the taxable base at the time of payment of the pension benefit by the funds.

The obligation to give notice to the Pension Fund

With reference to the last preferential benefit set out above, namely the exclusion from taxation of the pension benefit of contributions paid to supplementary pension schemes in place of performance bonuses, the Italian Revenue Agency clarified that this benefit is subject to giving notice to the Pension Fund of the contributions, to be carried out by 31 December of the year following the year of payment.

As indicated in Italian Revenue Agency Circular no. 5/E of 2018, the notice must contain (i) both the amount of contributions not deducted in the reference year and (ii) the amount of contributions replacing performance bonuses, which, even if they were subject to taxation, will not be included in the taxable base of supplementary pension benefits, under Article 1, paragraph 184-bis of Italian Law no. 208 of 2015, introduced by the 2017 Budget Law.

The Italian Revenue Agency’s opinion on the Applicant’s question

In its Response, the Italian Revenue Agency accepted the Applicant’s interpretation, essentially confirming the position taken stated in the above-mentioned Resolution no. 55/E of 2020.

Employees who choose to convert the performance bonus into additional payments to the supplementary pension scheme are not required to give notice of such contributions to their pension fund if this is done by the employer, for example by sending, via a specific electronic form, the data relating to the payments divided between (i) “ordinary” monthly contributions to the fund, (ii) and contributions replacing the performance bonus.

In conclusion, the Italian Revenue Agency’s recent Response, which follows and supplements the 2020 Resolution, is particularly useful as it provides clarification to employers and workers with respect to the notice obligations, the fulfilment of which, in fact, is “in the taxpayer’s interest, to avoid taxation of contributions paid in place of bonuses, at the time the benefit is paid by the Fund”.

With Resolution no. 40/E of 23 July 2024, the Italian Revenue Agency provided specific clarification on a question concerning the tax treatment of sums paid as an incentive to leave and other contractual amounts paid on termination of the employment relationship with workers benefiting from the so-called impatriate incentive regime, under Article 16 of Italian Legislative Decree no. 147 September 2015, no.

The request for clarification

The Applicant informed the Italian Revenue Agency that it had reached an agreement for the consensual termination of the employment relationship with some workers who were beneficiaries of the tax incentive regime for so-called impatriates, involving payment to the latter of sums as an incentive to leave and other settlement amounts.

In light of the above, the Applicant requested clarification on the possibility of applying the preferential regime referred to in Article 16 of Italian Legislative Decree no. 147 of 14 September 2015 to the aforementioned sums in derogation from the separate taxation regime referred to in Articles 17 and 19 of the Italian Income Tax Consolidation Act (Testo Unico delle Imposte sui Redditti, ‘TUIR’).

Reference legislation

As a preliminary point, it should be noted that in line with the provisions of Article 17, paragraph 1, letter a), of the TUIR “the tax is applied separately on the following income: a) […] other one-off compensation and amounts received relating to the termination of the aforementioned relationships […], as well as the sums and amounts received in any case net of legal costs incurred […]”. These also include “other compensation and amounts received on a one-off basis in relation to termination”, such as sums paid as an incentive to leave, up to an overall limit of EUR 1 million.

As is well known, for such income the taxation applied by the withholding agent is to be considered provisional, since it is only at a later date that the Italian Revenue Agency provides for its recalculation by determining the tax actually due, applying the average rate of the preceding five-year period or by including the income in the total income of the year of receipt, if this is more favourable to the taxpayer.

With reference, however, to the applicability of the preferential tax regime for impatriate workers, it has been clarified on several occasions that the preferential income “must be determined according to the provisions set out in the TUIR for the individual categories of income, namely Article 51, if deriving from employment relationships, Article 52, if deriving from relationships assimilated to employment and Article 54 if deriving from the exercise of arts and professions”.

The Italian Revenue Agency’s conclusions

Without prejudice to the point highlighted above, in this resolution the Italian Revenue Agency clarified at the outset that, for the purposes of applying the special regime in question, “the relief applies to income from employment in Italy which is included in the total income according to the ordinary provisions of the TUIR. However, income which is not included in the taxable base for Italian Personal Income Tax (Imposta sul Reddito delle Persone Fisiche, ‘IRPEF’) purposes is excluded, including income which is taxed separately under the aforementioned Article 17 of the TUIR”.

Consequently, the ruling confirmed that amounts that do not contribute to the formation of the taxable base for IRPEF purposes are excluded from the “impatriates” preferential tax regime. This includes those subject to separate taxation such as the compensation that is the subject of the request for clarification. 

It introduces, however, one new aspect, guaranteeing that workers benefiting from the so-called impatriate regime can apply, after receiving the notice of the results of the tax assessment, to the competent regional office of the Italian Revenue Agency, which, upon verification of the conditions, will reassess the tax due, including the income in question in the total income for the year in which it is received.

Alternatively, while waiting for the notice from the Italian Revenue Agency, workers can submit a request for reimbursement under Article 38 of the same Italian Presidential Decree no. 602 of 1973.

With notice no. 2704 of 23 July 2024, the Italian National Social Security Institute (Istituto Nazionale della Previdenza Sociale, ‘INPS’) announced the implementation of the electronic procedure for submission of applications for parental leave and hourly parental leave seeking the increased 80% allowance.

The communication in question is addressed to all employees who, based on the provisions contained in the 2023 Budget Law (Italian Law no. 197/2022) and the 2024 Budget Law (Italian Law 213/2023), are entitled to take an 80% allowance for parental leave, for a maximum of one or two months depending on the conditions set out in the legislation.

Under the new procedure, it will be necessary, during the compilation phase for the employee (i) to confirm that he/she is requesting the allowance at an increased rate, (ii) to identify the date relating to the end of maternity or paternity leave (mandatory or otherwise), to correctly identify the months eligible for the 80% allowance.

Finally, INPS announced that the application procedure has already been changed to allow the submission of the application for parental leave only for periods starting within two months from the date of submission of the application itself.

In its Response to Application for Ruling no. 142 of 2024, the Italian Revenue Agency was once again called upon to provide guidance on the processing, in terms of retention, of documentation relating to expense reports and supporting attachments for employees’ travel expenses, with specific reference to taxis normally paid for with a company card.  

