The Law no. 220 dated December 13th 2010, so called "stability law" has introduced some news for employment and social security rules.
They can be divided in:
- Measures introduced for employment's productivity and competitiveness increase; in particular we will analyze in the following pages those measures concerning, even for 2011, social security contributions reliefs on payments related to productivity or achievements allowances under collective or corporate employment agreements;
- Measures finalized to face the negative effects of the adverse economic downturn through tax allowances available for employers hiring workers receiving income's support treatments.
In additional we'll briefly analyze the cancellation of the social security contribution increase foreseen for a 0,09% by the Law no. 247/2007.
The stability law has been enforced starting from January 1st 2011.
Most of the actions foreseen by the same law will be effective just after the publication of related enforcing measures by the Italian Authorities.
2. 2011 EXTENSION FOR PRODUCTIVITY'S ALLOWANCES DE-TAXATION
2.1. Private Companies' Employees
The chance to apply a substitutive individual income tax (IRPEF) at a 10% flat rate to productivity increase and corporate objectives achievements, has been extended per December 31st 2011.
With respect to the discipline applicable in 2010:
- The followings are confirmed:
- Subjects are employees of the private sector, with the exclusion of public companies employees;
- The maximum gross amount that can be taxed at 10% is Euro 6.000,00 (net of pension and social security contribution charged to employee);
- The personal income's limit, to access to the benefit, is instead increased from Euro da 35.000,00 to Euro 40.000,00, referred to the previous year. The extension is therefore applicable in 2011 to employees with an income 2010 not exceeding Euro 40.000,00 euro, grossed by the substitutive income tax applied to the same employee in 2010.
Clarifications on the objective application area of the tax reduction in 2011
Law no. 220/2010 confirms the chance to de-tax, under the extensive interpretation adopted by the Italian Tax Agency and by the Employment Ministry, all salaries and wages, even if recognized in a fix and stable measure, connected with productivity's increase, innovation, organizational efficiency and corporate competitiveness (indemnities for nightly and overtime work included):
- Despite if they have been unilaterally disposed by the employer or recognized under a specific collective agreement's disposition (national, local or corporate) or following an individual negotiation between the employer and the employee;
- Provided that the aim of productivity's increase is counterchecked in an explicit declaration of the employer to be added, as stated by the Tax Agency Resolution no. 130 dated December 12th 2010, in the notes space of the annual income certification (CUD form).
2.2. Public Companies' Employees
With regards to the public sector, the extension for 2011 of the personal income tax reduction is recognized only to employees:
- Belonging to security, defense and public rescue compartment;
- Having an annual income in 2010 not exceeding Euro 35.000,00.
The application of this particular tax regimen is subordinated to the issuing of a Prime Minister Council Decree.
We'd like to remind you that, with reference to 2010, the Prime Minister Council Decree dated April 23rd 2010, had foreseen a reduction of the gross income tax, determined on the additional income, for the maximum amount of Euro 149,50 for each beneficiary.
3. SOCIAL SECURITY CONTRIBUTION'S BREAKS ON "SECOND LEVEL" ALLOWANCES
The chance to benefit from the pension contribution's breaks related to salaries and wages items connected to corporate objectives' achievement (so called productivity and result awards), foreseen by the second level national collective agreements, has been extended even for 2011.
In particular, for the period January 1st 2011 – December 31st 2011, a pension contribution's relief is foreseen for both the employer and the employee:
- With regard to the amounts:
- Paid to employees of the private compartment under provisions of local and corporate collective agreements;
- Related to productivity, quality, profitability, innovation and organizational efficiency, or to the economic development or to corporate income or to any other element relevant for the corporate competitiveness improvement;
- According to the following criteria:
- The maximum amount admitted to benefit of the contribution relief can't exceed the 5% of the salary paid to each employee according to its employment agreement;
- With reference to the above mentioned limit, under the submission of an appropriate application form, the pension contribution relief is fixed at 25% of the pension contribution due by the employer and 100% of the contribution due by the employee;
- Within the national expense limit of Euro 650 Million.
