Fringe Benefit: Exemption of up to €3000 for Employees with Dependent Children

The Italian Revenue Agency, through Circular No. 23/E/2023, has provided clarifications on the new corporate welfare regime following the amendments introduced by the “Lavoro Decree,” which raised the threshold for tax-exempt goods and services provided to employees to €3000 for the year 2023, instead of the standard €258.23.


The same decree (D.L. 48/2023) has also included among the “bonuses” not contributing to the formation of taxable employment income, sums disbursed or reimbursed to employees by employers for the payment of domestic utility bills such as electricity, water, and gas.

It should be noted that if the total value of goods (including company cars made available for mixed-use) or services provided, as well as sums disbursed or reimbursed for utility bill payments, exceeds the aforementioned limit, the entire value becomes taxable for income and contributions.

Objective Prerequisite

The “Lavoro Decree,” specifically Article 40, has introduced significant changes regarding benefits for dependent employees with children. For the tax year 2023 only, and exclusively for dependent employees with dependent children, the decree raises the exemption threshold for fringe benefits defined in Article 51, paragraph 3, third period, of the Income Tax Consolidation Act (TUIR) to €3000.

Generally, Article 51, paragraph 3, third period, TUIR stipulates that the value of goods provided and services rendered to an employee does not contribute to the formation of taxable employment income if their total value does not exceed €258.23 during the tax year.

In derogation from Article 51, and only for the tax year 2023, the decree also includes sums disbursed or reimbursed to employees by employers for the payment of domestic utility bills, including integrated water service, electricity, and natural gas, among the fringe benefits provided to employees.

When the requirements set forth in Article 40 of the Lavoro Decree are met, the value of goods provided, services rendered to the employee, and sums disbursed or reimbursed for domestic utility payments do not contribute to taxable employment income, as long as they do not exceed the €3000 limit.

Subjective Scope

This benefit, applicable exclusively for the tax year 2023, applies to fringe benefits received by dependent employees with children, including children born out of wedlock who are recognized, adopted, or entrusted, and who meet the conditions outlined in Article 12, paragraph 2, TUIR.

This provision applies to individuals with income from dependent employment and income assimilated to dependent employment income, for which income is determined according to the provisions contained in Article 51 of the TUIR.

Regarding the definition of dependent children for tax purposes, Article 12, paragraph 2, of the TUIR states that children are considered dependent if:

  • They have an income not exceeding €2,840.51 (the income for this limit is calculated before deductible expenses).
  • If under 24 years of age, they have an income not exceeding €4000.

Based on the principle of the unity of the tax year, the condition of being a dependent child must be verified as of December 31st of each year. Therefore, as this benefit is only applicable for the tax year 2023, it is necessary to verify whether the income limit has been exceeded or not as of December 31, 2023.

Scope of the Benefit

With respect to the items falling within the €3000 non-taxable threshold, they include:

  • Goods and services already subject to the exemption limit set forth in Article 51, paragraph 3, of the TUIR, such as, for example:
  1.  Gift vouchers
  2.   Fuel vouchers
  3.   Christmas hampers
  4.   Premiums for non-professional insurance
  5.   Private use of a mobile phone
  6.   In-kind items produced by the company
  • Sums disbursed or reimbursed for the payment of domestic utility bills, including integrated water service, electricity, and natural gas.

Scope of Application

To benefit from this incentive, the employee must formally communicate their right to their employer, indicating the tax code of the only dependent child or the dependent children.

As there is no specific method mentioned for this communication, it can be carried out through an agreement between the two parties, indicating the tax codes of the dependent children as provided in Article 12, paragraph 2 of the Consolidated Text of Income Taxes.

If the employee no longer meets the requirements communicated to the employer for the year 2023 as per the previous paragraph, they are obliged to promptly inform their employer. The employer will then recover the benefit that was not due in subsequent payroll periods and within the deadlines set for reconciliation operations.


LDP provides Tax, Law and payroll  scalable and customised services and solutions. LDP Professional have also matured a significant expertise in  M&A, Corporate Finance, Transfer Price, Global Mobility Consultancy and Process Automation. 

Sign up to our newsletter

Subscribe to our Newsletter

Subscribe Form