The Application for Ruling dealt with the applicant Company’s intention to dematerialise the aforementioned documentation, through an appropriate computer system, to streamline the preparation, management and monitoring of expense reports.  

The dematerialisation process  

To explain the dematerialisation process for the expense reports to the Italian Revenue Agency, the Company explained the different dematerialisation phases, starting from the scanning of the paper expense document by workers, through a special application installed on the company smartphone, to the transfer in a “form”, through the support of Optical Character Recognition (OCR technology), of the data contained in the document such as: the name of the operator, the date and time, the city, the amounts and reason for the expense (e.g.: food, taxi etc.). The “company form” would contain all the information collected from the paper version of the expense reports and the scanned image of the same. The applicant Company guaranteed the integrity, inalterability and legibility of the document thus digitised and that it would be automatically archived in accordance with the law. The document would therefore no longer be editable by the employee. 

The Company added that consistency between the scanned document and the digitised information would be further ensured by the use of Artificial Intelligence tools that would highlight any anomalies and by a final check by the approving manager. 

The expense report and its supporting documents, thus processed, would be archived. 

Purpose of the Application  

Following the description of the process, the Applicant asked the Agency if, once compliance with Article 4, Italian Ministerial Decree of 17 June 2014 on the dematerialisation and archiving of documents had been confirmed: (i) paper documents issued to employees, digitised and attached to expense reports also digitised, considered “original non-unique documents” can be destroyed; (ii) original non-unique documents can also include taxi receipts, not documented by invoice, but by mere accounting entries made by staff in transit at the time of payment by company card, which can also be dematerialised by the process set out above. 

The Italian Revenue Agency’s Response  

The Italian Revenue Agency’s Response to the Application emphasised what has been clarified several times in the past regarding dematerialisation procedures for seconded employees’ travel expense reports, namely that in relation to electronic documents, “any issue must have regard for Italian Legislative Decree no. 82 (so-called ‘Digital Administration Code’ or ‘CAD’ (Codice dell’ Amministrazione Digitale) and its implementing decrees (the Italian Prime Ministerial Decrees of 22 February 2013, 3 December 2013 and 13 November 2014, and the Italian Ministerial Decree of 17 June 2014)”. 

In this regard, the Italian Revenue Agency stated that any tax-relevant electronic document (defined in Article 1, letter p of Italian Legislative Decree no. 82/2005 as “an electronic document that contains the electronic representation of documents, facts or legally relevant data”), such as the expense reports under consideration, must possess, among others, the characteristics of inalterability, integrity and authenticity, as set out in Article 2 of Italian Ministerial Decree of 17 June 2014 and in Article 3 of Italian Prime Ministerial Decrees of 13 November 2014 and 3 December 2013, without prejudice – added the Italian Revenue Agency – to the additional requirements, identified by Italian Presidential Decree no. 917 of 1986 (Italian Income Tax Consolidation Act (Testo unico delle imposte sui redditi, ‘TUIR’), for the purposes of including those expenses in deductible costs. 

Only if the electronic documents have the characteristics of inalterability, integrity and authenticity mentioned, can they completely replace the paper copies, and can be duplicated under Article 23-bis of Italian Legislative Decree no. 82. 

With respect to the supporting documents attached to the expense reports, in relation to which the Applicant was applying to include them as original non-unique documents, the Italian Revenue Agency referred to its previous Resolution no. 96 of 21 July 2017, stating that “generally the receipts attached to expense reports correspond to the accounts of the suppliers or providers, who are required to fulfil their tax obligations, which makes them identifiable as non-unique original hard copy documents, within the meaning of the definition in Article 1, letter v of the CAD”. 

The ability to trace the content of the supporting documents through other records or documents the retention of which is mandatory, even if in the possession of third parties, makes the electronic retention of the supporting documents possible without the need for a public official to attest the conformity of the electronic copies to the original (Article 4, Italian Ministerial Decree, 17 June 2014). This in turn makes it possible to completely dematerialise and destroy the document. 

Finally, with regard to the classification of documents issued to travelling workers by taxi drivers as ‘non-unique analogue original documents’ and deductible expenses, the Italian Revenue Agency does not believe that mere accounting receipts delivered by the service provider following electronic payment with a company card can be considered as such. Rather, to be considered non-unique analogue documents and for the expense incurred to be considered as a deductible cost, it will be necessary to issue an invoice or other tax document accompanying the accounting receipt from which the essential data of the expense made (date, name of the service provider, route, consideration). In this regard the Italian Revenue Agency recalled that taxi providers must produce an invoice at the request of the client, under Articles 1 and 2 letter l) of Italian Presidential Decree no. 696/1996, and that the issuance of such a tax document in duplicate, one of which is kept by the service provider, either on paper or electronically, makes the analogue document non-unique. 

Finally, the Italian Revenue Agency noted, with reference to the supporting documents accompanying the expense reports, that if they are original unique analogue documents, “as it is not possible to trace the content through other documents the retention of which is mandatory, including from third parties” then the intervention of a public official will be required for correct dematerialisation.    

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• Management of national and trans-national postings

On 30 April 2024, Italian Law no. 56/2024, which implemented Italian Decree-Law no. 19/2024, was published in the Italian Official Gazette. Among other things, the new law introduced important changes to the sanctions regime for unlawful staff supply work, contracting and secondment. 

Specifically, Article 29, paragraph 4 of the above-mentioned law has amended Article 18 of Italian Legislative Decree no. 276/2003, effectively reinstating the criminal offences of unlawful staff supply work, contracting and secondment which had previously been decriminalised (Article 1, Italian Legislative Decree no. 8/2016). The new law has introduced the alternative or joint penalty of arrest or fine and increased the fines connected to these offences. 

Increased penalties 

In note no. 1091 of 18 June 2024, the Italian National Labour Inspectorate (Ispettorato Nazionale del Lavoro, ‘INL’) provided explicit operational guidelines on the sanctions regime, as set out in Italian Decree-Law no. 19/2024. In particular it highlighted that from the date of entry into force of Italian Decree-Law no. 19/2024 – that is, from 2 March 2024 – unlawful staff supply work, contracting and secondment are punished alternately with the penalty of arrest (one month) or “a fine of EUR 60 euros per day for each worker employed and for each day of work”. This is increased by 20% – as already previously introduced by Article 1, paragraph 445, letter d) of Italian Law no. 145/2018 – or 30% (in the case of the sanction for ‘off the books’ work), effectively reaching EUR 72 for each worker and for each day of unlawful work (and EUR 90 in the case of ‘off the books’ work). 

