Starting from January, Italy will introduce a trio of incentives aimed at boosting employment and replacing the previous Reddito di cittadinanza program. The new measures include Support for Training and Employment (Sfl) and the Inclusion Allowance (Adi). Additionally, there’s a super deduction for permanent hires outlined in the Legislative Decree on the first module of the income tax reform (see previous article). Pending approval from the European Union, the Southern Italy decontribution is also expected to come into effect. However, existing incentives for hiring women, young people under 36, and NEETs will expire in December.
For employers hiring Adi and Sfl recipients, a 100% exemption from employer social security contributions is granted for a maximum of 12 months, with an amount of €8,000 recalibrated on a monthly basis. This drops to 50% for a recalibrated amount of €4,000 per month in the case of fixed-term contracts.
The mechanism of the super deduction and the category of disadvantaged workers.
The super deduction mechanism involves a 20% increase (deductible in the Ires or Irpef declaration) applied to the lesser of the cost incurred in 2024 for new hires and the increase in personnel expenses between 2023 and 2024. An additional increase, up to 10%, is envisaged for hiring individuals deserving protection, such as “very disadvantaged” workers according to European legislation: people with disabilities, working-age minors in family difficulties, women of any age with at least two minor children, young people eligible for youth employment incentives, and former recipients of the Reddito di cittadinanza who do not meet the requirements for the Inclusion Allowance.
Company requirements.
To benefit from this incentive, companies must be in normal operation, not in liquidation, and without resorting to provisions of the corporate crisis code of a liquidatory nature. It is also necessary that the number of permanent employees at the end of 2024 exceeds the average of 2023. Taxpayers must also have, at the end of 2024, an overall number of employees (both permanent and temporary) greater than the average of 2023.
The tax benefit requires two checks:
The first concerns the increase in employment, requiring a positive difference between permanent workers at the end of 2024 and the 2023 average. The incentive is activated only with at least one new hiring starting from January 1, 2024. A mere average increase caused by mid-year hirings in 2023 is not sufficient.
The second check concerns the calculation of the benefit, applying a 20% increase to the cost incurred in 2024 for new hires compared to the overall personnel cost increase as of December 31, 2023. The resulting amount will operationally represent a reduction in taxable income for the beneficiaries.
Decontribution Southern Italy.
Extended until at least June 2024, this provides a contribution relief for companies located in the southern regions of Italy (private employers based in Abruzzo, Basilicata, Calabria, Campania, Molise, Puglia, Sardegna e Sicilia) and concerns both existing and new employment relationships. The relief is recognized based on decreasing percentages depending on the years of contributions (premiums and contributions due to Inail are excluded from the calculation). Until December 31, 2025, the exemption is 30% of the employer’s social security contribution; for the years 2026 and 2027, the exemption drops to 20%; for the years 2028 and 2029, it further decreases to 10% (this incentive does not have a maximum amount per individual worker). However, prior authorization from the EU Commission is required to benefit from this relief.
Incentives for hiring young people.
Finally, starting in January, companies will still benefit from the “under 30” incentive made structural by the Budget Law for 2018 (Law 205/2017) for young individuals who have never been employed indefinitely before facilitated hiring with an indefinite contract, even following the conversion of a previous fixed-term contract. This incentive provides a contribution exemption equal to 50% of the gross monthly taxable salary up to the amount of €3,000 recalibrated on a monthly basis.
For more information, consult your tax advisor.
