Taxation for company vehicles granted in promiscuous use
Article 1, paragraphs 632 – 633 of Law 160/2019 (the so-called “Budget Law 2020”) provides for a change in the methods for determining the fringe benefit, in the case of vehicles granted in mixed use to the employee.
The new rule will come into force from 1.7.2020
CURRENT REGULATIONS (VALID UNTIL 30.6.2020)
Article 51, paragraph 4, letter a) of the Consolidated Income Tax Act prescribes that for the purposes of determining the employee’s earned income, for motor vehicles, motorcycles and mopeds granted in mixed use, 30% of the amount corresponding to a conventional mileage of 15,000 kilometres is assumed, calculated on the basis of the operating mileage cost inferable from the ACI tables, net of any amounts withheld from the employee.
NEW DISCIPLINE FROM 1.7.2020
The new standard provided for a differentiated regime based on carbon dioxide (CO2) emission values. In all cases it refers to newly registered motor vehicles, motorcycles and mopeds, granted in mixed use with contracts signed from 1.7.2020. For vehicles with carbon dioxide emission values not exceeding 60 grams per kilometre (g/km CO2), 25% of the amount corresponding to a conventional mileage of 15,000 kilometres calculated on the basis of the operating cost per kilometre deducted from the ACI tables, net of any amounts withheld from the employee. This percentage is increased to 30% for vehicles with carbon dioxide emission values exceeding 60 g/km, but not 160 g/km. Where the emission values of vehicles exceed 160 g/km but not 190 g/km, this percentage shall be increased to 40% for the year 2020 and 50% from the year 2021. Finally, for vehicles with carbon dioxide emission values above 190 g/km, the percentage is 50% for the year 2020 and 60% from the year 2021.
N.B. This is without prejudice to the application of the regulations in force as at 31.12.2019, for vehicles granted in mixed use with contracts stipulated by 30.6.2020.
COVID-19 emergency and fixed-term contracts
In order to protect workers on fixed-term contracts, the Government has intervened on the subject of fixed-term contracts both with DL 18/2020 (“Cura Italia” decree) and with DL 34/2020 (“Rilancio” decree).
Below there is a summary of the rules contained in these two decrees.
Measures indicated in the “Cura Italia” decree
Art. 19-bis of DL 18/2020 prescribes that “in view of the epidemiological emergency of COVID-19, employers who have access to social shock absorbers […], are allowed, by way of derogation from the provisions of Articles 20, paragraph 1, letter c), 21, paragraph 2, and 32, paragraph 1, letter c), of Legislative Decree no. 81 of 15 June 2015, to proceed, during the same period, to the renewal or extension of fixed-term contracts, including for administration purposes”.
In other words, for the period between 23.2.2020 and 31.8.2020, there is no longer the prohibition to renew or extend the fixed-term contract, also for administration purposes, during the period of layoffs due to Coronavirus (CIGO, FIS and CIGD) and it is not necessary to wait 10 or 20 days before signing a new contract.
The provision therefore suspends, for employers who have access to social security benefits, the prohibition, ordinarily provided for by Legislative Decree no. 81/2015, to enter into a fixed-term contract at production units in which there is a suspension of work or a reduction in working hours under the Wages Guarantee Fund, which affect workers assigned to the tasks to which the fixed-term contract refers and at the same time removes the constraint that provides for the obligation of a temporary suspension (so-called “stop & go”) between two fixed-term contracts.
Measures indicated in the “Relaunch” decree
In this case, the rule prescribes that, in order to cope with the restart of activities as a result of the epidemiological emergency from COVID-19, it is possible to renew or extend until 30.8.2020 fixed-term employment contracts, existing on 23.2.2020, even in the absence of the justifying conditions ordinarily provided by Legislative Decree 81/2015, i.e:
temporary and objective requirements, outside the ordinary activity, i.e. the need to replace other workers; needs related to temporary, significant and non-programmable increases in ordinary activities.
Summary table
| PROHIBITION | It is not permitted to enter into a fixed-term contract at production units in which there is a suspension of work or a reduction in working hours under the Wages Guarantee Fund, involving workers assigned to the tasks to which the fixed-term contract refers. |
| EXTENSION AND RENEWAL | For the period between 23.2.2020 and 31.8.2020, the prohibition to renew or extend the term contract, including for administration purposes, during the period of lay-off for Coronavirus (CIGO, FIS and CIGD) is lifted.
It is also possible to renew or extend until 30.8.2020 fixed-term employment contracts, existing on 23.2.2020, even in the absence of the justifying conditions. |
| STOP & GO | During the period of layoff for Coronavirus (CIGO, FIS and CIGD) it is not necessary to wait 10 or 20 days before signing a new fixed-term contract. |
Indications from GNI on the provisions of the “Relaunch” decree
The National Labour Inspectorate (INL), following the notes 24.3.2020 n. 2211 and 6.5.2020 n. 12, has deemed it appropriate to provide further indications regarding the amendments made to DL 18/2020, by DL 34/2020 (“Relaunch” decree).
The topics covered included collective and individual dismissals for justified objective reasons, the suspension of payments of social security and welfare contributions and insurance premiums, the DURC and forward contracts.
Collective and individual dismissals for G.M.O.
At the time of the conversion of DL 18/2020, a specification was added that is without prejudice, with respect to the prohibition of dismissal, to the procedures for withdrawal in “cases where the staff affected by the withdrawal, already employed in the contract, is re-hired as a result of taking over a new contractor by law, national collective bargaining agreement or clause in the contract”.