A new rule that inspection staff must comply with is contained in Article 18, paragraph 5-quinquies according to which “the amount of the proportional fines, regardless of the determination of minimum or maximum limits, cannot, in any case, be less than EUR 5,000 or more than EUR 50,000”. 

These minimum and maximum limits apply to the offences referred to in Article 18, paragraphs 1 and 2, paragraph 5-ter, and paragraph 5-bis), i.e. unauthorised and fraudulent staff supply work and unlawful contracting and secondment, for which proportional fines are provided for each worker employed and for each day of work.  

Therefore, in the light of the above, and in line with what has already been set out in Circular no. 6/2016 of the Italian Ministry of Labour and Social Policies, for offences punished with a fixed proportional fine, even if the amount to be imposed in practice is less than EUR 5,000, this threshold will in any case apply. Once this requisite is met, it will then be reduced to a quarter, under Article 21, paragraph 2, of Italian Legislative Decree no. 758/1994 (therefore becoming EUR 1,250.00). 

New paragraph 5-quater of the new Article 18 of Italian Legislative Decree no. 276/2003, together with the current provisions of Article 1, paragraph 445 letter e) of Italian Law no. 145/2018, increases the penalties for recidivism while creating confusion about the applicability of one or the other provision. 

On this point, therefore, the INL intervened with its own interpretative guidance specifying that the increase referred to in paragraph 1, letter e) of Italian Law no. 145/2018 applies where, in the previous three years, the employer has been subject to any administrative or criminal sanction under the same law (so-called “simple” recidivism) while the increase referred to in paragraph 5-quater of the new Article 18 applies only in the case of repeat offences previously sanctioned under the new Article 18 (so-called “specific” recidivism). 

In the first case the fine will be EUR 60 plus 40% for recidivism (EUR 84 for each worker and for each day of unlawful work); while in the second case the fine will be EUR 72 plus 40% (EUR 100.80 for each worker and for each day of unlawful work). 

Finally, it should be noted that Italian Legislative Decree no. 19/2024 is silent on the alternative nature of the penalty of arrest or fine in the presence of the aggravating factor of child exploitation, for which the penalty of arrest of up to 18 months together with the fine increased by up to six times remain. 

On this aspect, the INL, in light of the new wording of most of the sanctions of Article 18 of Italian Legislative Decree no. 276/2003, clarifies that also in the presence of the aggravating factor of child exploitation, “the prescription under Article 20, Legislative Decree no. 758/1994 and, where the prerequisites are met, a fine equal to a quarter of six times the basic penalty (increased by 20%) or that determined following recidivism [will also apply]”. In addition, the minimum and maximum limits introduced by Article 5-quinquies of the new Article 18 of Italian Legislative Decree no. 276/2003 will apply. 

The maxi deduction provided for by Italian Legislative Decree no. 216 of 30 December 2023, fully implemented by Italian Ministerial Decree of 25 June 2024, allows, for 2024 only, companies with business income and those engaged in the arts and professions to benefit from a labour cost deduction increased by 20% for the purposes of determining their income with reference to new permanent hires in 2024. This is to provide an incentive to the recipients to establish this type of employment relationship.

The benefit will only apply if there is an increase in the number of permanent employees as of 31 December 2024 with respect to the average number of permanent employees employed in the previous year, as well as an overall increase in the number of employees, including those on fixed-term contracts, at the end of 2024, compared to the average number employed in the previous year.

Newly established companies operating for less than 365 days and companies and institutions in crisis are excluded from this benefit.

For the purposes of determining the applicable increase, it will be necessary to determine the lower of the 2024 cost actually attributable to the new permanent employees and the overall increase in the cost of personnel with respect to the current year ended 31 December 2023.

The benefit, determined at the end of the current year, may be applied, where possible, on the  –  Italian Tax on Corporate Income (Imposta sul Reddito della Società, ‘IRES’)– Italian Income Tax on Natural Persons (Imposta sul Reddito delle Persone Fisiche, ‘IRPEF’) declarations prepared in 2025.

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• New regulations on the use of contributions’ relief

The “Cohesion Decree” has introduced a new contributory exemption for the recruitment of permanent staff. This exemption will be available for up to 24 months for the recruitment of young people who, as of the start date, have not yet reached 35 years of age and have never been employed on a permanent basis..

The “Cohesion Decree” has introduced a new contributory exemption for the recruitment of permanent staff. This exemption will be available for up to 24 months for the recruitment of young people who, as of the start date, have not yet reached 35 years of age and have never been employed on a permanent basis.

The measure of the exemption for companies is equal to 100% of the INPS contributions payable by the employer, up to a maximum monthly limit of €500 for each “under 35” employed. Moreover, the monthly limit increases to €650 for new recruits in locations in the southern part of the national territory.

Regarding the timing of the exemption’s implementation, the “Cohesion Decree” states that it can be applied to new recruits employed beteen the 1^st of September 2024, and the 31^st of December 2025. The entry into force, however, is still subject to approval by the European Commission.

To benefit from the exemption, employers will therefore have to wait, while also meeting the general requirements for enjoying contributory benefits, such as having a regular DURC and complying with legal and contractual labor regulations. In fact, in addition to authorization from the European Union, the exemption will also necessitate the publication of the usual operational instructions by INPS.

Regarded as probably the most innovative job of recent years, the activity of influencers, which is on the rise in the large financial market of the internet, is not only the most coveted profession among the very young, but also a profitable resource for all those companies that collaborate with these popular and influential market figures, for their own commercial purposes, and the promotion and sale of products.

However, the ever-increasing visibility and use of influencers, the face in some cases of real corporate propaganda, is accompanied by as yet ill-defined employment laws governing the collaboration relationship between influencers and commissioning companies.

