Italy: Update On Labour And Social Security - Exemption For Working Mothers

Premise.

The Budget law 2024 (law of December 30, 2023, n. 213, art. 1, co. 180/182), established an exemption in favour of working mothers who meet certain requirements, for payment periods between January 1, 2024 to December 31, 2026, over the 100 percent of the contribution rate to social security (IVS quota) paid by the worker.

The subsequent INPS circular of January 31, 2024, n. 27 allows us to outline the characteristics of the exemption and provide procedural clarifications regarding the obligations of workers and employers.

Requirements.

The exemption in question was established, for the salary periods from 01/01/2024 to 12/31/2026, in favour of working mothers of three or more children with an employment relationship already established or in the process of being established on a permanent basis (excluded domestic employment relationships), 100 percent of the social security contribution fee (IVS quota) paid by the worker until the month in which the youngest child turns eighteen (precisely until age 17 years and 364 days), within the maximum annual limit of 3,000 euros (adjustable monthly).

On an experimental basis, only for the current year (2024), the benefit is also recognized for working mothers of at least two children with an employment contract already established or in the process of being established on a permanent basis (excluding domestic work relationships) until the month of the tenth birthday of the youngest child (precisely up to 9 years and 364 days).

The requirement is considered at the time of the birth of the third (or subsequent) child for the period 2024-2026, while, on an experimental basis, for 2024 it is only considered at the time of the birth of the second child.

The exemption is also applicable in the case of adopted or fostered children. Also included part-time contracts with indefinite duration, and the training contract, as equivalence to the indefinite contract with a formative nature.

In addition, those labour relations associated with a worker cooperative (Law 142/2001), but also contracts stipulated for administration purposes.

Exemption Features.

As mentioned, the measure in favour of working mothers consists of a 100% exemption from the IVS contributions that must be pay for them within the annual limit of €3,000.00 (monthly reset with a maximum value of €250.00) and without reduction of the rate of calculation from the pension benefits.

The benefit must be understood as referring to each employment relationship, so it can be recognized if the conditions are met, by several employers, in the case of multiple part-time relationships at the same time.

Regarding compatibility with other incentives, as specified in INPS dispatch no. 27/2024, it is generally established that the exemption for working mothers is compatible with other incentives and benefits when recognized by employers.

Confronted with the IVS exemption referred to in art. 1 paragraph 15 of law no. 213/2023 (exemption of 6 or 7 percentage points from IVS contributions payable by workers in the presence of taxable monthly salaries not exceeding €2,692 and €1,923 respectively) it is possible to confirm that the exemption in favour of working mothers (which is more favourable) should prevail in case of simultaneous existence of the requirements to access both measures (*).

Access to this IVS exemption from the month following the month of departure of the measure under study remains unchanged, as does entry into the latter from the month in which the eligibility conditions materialize (*).

(*) To better understand this mechanism, the following examples are reported:

Example 1

Working mother of 2 children, whose youngest child will be 10 years old on 07/20/2024: possibility of using the exemption for working mothers until the end of July 2024 and, when the right is exercised, accessing the use of the IVS exemption referred to in art. 1 paragraph 15 of the Budget Law from August 2024.

Example 2

Working mother of 1 child, who becomes mother of the second child on 09/23/2024: possibility, if the right is exercised, of benefiting from the IVS exemption until the end of August 2024, and access to the exemption for working mothers from September 2024.

Obligations of workers.

Workers who, based on the requirements established by law, are entitled to the exemption must inform their employer of their desire of benefit from this measure.

In particular, it is necessary to communicate the children's tax codes to demonstrate the existence of the right to exemption (without which the INPS will proceed to revoke the benefit with possible return of any amount already received for this purpose).

This can be done directly with the employer, or through a specific app that will soon available for the INPS services, after a specific communication of the measure.

Employer obligations.

Starting in February 2024, authorized employers must show the workers to whom the exemption applies in the Uniemens flow.

From March to May 2024, arrears in Uniemens flows can be recovered. If in the month of January 2024, or in the months of the child's birth, the exemption from the IVS fee paid by the worker of 6% or 7% (art. 1, c. 15 Budget Law 2024) to benefit from the full exemption, the amount already paid must be return.

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.