The Legislative Decree reforming the Personal Income Tax (IRPEF) introduces a 120% super-deduction for new indefinite-term employment contracts. However, this benefit will only be accessible if the new employment contract is finalized from January 1, 2024. This implies that hirings in 2023, even if formalized by the end of the year, will not be eligible for this advantage.
How it works:
The mechanism of the facilitation involves a 20% increase, applied to the lower of the cost incurred in 2024 for new hires and the increase in personnel expenses between 2023 and 2024. However, the benefit tends to decrease as the start date of the employment relationship is postponed.
For example, hiring new personnel at the end of 2024 could result in a negligible or zero benefit.
A critical aspect concerns the additional increase of up to 10% provided for the hiring of individuals belonging to protected categories: two divergent interpretations raise doubts about the actual deduction, ranging from a maximum of 30% to a modest 5.28%.
The complexity arises when the second parameter (increase in personnel costs) is lower than the first and constitutes the basis for calculating the bonus. It is unclear how to distribute this magnitude between the 20% and 30% quotas, according to different percentages that may be indicated in the implementing decree.
What happens to hirings planned by 2023?
The imminent entry into force of Article 4 of the decree, awaiting approval by the Council of Ministers, puts on hold the hiring of employees planned in the last weeks of 2023. This article provides for the irrelevance of the facilitation in the calculation of advances for both 2024 and 2025, making the management of payments complex, as highlighted in the observations of the opinion approved by the Finance Committees of the Chamber and the Senate.
In conclusion, the timing of hirings and interpretations of the regulation are key elements to maximize the benefits of the 120% super-deduction in new indefinite-term employment contracts. The complexity of the calculation and interpretative uncertainties pose challenges for businesses intending to take advantage of these tax benefits.
For further information, it is recommended to consult with your tax advisor.