In this context, a recent  Court of Rome ruling is of particular interest. In judgment no. 2615 of 4 March 2024, dealing with the classification of the collaboration relationship between influencer and commissioning Company, the Court held that the relationship fell under the contractual category of an agency relationship under Article 1742 and following of the Italian Civil Code.

Following an inspection, the Rome Inter-regional Labour Inspectorate had considered certain influencers employed by the claimant Company to be classifiable as Commercial Agents and required the company to pay contributions to the National Assistance Organisation for Commercial Agents and Representatives (Ente nazionale di assistenza per gli agenti e i rappresentanti di commercio, ‘ENASARCO’) Social Security Fund and to the Severance Indemnity Fund.

The influencers’ activities

The Company was a wholesale food supplement business. Its sales were mainly through its own websites and it used a number of people in online promotion and sale of its products. The company collaborated with professional athletes and personal trainers with whom the Company had signed collaboration agreements relating to sponsorship, testimonials and “influencer services”.

In their capacity as sponsors and providing testimonials, professional athletes undertook to use their image, to participate in official competitions, to wear Company-sponsored clothing, and to publish fitness-related articles and videos on the company website. In return for these undertakings, there was a fee, agreed in advance, which was totally unrelated to the company achieving its sales results.

The “influencer activity” was different and consisted of the collaborators undertaking to promote the Company’s products through their social channels: Facebook, Instagram, Twitter, YouTube, with the aim of influencing their followers and promoting the commissioning company’s products on a large scale.

During the promotional activities on their web pages, the influencers indicated a customised discount code linked to the Company’s platform. The use of the discount code allowed the Company to trace the orders received back to the influencer through which the buyer was purchasing the product. In this event the parties had agreed on a percentage of profit on the orders attributable to the influencer.

From the evidence it emerged that through the professional’s ability to grant discounts to user followers she “was actually carrying out sales promotion activity where the remuneration was determined by the orders directly procured and successfully completed by the collaborator”.

From the inspection of the invoices issued, it appeared that the above-mentioned appointments were long-term and took the form of multi-year continuous collaborations.

The Inspectorate’s view and its confirmation by the Court

With respect to the Inspectorate’s finding, the claimant Company argued that the conditions necessary to classify the influencers as Commercial Agents were missing on the basis of the following factors: (i) the existence of a permanent professional services contract under which the services were provided, (ii) the absence of a permanent on-going appointment for the promotion and conclusion on behalf of the Company of sales contracts in a specific area, (iii) the absence of a specified scope of work, which is typical of the contract referred to in Article 1742 of the Italian Civil Code.

Refuting the points raised by the Company, the Inspectorate emphasised the typical aspects of the agency agreement, which were present in the way in which the Company employed the influencers, namely: (i) the activity carried out on a permanent basis, demonstrated by the type of agreement which was for an indefinite period and evidenced by the long-standing issuance of invoices, (ii) the purpose of the agreements entered into with the Company, not limited to mere propaganda but to the promotion and sale of products complete with a discount code made available by the influencer, (iii) the percentage of profit associated with the purchase of the product by the user and (iv) the presence of a specified area, which in view of the new consumer purchasing methods based on an online ‘click’, can be traced back to the community of followers.

The Court of Rome agreed with the Inspectorate that the influencer in this case fell within the classification of Commercial Agent and ordered the Company to pay the ENASARCO contributions, ruling on an issue which is not yet regulated.

In circular no. 69 of 29 May 2024, the Italian National Social Security Institute (Istituto nazionale della previdenza sociale, ‘INPS’) provided instructions on how to make up shortfalls for periods not covered by contributions for the two-year period 2024-2025. This is line with Article 1, paragraphs 126 to 130 of Italian Law no. 213 of 30 December 2023, (hereafter, ‘2024 Budget Law’) that reintroduced this provision which had already been introduced, on an experimental basis, for the three-year period 2019-2021 by Italian Law no. 26 of 28 March 2019.

Beneficiaries

The following categories of people are eligible to make up shortfalls for periods not covered by contributions (also called ‘contributions gaps’) (i) employees with Compulsory General Insurance for disability, old age and surviving partners (Assicurazione Generale Obbligatoria per l’invalidità, vecchiaia e superstiti, ‘AGO’), or (ii) those who are enrolled special contributions’ management fund for self-employed workers, or (iii) those who are enrolled in the Separately Managed Contributions fund for other workers (Gestione Separata), or (iv) those who have substitute and exclusive forms of AGO provided that they have not made sufficient contributions as of 31 December 1995 and are not already in receipt of a pension.

In summary, only those who will obtain a pension calculated entirely on contributions and who have made no additional pension contributions (mandatory, notional, from redemption) before 1 January 1996 to any compulsory pension management scheme (including professional pension funds) will then have the right to make up pension shortfalls.

INPS has indeed clarified that if a person who makes a request to fill a pensions shortfall, for any reason, reaches a position where they have made sufficient contributions prior to 1 January 1996, the sums paid towards the shortfall will be returned and the payment will be automatically cancelled. Furthermore, this exclusion from the right to make up contribution gaps also applies to holders of direct pensions (in any compulsory pension management scheme).

Contributions gaps, cost of making up shortfalls and potential employer intervention

It should be highlighted that the INPS guarantees that contributions gaps can be made up only for the periods entirely uncovered by contributions falling between 1 January 1996 – 31 December 2023. This right is also extended to those who have not used it to make up shortfalls introduced previously by Italian Law no. 26/2019 or to those who have used it, if the person eligibility requirements are met, for a maximum of five years.

However, people who have periods of work for which no contributions have been paid remain explicitly excluded from the possibility of benefiting from the ability to fill contributions gaps. In this case, the worker can only use the so-called creation of a life annuity under the provisions of Article 13, Italian Law no. 1338/1962.

Furthermore, the periods that can be made up must fall between the year of the first and the last contribution credited to the INPS insurance schemes while it is not possible to make up contributions gap periods at professional funds.

With regard to the cost, the INPS announced that the cost of making up contributions gaps is calculated under Article 2, paragraph 5 of Italian Legislative Decree no. 184/1997, i.e. using the percentage method, applying the financing contribution rate in force on the date of submission of the application to fill the shortfall in contributions to the applicable Pension Management Scheme. The calculation is effectively based on the salary subject to contributions in the last 52 weeks prior to the transaction and correlates to the period for which contributions are being made. The payment can be made in a lump sum or in a maximum of 120 monthly instalments.