Consequently, the prohibition in question does not operate in cases where the new contractor ‘takes over’ the staff employed in the contract. Instead, the prohibition remains in place for the outgoing contractor in relation to staff not ‘absorbed’, for whom it will therefore be possible to apply for wage subsidies where the conditions are met.
DL 34/2020, on the other hand, intervened by modifying the suspension period provided for in art. 46 of DL 18/2020. Specifically, it will not be possible to start collective dismissal procedures starting from 17.3.2020 (date of entry into force of DL 18/2020) and for the following 5 months and, those pending after 23.2.2020, are suspended for the same period.
The new term of 5 months starting from 17.3.2020 also applies to the prohibition of dismissal for justified objective reasons set forth in art. 7 of Law 604/66.
The legislator has also introduced the express provision concerning the extension of the suspension also to the procedures for dismissal for justified objective reason in progress, i.e. those not yet defined at the date of entry into force of the decree law.
Therefore, INL has specified that, as a result of the amendments introduced by DL 34/2020, until the expiry of the term of 5 months (and therefore until the next 17.8.2020), the procedures referred to in Article 7 of Law 604/66 cannot be initiated, nor can those pending be dealt with.
Suspension of payments of social security contributions and insurance premiums
INL recalls that the payments of withholding tax, social security and welfare contributions and compulsory insurance premiums suspended by Article 61 of the
DL 18/2020, must be carried out:
- in a single solution by 16.9.2020;
- or by instalments of up to four equal monthly instalments, with the first instalment to be paid by 16.9.2020.
This extension also applies to tax and social security contributions payments suspended by art. 62 of the same DL 18/2020.
Validity of durc
Article 81 of Legislative Decree 34/2020 states that the single documents of regularity of contribution (DURC) expiring between 31.1.2020 and 15.4.2020 shall remain valid until 15.6.2020.
Derogations concerning the extension or renewal of the fixed-term contract
Article 93 of Legislative Decree no. 34/2020 introduces the possibility to derogate from the obligation to indicate the reasons referred to in Article 19, paragraph 1, of Legislative Decree no. 81/2015 if it is intended to extend or renew until 30.8.2020 the fixed-term contracts existing at 23.2.2020.
For the purposes of the extension or renewal “for reasons” referred to in the above provision, the following two conditions must therefore be met:
the fixed-term contract must be in existence on 23.2.2020 (contracts concluded for the first time after 23.2.2020 are therefore excluded);
the extended or renewed employment contract must end by 30.8.2020.
Obviously, the possibility of an extension “as a cause” even beyond 30.8.2020 remains unaffected if, in compliance with art. 19, para. 1 of Legislative Decree 81/2015, it does not entail exceeding the 12-month period.
News from July 2020, how the Renzi Bonus changes
This is to inform you of the main innovations as of 1 July 2020 with regard to the IRPEF bonus provided for in Article 13 paragraph 1 bis of the TUIR, better known as the “Renzi Bonus”.
As of 1 July next, the Renzi Bonus will be replaced by the so-called “supplementary treatment” which will be translated into
- an IRPEF credit for workers with an income of up to 28,000 euros;
- a new tax deduction for holders of total income between €28,001 and €40,000.
The persons who will be able to benefit from the new measures in force as of July 1 coincide with the current beneficiaries of the Renzi bonus (these are, in fact, the holders of employment income and some similar income).
The new Irpef Credit in force since July 1st is better than the Renzi Bonus, both for the amount and for the income limits to be considered, since, until June 30th, the Bonus has been recognized:
- in a fixed amount (960 euro provided the employment relationship lasts all year) to those who have had a total income of up to 24,600 euro,
- in a decreasing measure, until cancelled, to those who have earned income exceeding the threshold of 24,600 euros and up to 26,600 euros.
Let’s look at the conditions of entitlement and the actual amounts of the benefit.
Supplementary treatment is payable to holders of a total income not exceeding 28,000 euros (higher income limit than the Renzi Bonus) to the following extent:
- EUR 600 for the year 2020 (months July to December);
- Eur 200 from the year 2021.
Therefore, with the July coupon will disappear the Renzi Bonus to be replaced by a Bonus of 100 euros per month.
The novelties are not over, in fact, from 01 July to 31 December 2020 for employees with a total income between 28,001 and 40,000 euros was introduced a tax deduction whose amount decreases to zero when the maximum of 40,000 euros is reached.
The amount of the deduction will be recognized according to the following calculation:
| Total annual income | Additional tax deduction due | |
| 28.000 < RC < 35.000 | 480 + 120 x | (35.000-RC) |
| 7.000 | ||
| 35.000 < RC < 40.000 | 480 x | (40.000-RC) |
| 5.000 | ||
| > 40.000 | 0 | |
By way of example, an employee with an income of 35,000 euros, from July to December 2020, will receive a deduction from the value of 80 euros per month.
It is important to underline that the supplementary treatment (Bonus of 100 euros per month) will be applied for work services rendered from July 1, 2020. The additional tax deduction will be applied to services rendered from 1 July to 31 December 2020.
The Relaunch Decree (Decree Law no. 34/2020, art. 28) specified that for the 2020 period only, the new bonus of 100 euros per month will apply even if the gross IRPEF determined on the income from work, net of deductions, is not positive due to the effect of social shock absorbers or parental leave linked to the Covid 19 period.
For the purposes of calculating the Bonus, the contractual remuneration that would have been due in the absence of the health emergency and the related social shock absorbers or leave taken shall be taken into account.
The study remains available for any further clarifications, inviting anyone who believes they fall within the scope of application of the above mentioned regulation to contact us in order to verify the conditions of application and organize the work.
LDP Payroll remains at your disposal for any further clarification.
Arianna De Carlo – adecarlo@ldp-payroll.com
Head of Payroll Department