New legislation on employee profit-sharing
With Law No. 76/2025, the legislator has introduced new rules concerning employee participation in company management, capital, and profits.
This legislation aims to promote greater employee involvement in company life, strengthening cooperation and the employer-employee relationship by encouraging different forms of participation:
- Managerial participation, with employee representatives included in some company bodies;
- Economic and financial participation, which may include both profit-sharing and ownership through employee shareholding plans;
- Organizational participation, involving employee representatives in strategic and production-related decisions.
Regarding profit-sharing (Article 5), the new legislation establishes for 2025, by way of derogation from Law No. 208/2015 (on performance bonuses), that a reduced 5% tax rate applies to the distribution of profits to employees, provided the following conditions are met:
- At least 10% of the total company profit is distributed;
- The distribution is implemented through second-level collective agreements (at company or territorial level);
- The total gross amount distributed to each employee does not exceed €5,000 per year.
Regarding employee shareholding (Article 6), the law introduces specific share classes to be allocated individually to employees, subject to special rules on form, transferability, and shareholder rights, in accordance with the Italian Civil Code.
For 2025, dividends paid to employees in lieu of performance bonuses—as a result of such shareholding—will be 50% tax-exempt, up to an annual limit of €1,500 per employee.
AIRE registration and impact on flat-rate tax regime
In ruling No. 149/E dated June 9, 2025, the Italian Revenue Agency clarified that registration with AIRE (Registry of Italians Residing Abroad)—which normally excludes taxpayers from the flat-rate tax regime (Art. 1, paras. 54–89, Law No. 190/2014)—does not trigger an immediate exit from the regime.
The case involved an engineer who had opted for the flat-rate regime and later registered with AIRE, effective from May 15, 2024. However, the approval of his registration was only communicated in February 2025. In the meantime, he continued to issue invoices under the flat-rate regime throughout 2024. The taxpayer asked whether the invoices issued should be corrected in light of the 2025 confirmation.
The Agency responded negatively, stating that AIRE registration did not immediately revoke eligibility for the tax benefit. Instead, exit from the flat-rate regime takes effect starting from the 2025 tax year.
The Agency also reaffirmed that the only immediate cause for termination of the regime is exceeding €100,000 in annual revenue, which results in an automatic shift to the standard tax regime in the same fiscal year.
Figurative contributions for employees on leave
With Message No. 1606/2025, INPS provided clarifications on figurative pension contributions for part-time employees placed on leave under Art. 31 of Law No. 300/1970 and Art. 3 of Legislative Decree No. 564/1996, when such employees simultaneously enter into another part-time employment relationship—including with political parties or trade unions.
This clarification follows a Supreme Court ruling recognizing the compatibility between holding an elective position within a trade union and having an employment relationship with the same organization.
In Message No. 55/2008, INPS had previously stated that figurative contributions under the IVS pension scheme were not excluded for workers also enrolled in other substitute or separate pension schemes, provided these were for activities other than the one they were on leave from.
However, the same message specified that employees of political parties or trade unions on full-time leave were not entitled to figurative contributions if they carried out any other type of work concurrently—including coordinated and continuous collaborations requiring enrollment in the separate INPS scheme.
To avoid unfair penalization of part-time workers involved in union or political activity, INPS now adopts a more evolutionary interpretation of Art. 31 of Law No. 300/1970.
Effective for all pending applications as of May 21, 2025, INPS allows:
- Pro-rata figurative contributions for the part-time job from which the employee is on leave (for union/political activity);
- Mandatory contributions for any simultaneous part-time job with a different employer (even a party or union),
provided there is no overlapping insurance coverage.
Thus, the original interpretation from Message No. 55/2008 remains valid only for full-time employees of political parties and unions placed on leave, who simultaneously work for another employer and are enrolled in any pension scheme.