It is also essential to underline that the amount of contributions that the worker acquires through filling a contributions gap contributes to both the maturation of the right to a pension and its financial amount. In addition, the cost incurred in filling a contributions gap is tax deductible from overall income.

It is of particular note that, in the private sector, the employer rather the employee can pay the contributions’ gap.

In fact, if the beneficiary’s consent is obtained in advance, the employer can pay the employee’s contribution gap by allocating any production bonuses due to employee and take advantage of the fact that it will be fully deductible from the company’s income.

Final thoughts

The clarification provided by the INPS shows, on the one hand, the financial benefits of the scheme as it permits payment by instalment and the costs of adherence are deductible, and on the other hand, the possibility of early retirement, as being able to make up the gap is useful both for the accrual of the right to a pension and for its monthly amount.

Other related insights:
Exercise of optional contribution regime: buy-back periods determine if pre-conditions are fulfilled – HR Capital

Published in the EU Official Journal, C series, on 23 April 2024, the opinion of the European Economic and Social Committee (EESC), C/2024/2479 analyses the current European and global employment framework, which has been increasingly shaped by globalisation, digitisation and the pandemic, and the critical issues related to tax aspects, which are progressing slowly in comparison to the changing world of work.

The new employment framework 

The EESC’s opinion on “Taxation of cross-border teleworkers globally and the impact on the EU” opens with an overview of today’s working world: early changes can be traced back to globalisation and the development of digital tools and new technologies, that have been affecting companies for decades. In recent years, the companies themselves and their workers have also unknowingly contributed to the acceleration of the digitisation process, having to resort during the Covid-19 pandemic to the use of “new technologies” that would ensure that they could carry out their daily work activities – by necessity carried out remotely – without it affecting their work.   

The unintended result was the realisation that the exact same work could be done without having to be physically present, as well as the recognition of the effectiveness of the new mode of remote work, not only by the companies that now benefit in terms of reduced costs related to the space formerly used by employees, but especially by the workers, in that remote work has improved the quality of life by increasing the work-life balance. And while worker welfare has always translated into a productivity benefit for companies, in this case remote working is also believed to promote increased corporate sustainability through a reduction in the environmental impact generated by commuting, furthering EU goals in this regard. 

As noted above, while remote working has many positive implications, on the other hand, when workers employed in a foreign state other than their country of origin work remotely, several critical issues emerge, including (i) the social security and tax aspects relating to the worker’s income and (ii) the impact that remote work has on the States involved. 

After analysing the current regulatory framework, the EESC opinion affirms the need for updated tax rules that reflect the new way in which work is carried out, and which also reflect the fact that a worker’s choice to live in a given country has implications in terms of public spending and tax revenues of the countries involved. 

Current tax legislation 

Where a person resides in one state and works in another, the general rule on the taxation of employment income set out in the OECD model gives the right to tax the employment income to the state where the work is carried out. This is subject to bilateral agreements derived from this model, signed by the countries concerned, aimed at avoiding double taxation on transnational income, for example in the case of European cross-border workers. 

However, the EESC’s view is that the increasing presence of workers working remotely in their State of residence, while their employer is located in a different State, means that both bilateral and multilateral agreements need to be reviewed. 

In this regard, the opinion refers to the recent agreement between Switzerland and France, which has been updated to deal with taxation of the income of cross-border telecommuters. The existing agreement between the two states stipulates that frontier workers residing in France who work in the canton of Geneva are subject to taxation in the Swiss canton by withholding tax on wages received. Under the new agreement, if the hours of cross-border telecommuting are less than 40% of total working hours, the tax regulations for cross-border telecommuters will remain unchanged. From the perspective of the countries involved, the agreement provides for a revenue-sharing mechanism under which the Swiss canton will pay compensation to France of 3.5% of the applicable tax revenue. 

While noting the need for countries to agree specific solutions to regulate cross-border telework, the Committee hopes, that by expressing its opinion, general principles can be established. These can then be transposed by bilateral agreements, to avoid ad hoc solutions among individual states resulting in a set of internationally applicable standards and rules that would lead to inconsistency in regulations. 

The Economic and Social Committee’s proposal 

The EESC’s proposal sees a possible solution in the taxation of telecommuters’ income in the country where the employer is based. This would simplify and harmonise the tax rules for cross-border telecommuters and would facilitate international mobility and its benefits.  

In its opinion the Committee also analyses the impact that this solution could have on the country where the worker resides, in terms of increased public spending and failure to increase tax revenues, its main source of financing. Indeed, the fact that a worker remains in his or her own State will result in greater use of public services, subsidised by the public expenditure of his or her own State, which, in contrast, will not be financed by the tax on the worker, as this will be applied by the employer’s State. To obviate this burden on the first state, the EESC believes that the countries concerned could decide to share the tax revenue, for example, on the basis of the actual presence of the workers in the countries concerned, through the data provided by the employer to its tax authority (acting as a “one-stop shop”), a mechanism that would also ease any double taxation issues. 

In a globalised and digitised world, there will be more and more cross-border telecommuters, free to choose the country in which they reside and “connect” regardless of where their employer is based; faced with this prospect, it will be easier to apply the tax law of the country in which the work is performed, rather than the country in which the worker lives. 

The EESC concludes its opinion by speculating that the implementation of such a proposal could take place through “introducing alternative model provision(s) in the commentary of the OECD Model Convention to be used by countries in bilateral negotiations. This would facilitate a more uniform set of rules”. 

If you want to learn more about the topic:

• New social security agreements between Italy-Albania and Italy-Japan: updates  – HR Capital
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With circular no. 57 of 18 April 2024, the Italian National Social Security Institute (Istituto nazionale della previdenza sociale, ‘INPS’) issued the operating instructions for the new rules on parental leave. The new rules were introduced by Article 1, paragraph 179, of Italian Law no. 213 of 30 December 2024 (hereafter, 2024 Budget Law), which amended Article 34, paragraph 1 of Italian Legislative Decree no. 151 of 26 March 2001, (the “Consolidated Maternity and Paternity Support Law”). 

