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CORPORATE WELFARE: NEW DEVELOPMENTS ON EDUCATION AND FAMILY CARE SUPPORT
Through Responses No. 159 and No. 163 issued last August, the Italian Tax Authority provided important clarifications on the application of the tax regime set out under Article 51, paragraph 2, letters (f-bis) and (f-ter)of the Italian Income Tax Code (TUIR) with respect to expenses reimbursed under corporate welfare plans.
Through Response No. 159, the Tax Authority confirmed that education expenses incurred for an employee’s children may be reimbursed by the employer even where the payment was made by the employee’s spouse. What matters, therefore, is the fact that the beneficiary can be clearly identified and the nature of the expense incurred, regardless of the person who actually paid for it.
It was also clarified that expenses reimbursed under a welfare plan cannot also be used to claim tax deductions or tax allowances. Accordingly, employers must collect appropriate supporting documentation, together with a declaration from the employee confirming that the same expenses have not been, and will not be, used to obtain additional tax benefits or other reimbursements.
Through Response No. 163, the Tax Authority further clarified that amounts reimbursed in respect of nursing home (RSA) and care expenses incurred for elderly or non-self-sufficient family members do not constitute employment income even where such family members do not live with the employee.
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.
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