Even for 2011, in order to enforce to the above mentioned measure and to make the benefit operating, a Ministry Decree must be issued.
With regards to previous year we have to remind that, till today, the following Ministry Decrees has been issued:
- For year 2008 the Ministry Decree dated may 5th 2008, that has set the maximum amount admitted to the contribution break at 3% of the agreed salary;
- For allowances recognized in 2009 the Ministry Decree dated December 17th 2009 has reduce the amount from 3% to 2.5%.
The Ministry Decree setting maximum amounts and rules for access to the contribution relief for 2010 has still to be issued.
4. TAX ALLOWANCES FOR EMPLOYERS HIRING EMPLOYEES UNDER INTERGRATIVE INCOME MEASURES
4.1. Tax Allowance Design
Has been confirmed the measure, paid by the Italian Pension Authority (INPS) in favor of employers :
- Without employees already affected by extraordinary redundancy fund payment;
- Without being obliged hire employees dismissed for company's closure due to bankruptcy;
In order to access to this measure the ownership of the hiring company and the one of the dismissing company must not have a substantial coincidence, neither the two company have control or participations' relationships.
The measure consists in the right to compensate the amounts due to INPS by the employer (for Pension Contribution) to the extent of amounts related to the unemployment allowance due to the employee by INPS, and not paid by this last one.
4.1.2. Key rules
With reference to 2009 and 2010, applicable rules have been clarified by INPS: it's still not clear if the same clarifications can be applied even to year 2011.
4.2. Social Security Contribution Reduction For Employees Receiving Mobility Or Unemployment Measures
The Social Security experimental favorable regimen introduced in 2010, in order to facilitate the employment of those employees recipient of income's endorsements, has been extended to 2011.
In particular reliefs consist of:
- The reduction (with a 10% charge on the employer instead of the ordinary social security contribution), until December 31st 2011, of the social security contribution related to employees registered in unemployed lists:
- Receiving the unemploymnet allowance;
- At least 50 years hold;
- The extension of the social security reduction mentioned above till the employee's retirement date (in any case not over December 31st 2011) for employers hiring:
- Unemployed or unemployed receiving the unemployment allowance;
- Who have matured at list 35 year of social security contribution.
The extension to 2011 of the above mentioned experimental measures will be enforced:
- According to a Ministry Decree;
- Not exceeding the amount foreseen in 2010
We remind you that the enforcement measure for 2010 have been introduced by the Ministry Decree no. 5443 dated July 7th 2010.
5. SOCIAL SECURITY CONTRIBUTION INCREASE CANCELLATION
The measure foreseen by the Law no. 247/2007, that should have introduced an increase of 0.09% of the social security contribution applicable to:
- Employees registered for the compulsory general insurance and its exclusive and substitutive entities;
- Craftsmen, merchants and farmers registered under respective INPS sections;
- Self-employees registered under the separated sections of INPS (law no. 335/1995);
Has been abolished starting from January 1st 2011.
Feb. 16 2011 – Tax Withholders (Employers)
Employment and self-employment withholdings payment.
Revaluation substitutive tax on End Of Employment Severance Payment – TFR
Payment of the the final balance for the substitutive tax on the revaluation of the End Of Employment Severance Payment – TFR matured in the previous year.
Social Security Contribution (INAIL)
1st pre-payment 2011 and final payment (balance) for 2010 as stated by the annual Social Security Return.
Feb. 28 2011 – Tax Withholders (Employers)
Withholdings certifications delivery to employees for salary, wages and professional fees as well as for withholdings operated in 2010 (CUD Form)
Within the same date Companies must deliver certifications for withholdings operated on dividends paid in 2010.
All the above mentioned certifications can be delivered via hard mail or by hands.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.