The new rules and beneficiaries 

With the aim of fostering work-life balance as well as promoting greater sharing of parental responsibilities between working mothers and fathers, the new rules have increased, from 30% to 60% of salary, the parental leave allowance for an additional month to be taken before the child’s sixth birthday (or, in the case of adoption or fostering, within six years from the child’s entry into the family and, in any case, no later than the child turning 18). For 2024 only, the parental leave allowance for the additional month is 80% of salary (instead of 60%).  

The 2024 Budget Law added a second month of paid parental leave. This is more favourable than the provisions of the 2023 Budget Law, which had raised the leave allowance to 80% for a single month’s pay subject to the following conditions: 

1. only employees are entitled to the increase; 

2. compulsory maternity leave or compulsory paternity leave or alternative paternity leave must have been concluded after 31 December 2023 (taken as the starting date); 

3. it could be shared between both parents or by only one as long as the period of increased allowance falls within the first three months of non-transferable leave. On this point it should be clarified that “alternating” use of the leave between parents does not preclude the possibility of both parents taking parental leave on the same days and for the same child.  

From this it follows that, while respecting the maximum limits of parental leave provided for both parents in Article 32 of Italian Legislative Decree no. 151/2001 (10 months that can be increased to 11 months if the father abstains from taking the parental leave for a full or fractional period of at least three months), the parental leave allowance that can now be claimed by parents or a single parent is as follows:  

• one month at 80% of pay before the child’s sixth birthday (or, in the case of adoption or fostering of the child, within six years of entering the family); 
• one month at 60% of pay (80% for 2024 only), before the child’s sixth birthday (or, in the case of adoption or fostering of the child, within six years of entering the family);  
• seven months at 30%, regardless of income if taken before the child’s first birthday;  
• two months unpaid (unless the special income conditions set out in Article 34, paragraph 3 of the Consolidated Law are met). 

Changes introduced by the 2024 Budget Law 

As stated above, the increase in the allowance provided by the 2024 Budget Law only applies to parents who end (even by a single day) maternity or, alternatively, paternity leave after 31 December 2023. Thus, the provision excludes all those who have completed maternity or paternity leave on 31 December 2023. 

However, an important new change introduced by the 2024 Budget Law and also reiterated by the INPS should be highlighted. This is that the increase in the allowance for the first two months of parental leave only applies to workers who end the period of maternity or, alternatively, paternity leave after 31 December 2023, is not a condition for the right to the increase of the parental leave allowance for an additional month, but rather an initial effective date of the new provision.  

In light of the above, in the case of a child born on or after 1 January 2024, the right to an additional month’s increase in the parental leave allowance from 30% to 80% of salary for 2024 (to 60% from 1 January 2025) is granted irrespective of whether the parental leave is taken, provided there is an employment relationship at the time of taking the leave.  

If you want to learn more about the topic:
Access to NASpI for working fathers who have taken paternity leave – HR Capital

EU Blue Card holders will be able to start work immediately even in the absence of a “work permit employment contract” – There are also changes to the “digital nomads” guidelines.

Workers who are citizens of countries outside the European Union and who come to Italy to work are regulated by specific provisions, under which the Ministry of the Interior sets and limits the annual entry quotas. The provisions also ensure that highly qualified personnel can benefit from ad hoc exemptions from these quotas, allowing them to work in Italy regardless of the annual limits.

For highly qualified “non-EU” personnel, the procedures for the entry into Italy require the Italian employer and the worker to complete a set of procedural requirements certifying that the worker is highly qualified and specialised. In most cases, this will involve several relevant authorities and processing times of months.

In light of the growing international mobility of workers over recent years – also as a result of the spread of remote working that occurred during the Covid-19 pandemic – the above-mentioned entry requirements have proved to be particularly cumbersome with respect to the specific needs of employers, given the increasing number of highly specialised workers – whether employees or self-employed – who decide to work abroad and remotely for a certain period of time,with respect to their country of origin or employment.

In this regard, there have been some recent changes, deriving, first of all, from the transposition in Italy of Directive (EU) 2021/1883 and the subsequent measures introduced by the ministries concerned, which have addressed the specific features of the new procedures with a circular and a Ministerial Decree.

Looking at the recent changes, it should be remembered that in the Italian legal system, Italian Legislative Decree no. 286/1998 (“Consolidated Immigration Act”) regulates the entry into Italy of foreign persons, including with reference to employment relationships. As mentioned above, and with particular relevance to the latter, it is generally provided that, with respect to the so-called “annual quotas” of entry from time to time established by the Ministry of the Interior, it is possible to guarantee the entry of so-called “extra-quota” workers, i.e. in derogation of the ministerial limits established annually, for foreigners who meet certain specialisation requirements. These exceptions are regulated by Article 27 of the Consolidated Immigration Act.

Following the entry into force of Italian Legislative Decree no. 152/2023, which incorporated into Italian law the aforementioned Directive (EU) 2021/1883 aimed at expanding and simplifying the entry and stay of highly qualified citizens from countries outside the European Union and the Schengen area, the Ministry of Labour and Social Policies, together with the Ministry of the Interior, issued circular no. 2829 of 28 March 2024, containing some clarification on the new Consolidated Immigration Act.

Among the various changes, the introduction of additional subjective requirements aimed at identifying the “highly qualified” foreign workers, specifically referred to in the circular is of considerable importance. Currently, this definition includes not only the holders of a university degree, but also the holders of the professional qualifications provided for in the new Article 27-quater of the Consolidated Immigration Act, such as: (i) persons who have held a post-secondary level professional qualification for at least three years, (ii) persons who meet the requirements for the exercise of regulated professions, (iii) holders of higher professional qualifications attested by at least five years’ experience at a level comparable to tertiary level higher education qualifications, and (iv) managers and specialists in the field of information and communication technologies with higher professional qualifications attested by at least three years’ professional experience.

The Ministerial circular clarifies that satisfaction of the above requirements must be demonstrated at the time of submission of the application for authorisation for the EU Blue Card, by forwarding the diploma certificates issued by universities or non-university institutes at the end of the training course. In the case of professional qualifications, satisfaction of the requirements must be met through the presentation of contracts and/or payslips and the optional addition of a letter of experience drawn up by the previous employer, certifying that the worker has been employed for the time period provided for by the legislation, in the specific sector in which the worker will be employed in Italy.

