Omnibus Tax Decree, Impact on Employment Income and New Employment Incentives
Corporate welfare and company car fringe benefits
- Definition of “other family members”: Legislative Decree No. 148/2026 amends the definition of “other family members” for corporate welfare purposes. Employers should carefully verify eligible beneficiaries, distinguishing between family members referred to under Article 12 of the Italian Consolidated Income Tax Act (TUIR) and family members who qualify as tax dependants.
- 50% increase after five years: From 31 December of the fifth year following the year of first registration, the taxable fringe benefit value of company cars made available for both business and private use will be increased by 50%.
- Vehicles assigned up to 2024/2025: Vehicles assigned between 1 July 2020 and 31 December 2024, as well as vehicles ordered by 31 December 2024 and assigned during 2025, remain subject to the regime based on the 2024 CO₂ emission thresholds. For these vehicles, the taxable value will also increase by 50% after the fifth year following registration. This rule also applies where the vehicle is subsequently reassigned to another employee.
- Fair market value: The possibility of determining the taxable benefit relating to mixed-use company cars on the basis of the ordinary fair market value has been removed.
- Accessories not included in ACI tables: Starting from 2026, where a vehicle includes accessories or additional equipment that are not reflected in the ACI tables and have not been purchased directly by the employee, the taxable value of the vehicle must be increased by a further 5%. Previous employer practices adopted up to 31 December 2025 are safeguarded, although no reimbursement will be due for any higher taxes already paid. Payroll adjustments may therefore be required for 2026, while no corrective action is required for previous periods.
Social security contribution exemption for mothers with at least three children
From 1 January 2026, private-sector employers, including employers in the agricultural sector, may benefit from a 100% exemption from employer social security contributions when hiring or converting the employment contracts of certain categories of working mothers.
The incentive does not apply to the Public Administration, apprenticeship contracts, domestic employment or on-call employment.
Employee eligibility requirements at the date of hiring or conversion
- Mother of at least three children: The employee must have at least three children under the age of 18 (up to 17 years and 364 days). The eligibility requirement becomes fixed at the date of hiring or contract conversion and is not subsequently lost if a child reaches the age of 18, dies, no longer lives with the mother, or is placed in the custody of the father. Adopted and foster children are also included.
- Not regularly employed: The employee must have been without regularly paid employment for at least six months. This requirement is deemed to be met where, during the previous six months, the individual has not been employed under an employment contract lasting at least six months, or has carried out self-employed or quasi-subordinate (parasubordinato) activities generating income below the relevant taxable thresholds: €5,500 for self-employment and €8,500 for coordinated and continuous collaboration agreements (Co.Co.Co.).
Eligible contracts and duration of the incentive
- Fixed-term employment contracts, including temporary agency contracts and extensions: up to 12 months.
- Conversion into an open-ended contract of a fixed-term contract already benefiting from the incentive: the overall benefit may apply for up to 18 months from the initial fixed-term hiring date.
- Direct hiring under an open-ended employment contract: up to 24 months from the hiring date.
The benefit may be suspended, with a corresponding extension of the final eligibility date, only in the event of maternity leave.
Financial conditions and contributions excluded from the exemption
- Maximum amount: The exemption is capped at €8,000 per employee per year, corresponding to €666.66 per month and €21.50 per day for partial months. For part-time employees, the maximum amount is reduced proportionally.
- Contributions excluded from the exemption: The incentive does not apply to INAIL insurance premiums, contributions to the TFR fund, solidarity funds, the Air Transport Fund, the 0.30% contribution allocated to interprofessional training funds, solidarity contributions relating to supplementary pension or healthcare schemes, entertainment workers and professional sportspeople, or any other contributions that are not strictly social security contributions.
- Budget monitoring: The incentive is subject to an overall State expenditure ceiling. Once the available budget has been exhausted, INPS will no longer accept additional applications.
Non-cumulation and compatibility
The exemption cannot be combined with:
- other employer social security contribution exemptions;
- incentives for hiring disadvantaged women pursuant to Law No. 92/2012;
- the “Decontribuzione Sud” incentive;
- incentives for hiring persons with disabilities under Law No. 68/1999;
- the NASpI employment incentive;
- contribution reductions applicable to mountain or disadvantaged agricultural areas;
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- contribution reductions applicable to the construction sector;
- special contribution regimes concerning non-EU countries without social security agreements with Italy.
The exemption is compatible with:
- the enhanced tax deduction for the cost of new hires (“maxi-deduction”);
- the 1% contribution reduction for employers holding Gender Equality Certification pursuant to Law No. 162/2021; and
- the IVS social security contribution exemption applicable to working mothers pursuant to Law No. 213/2023.
Incentive for the stabilisation of employment relationships (esta)
With Message No. 2518/2026, INPS clarified the rules governing the incentive applicable to the conversion of fixed-term employment contracts into open-ended contracts carried out between 1 August 2026 and 31 December 2026, involving employees under the age of 35 who have never previously been employed under an open-ended employment contract.
Eligibility requirements
- The conversion must take place without any interruption between the original fixed-term employment relationship and the open-ended contract.
- The fixed-term contract to be converted must have been entered into by 30 April 2026.
- The actual duration of the fixed-term contract, calculated on an overall basis and including any extensions, must not exceed 12 months.
Application procedure – available from 29 July 2026
Applications must be submitted online through the INPS website via:
“Portale delle Agevolazioni (formerly DiResCo) – Incentivi decreto Lavoro 2026 – Articolo 4 – ESTA”
in accordance with the instructions provided by INPS Circular No. 72/2026.
- Conversion already completed: INPS will immediately provide confirmation of acceptance, together with the amount of the incentive granted, which will be indicated at the bottom of the application form.
- Conversion not yet completed: INPS will calculate the incentive amount, reserve the relevant funds and send a notification by certified email (PEC) or ordinary email to the employer or authorised intermediary. The employer will then have a mandatory 10-day period within which to complete the contract conversion and submit the relevant mandatory employment notification (Unilav). Final approval will be issued once INPS has identified and processed the relevant Unilav filing.
Refund of the additional contribution and UniEmens reporting
Where a fixed-term employment relationship is converted or otherwise stabilised within six months from the original expiry date, the employer is entitled to the refund of the 1.40% additional contribution paid in connection with the fixed-term contract.
INPS Message No. 2518/2026 also provides the relevant operational instructions for reporting the incentive through UniEmens payroll filings, together with the applicable accounting codes.
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