Recognition Of Exemptions For Youth Employment Following Requalification Of A Previous Indefinite Employment Relationship
The exemption cannot be applied when the indefinite employment relationship was not established by the employer’s free choice but as a result of an inspection finding. This preclusion applies only if the employer intending to benefit from the incentive is the same employer who is the holder of the employment relationship requalified following an inspection finding.
Through message No. 4178/2023, INPS (Italian National Social Security Institute) has clarified that, concerning the aforementioned matter, if the employer benefiting from the incentives for hiring young individuals (Article 1, paragraphs 100 to 108, 113, and 114 of Law No. 205 of December 27, 2017; Article 1, paragraph 10 of Law No. 178 of December 30, 2020, and referred to in Article 1, paragraph 297 of Law No. 197 of December 29, 2022) is a different entity from the employer holding the requalified employment relationship following an inspection finding, they can legitimately avail themselves of the benefit. This is because, at the time of the incentivized hiring, they reasonably believed the worker was a legitimate recipient of the facilitation.
Consequently, in cases where a relationship is reclassified ab initio as an indefinite employment relationship, resulting in the loss of one of the legitimizing requirements for the entitlement to the aforementioned exemptions, such circumstance, not known nor knowable at the time of hiring for which the contributory exemptions are intended, cannot negatively affect the different employer who, in good faith, hired the worker holding the requalified relationship.
Therefore, in the described scenario, the employer who hired in good faith can legitimately benefit from the aforementioned contributory exemptions and is not required, following subsequent verification of the existence of a requalified employment relationship with a different employer, to reimburse the facilitation or pay any penalties for the prior utilization of the incentive measure.
Fringe benefits and contributory impact
It is noted that INPS, in message No. 3884 dated November 6, 2023, provided instructions regarding the contributory adjustments when the annual sums related to fringe benefits granted to employees exceed the exemption thresholds set for the 2023 tax period by Article 51, paragraph 3 of the Income Tax Consolidation Act. The message outlined the regulatory novelties introduced by D.L. 48/2023, which set the maximum exemption limit for employees with dependent children at 3,000 euros. This inclusion in the exception to the general regime comprises sums disbursed or reimbursed to employees (both private and public) “for the payment of household utilities, including integrated water service, electricity, and natural gas.” Additionally, it clarified that fuel vouchers do not entitle any contributory benefits.
INPS has specified the procedures for reconciling fringe benefits for different categories of employers through the UniEMens system. Two possibilities are available: submitting monthly adjustment flows or filling in the variable remuneration section solely in the December 2023 declaration, reporting month-by-month corrections of the taxable amounts resulting from fringe benefits.
In subsequent message No. 4027/2023, INPS further specified that in cases where the fuel bonus was not subject to contributions, it is necessary to arrange payment through DMVig flows.
2024 unique certification – new guidelines from the revenue agency
With Resolution No. 55/2023, the Revenue Agency provided specific guidelines regarding the 2024 Unique Certification (CU2024) concerning the completion of the “Data relating to the spouse and dependents” section.
It was indicated in CU2024 the necessity of reporting data regarding dependents who, during the reference tax period, were fiscally dependent. This requirement remains valid even if conditions for availing deductions for dependent family members were not met, regardless of whether the expenses were recognized by the substitute in CU.
In the latest note No. 386245 dated October 27, 2023, the Revenue Agency reports that, following an in-depth analysis regarding data exchange with INPS, the previous request made in Resolution 55/E addressed to substitute taxpayers to communicate, through the 2024 Unique Certifications, the tax codes of children for whom the Universal Child Benefit was recognized, is now considered obsolete.
The note reiterates that there are situations where, despite the absence of recognition for the personal income tax deduction for dependent children, there will still be an obligation for the substitute taxpayer to report the data of the employee’s dependents (namely, tax code, months, and percentage of dependency) in the relevant section of CU.
These operational situations include:
- When, during reconciliation, the employee requests recognition of a deduction for expenses incurred on behalf of the child (e.g., medical expenses invoiced to the child). It is reminded that children under 21 years old, for whom the Universal Child Benefit is recognized, are considered fiscally dependent even if the taxpayer cannot claim deductions for family burdens.
- For the calculation of regional personal income tax surcharge, where regional legislation grants specific benefits in the presence of dependent children (even if the Universal Child Benefit is recognized for them). If the substitute does not acquire information about the employee’s dependent children (including them in the CU schedule), they may not correctly calculate the amount of surcharge owed.
- For 2023, there is a provision for the non-inclusion, up to a limit of 3,000 euros, of the value of goods provided and services rendered to employees with dependent children in the income. The employee provides the tax codes of their children to the substitute, who then reports this information in the section regarding dependents, even if deductions for these dependents were not utilized.
The office remains available for any further clarifications.