In order to obtain the EU Blue Card, and in addition to the documentation referred to above, it will be necessary to submit a draft employment contract or binding offer for the highly qualified work activity for a period of at least six months and with an annual salary, shown in the draft or offer, that is not less than the remuneration provided for by the national collective bargaining agreement (contratto collettivo nazionale di lavoro, ‘CCNL’).

In addition, in point 4, the circular reiterates the worker’s rights and limitations on him/her, after he/she has obtained the EU Blue Card, namely:

• for the first 12 months of residence, he/she must carry out the highly qualified activity for which he/she has obtained the authorisation exclusively for the employer who made the request. It is possible to change employer within the 12 months’ period subject to authorisation from the Territorial Labour Inspectorate;
• during a period of unemployment, the worker has the right to seek and take up employment in accordance with Article 27-quater;
• he/she may, in parallel with the highly qualified activity for which he/she is employed, engage in self-employment, in accordance with the provisions of Article 27-quater, paragraph 13-ter.

When the highly qualified worker has obtained the authorisation and the entry visa from the Italian diplomatic corps in the country of origin, he/she has the right to work immediately upon arrival in Italy, even before being summoned to the Immigration Desk to sign the work permit employment contract (contratto di soggiorno). The employer must still send the mandatory prior notice of the establishment of the employment relationship (so-called “Unilav”).

In relation to the simplified procedure, the circular refers to the provisions of Article 27-quater, paragraph 8 of the Consolidated Immigration Act and provides that if the employer has signed with the Ministry of the Interior, after consulting the Ministry of Labour and Social Policies, a specific memorandum of understanding in which it guarantees the existence of the requirements for the application of the procedure, in that case the employer does not need to file a request for authorisation, but can instead file a draft employment contract or binding offer for the non-EU worker. In this case, the highly qualified worker will be issued a residence permit within 30 days of the notification, during which he/she will be able to stay in Italy and work.

A further change favouring international mobility within the EU concerns workers already holding a valid EU Blue Card issued by other Member States. These workers are allowed to enter and stay in Italy without a visa for work purposes for a maximum of 90 days within a total of six months, provided that they declare their presence in Italy to the Police Headquarters (Questura) within eight working days of entry.

If the holder of an EU Blue Card issued by a Member State has been legally resident in the same State for at least 12 months, he/she may enter Italy, without the need for a visa, to perform highly qualified work for more than 90 days, subject, in this case, to the filing of the request for authorisation. The period of legal residence in the other State required for entry into Italy is reduced to six months if the worker comes from a second Member State where he or she had already arrived in possession of an EU Blue Card issued by a first Member State.

Finally, the joint circular explains that holders of the EU Blue Card may apply for a family reunification authorisation, with the issuance, at the same time as the EU Blue Card, of a residence permit for family reasons, which can be converted into a residence permit for work (employed or self-employed) or for study purposes, if the requirements are met.

As set out at the outset, further changes have been made through Italian Decree no. 79 of 4 April 2024, issued jointly by the Ministry of the Interior, the Ministry of Tourism and the Ministry of Labour and Social Policies. With this decree, the ministries regulate the methods and requirements for entry and stay in Italy also of highly qualified workers identifiable as “digital nomads” and remote workers.

According to the aforementioned decree, “digital nomads” and remote workers are defined as workers –  self-employed in the first case, employees or collaborators in the second – who carry out highly qualified work through the use of technological tools that allow them to work remotely, independently or on behalf of companies, regardless of whether they are resident in Italy or not.

Continue reading the full version published on Norme e Tributi Plus Diritto del Il Sole 24 Ore.

For further information on this topic, see also:

• New social security agreements between Italy-Albania and Italy-Japan: updates 
• Cross-border workers: new agreement between Italy and Switzerland on taxes and remote working effective from 1 January 2024 (Norme e Tributi Plus Diritto – Il Sole 24 Ore, 14 February 2024 – Andrea di Nino, Valentino Biasi)
• National Labour Inspectorate: transnational posting and document retention burden – HR Capital

The Italian Revenue Agency, with its answer to request for ruling no. 89/E of 11 April 2024, returns to the issue of taxation applicable to gifts to employees.

The facts of the case

In the case in question, the company provided its employees with a free drink each day, a bag of coffee per month and was considering the possibility of giving employees promotional items, such as mugs or pins with the company logo, for parties or promotional launches. In the request for ruling, the applicant company clarified that the purpose of the gifts was in line with its corporate marketing strategy: firstly, to promote employees’ product knowledge to ensure better customer service and, secondly, to promote the company’s image on the market.

The Italian Revenue Agency’s decision

The Italian Revenue Agency, while recognising that the gifts in question are connected to the corporate strategy, considered that these gifts – although offered to all employees in the workforce regardless of their sales and work performed – satisfy the individual worker’s specific needs and, therefore, constitute his/her enrichment. The gifts, according to the Agency, cannot therefore be considered as payments made in the employer’s exclusive interest.

In light of this interpretation, if the value of the assets granted in the case in question exceeds the exemption limit for “fringe benefits” – generally equal to EUR 1,000 for 2024, raised to EUR 2,000 for workers with children who are dependent for tax purposes – the same will constitute employment income.

For more information about Fringe Benefits, see the article referred to below:

• 2024 Budget Law: employment initiatives – HR Capital

The European Directive 2022/2464/EU (Corporate Sustainability Reporting Directive), which came into force on 5 January 2023, is part of the European Green Deal and aims to promote transparency and disclosure of information by companies on the environmental, social and governance-related (ESG) impacts of their activities, through enhanced corporate reporting obligations. In this regard, the so-called ‘Relaunch Decree’ (Decreto rilancio) (Italian Decree-law no. 34/2020, converted into Italian Law no.77/2020) introduced the concept of ‘Mobility Management’ into our legal system, i.e. the promotion of sustainable mobility, as well as the management of private transport demand by changing user attitudes and behaviour.

The legislation currently applies to public bodies and private companies with more than 100 employees per location, with offices in cities with a high risk of air pollution, for which there is also an obligation to appoint a ‘Mobility Manager’ who to produce an annual ‘Home-Work Travel Plan’ for employees, aimed at reducing the use of individual private transport and better organising working hours to limit traffic congestion.

The question addressed to the Italian Revenue Agency

In this regard, the Italian Revenue Agency, a few months before the deadline for the implementation of the aforementioned directive, scheduled for 6 July 2024, has provided Answer no. 74/E of 21 March 2024 providing clarification on the possibility of using sustainable mobility services for the home-work-home commute as part of a company welfare plan, through the use of an App.

The question addressed to the Italian Revenue Agency concerned a company that was considering creating an App to enable employees to access sustainable mobility services, such as car-sharing, bike-sharing, scooter-sharing, electric scooters and others. The App would be used for home-work-home commutes, to optimise and reduce, in terms of environmental sustainability and greater road safety, the social costs and individual transport costs linked to the employees’ commute. In line with these purposes, the applicant clarified that sharing services should only be used where the place of work is in urban or metropolitan areas, allowing the transport to be shared with other users. Charging the use of services to the employer and setting a ceiling for expenditure would allow the quantification of usage and ensure that it would be limited to the home-work-home commute.

The applicant’s question concerned the possibility of including the use of the App, granted to categories of employees or to the majority of employees, among the welfare initiatives excluded from taxation under Article 51, paragraph 2, letter f) of the Italian Income Tax Consolidation Act (Testo unico delle imposte sui redditi, ‘TUIR’).

In its reply to the applicant, the Italian Revenue Agency set out the guidelines to be followed so that services granted to employees can be excluded from employee income in accordance with the provisions of Article 51, paragraph 2, letter f) of  TUIR.

Conditions for the implementation of welfare plans

The Agency pointed out for the exclusion from employee income to apply, the benefits and services granted to employees must firstly (i) be granted to the majority of employees or categories of them, (ii) relate exclusively to disbursements in kind and not to disbursements in lieu of money, and (iii) pursue the specific social utility purposes referred to in Article 100, paragraph 1 of TUIR. In addition, employees using the services must be totally unconnected to the financial relationship between the company and any third-party service provider.

The Italian Revenue Agency had provided guidelines on this point in the past with answer no. 461 of 31 October 2019, confirming that the provisions of Article 51, paragraph 2, letter f) of TUIR also included benefits in kind granted to employees through the company car-pooling service, which could be used through an IT platform and was provided by the employer through a specific contract with a third party. The aim of the service was, in fact, to reduce social and individual costs related to the home-work-home commute, while at the same time increasing employees’ punctuality with respect to working hours and promoting socialising, which also benefitted company work productivity. 

In line with the position already confirmed, the Italian Revenue Agency therefore reiterated that where an employer provides its employees with an App for accessing sustainable mobility services for the home-work-home commute, as part of a corporate welfare plan, this falls within the purposes of ‘social utility’ identified by Article 100, paragraph 1 of TUIR, and that such services may be considered non-taxable in accordance with the provisions of Article 51, paragraph 2, letter f) of TUIR provided that the conditions described above are fulfilled.

On 22 March 2024, Confcommercio, Filcams Cgil, Fisascat Cisl and Uiltucs Uil signed the agreement to renew the National Collective Bargaining Agreement (contratto collettivo nazionale di lavoro, ‘CCNL’) for employees of Tertiary, Distribution and Services Companies, effective from 1 April 2023 to 31 March 2027.

Leave for women who are the victims of abuse

In addition to wage increases and benefits such as supplementary health care and permanent contracts, the agreement addresses the increasingly topical issues of gender equality, fair distribution of family burdens, and support for women who are victims of gender-based abuse.

In this regard, implementing Article 24 of Italian Legislative Decree no. 80/2015, Article 16-bis of the new agreement recognises the right of female employees of public or private employers included in ‘protection pathways’ related to gender-based abuse to take leave from work for a maximum period of 90 days. For the purposes of exercising this right, the employee, except where it is objectively impossible, is required to give the employer at least seven days’ notice and, furthermore, to produce the certification confirming her inclusion in the pathways in question.

During the leave period, the woman is paid an allowance corresponding to her last salary, paid in advance in her pay packet by the employer on behalf of the Italian National Security Entity (Istituto nazionale della previdenza sociale, ‘INPS’) (in line with the payment of maternity benefits).

The period of leave is taken into account for the purposes of accruing seniority, holidays, and for the purposes of accruing additional months’ pay and severance pay (trattamento di fine rapporto or T.F.R.).

Leave for women who are victims of abuse may be taken, over a three-year period, on a daily or hourly basis (the latter is allowed at half the average daily working hours for the month immediately preceding the month in which the leave starts).

If further conditions are met, the leave period may be extended for a further 90 days, with entitlement to payment of an allowance equal to 100% of the current salary.

In addition, the employee has the right to change her employment relationship from full-time to part-time, and both vertically or horizontally within the organisation, and also to apply for a transfer to another place of work, even if located in another municipality.

Parental leave

To promote gender equality as well as the fair distribution of family burdens, the parties to the agreement agreed new provisions on parental leave.

In particular, it should be remembered that, to reconcile workers’ rights with the company’s organisational needs, Italian Legislative Decree no. 151/2001 (the Consolidated Law or Testo Unico, ‘TU’) introduced a notice period under which, to take the leave, the parent is required to give his or her employer at least 15 days’ notice.

In the new agreement renewing the CCNL Commerce, this notice period has been reduced to five days, unless this is objectively impossible.

Finally, it should also be noted that, under Article 34 of Italian Legislative Decree no. 151/2001, both working parents are entitled to the period of parental leave which may be shared between them. This leave may be taken during the first 12 years of the child’s life and may not exceed a total of 10 months, which may be increased to 11 months if the working father uses the leave for a period of at least three months.  

Currently, the period for which the working parent will receive their salary is nine months: in the first month the parent will receive 80% of salary and in the second 60% (increased to 80% for 2024 only) provided that:

• the leave periods are taken after 1 January 2024;
• the leave is taken before the child is six years old; 
• the period of maternity or, alternatively, paternity leave ended after 31 December 2023. 

Otherwise, the parent will receive 30% of salary for the remaining period.