News n.04/2022
The Budget Law for the year 2022, No. 234 of Dec. 30, 2021, was published in Gazzetta Official Gazette on Dec. 31, 2021. Important news on labor, families and businesses.
We summarize the most important ones:
New IRPEF rates and how to calculate tax deductions;
IRAP news;
"Patent Box" simplifications;
Repeal of Decree Law No. 157 of November 11, 2021;
Tax credits;
Tax exemptions and reliefs to promote stable employment and experimental measures;
Social security reform;
Measures to promote corporate social responsibility and dialogue in industrial crisis management;
Extracurricular internships;
Citizenship income and LEPS for non-self-sufficiency;
Social Bee.
Regarding other novelties (such as, for example: Tax credit for renewable source plants, composting plants, subsidies for PDO, PGI and organic wine producers, Sustainable Practices Fund, Superbonus for the construction sector, Facade Bonus and other building deductions, interventions with a view to urban regeneration, tax bills, extension of capital goods tax credit, changes to the rules on revaluation and realignment, extension of the entry into force of the provisions on VAT, reduced Imu for non-resident pension holders and much more), please refer to the text of the Law for what is not expressly mentioned in this News.
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1. New IRPEF rates and calculation of tax deductions.
The following amendments are made to the Consolidated Income Tax Act, No. 917 of 12/22/1986:
Gross tax is determined by applying the following rates by income bracket to total income, net of deductible expenses:
Up to 15,000 euros, 23%;
Over 15,000 euros and up to 28,000 euros, 25%;
Over 28,000 euros and up to 50,000 euros, 35 percent;
Over 50,000 euros, 43%.
Therefore, the main change concerns the rates to be applied to the relevant income brackets, which are reduced from 5 to 4.
It changes the calculation of tax deductions, which as of January 01, 2022 will be done in the following way, according to the following summary scheme:
(a) Deductions for employee and assimilated income (as per new Article 13 TUIR) (summary outline)
Annual deduction (expressed in euros) | Annual income limit (expressed in euros) |
1.880 | Up to 15,000 (the amount of the deduction due cannot be less than 690 euros or if fixed-term to 1,380 euros) |
1.910+((1.190*(28.000-RC)/13.000)) | Over 15,000 up to 28,000 |
1,910 * (50,000-RC)/22,000 | Over 28,000 up to 50,000 |
0 | Over 50,000 |
Deduction due + 65 euros | Greater than 25,000 but less than 35,000 |
(b) New deduction for retirement income (Article 13 paragraph 3 (a), (b) and (c) TUIR)
Annual deduction (expressed in euros) | Annual income limit (expressed in euros) |
1.955 | For incomes up to 8,500 (the amount of deduction due cannot be less than 713 euros) |
700 + ((1,255*(28,000 - RC)/19,500)) | Over 8,500 but not to 28,000 |
700 * (50,000-RC)/22,000 | Over 28,000 up to 50,000 |
0 | Over 50,000 |
Deduction due + 50 euros | Greater than 25,000 but not exceeding 29,000 |
(c) New deduction for income assimilated to employment and other income (art. 13 paragraph 5 letters a), b) if one or more of the incomes referred to in Articles 50, paragraph 1, letters e) compensation for intramurary professional activities of SSN employees etc.), f) (allowances, attendance fees and other compensation paid by the State, regions, provinces and municipalities for the exercise of public functions etc.) contribute to the formation of total income, (g) (allowances received by members of Parliament, etc.), (h) (life annuities and fixed-term annuities constituted for consideration other than those having a social security function), and (i) (other periodic allowances), excluding those deriving from periodic allowances indicated in Article 10, paragraph 1 (c), among deductible expenses, 53, 66 and 67, paragraph 1 (i) and (l)
Annual deduction (expressed in euros) | Annual income limit (expressed in euros) |
1.265 | Up to 5,500 |
500 + ((765*(28,000 - RC)/22,500)) | Over 5,500 up to 28,000 |
500* (50,000-RC)/22,000 | Over 28,000 up to 50,000 |
0 | |
Over 50,000 Deduction due + 50 euros | Greater than 11,000 but not exceeding 17,000 |
(d) Deductions for dependents
The reform on deductions for dependent family members is dictated by Legislative Decree No. 230 of Dec. 21, 2021, which introduced the Universal Single Allowance as a form of support for families with underage dependent children and, under certain conditions, for children of age up to the age of 21. The disbursement of the Allowance, which will take off next March 1, 2022, will result in the disappearance of Family Unit Allowances and deductions for dependent children in the paycheck, being precisely replaced by the Universal Single Allowance, which will be disbursed directly by Inps.
Both the Bridge Allowance and deductions for the aforementioned dependents will continue to be recognized in the paycheck until February 28, 2022. Effective March 1:
Deductions for dependent children 21 years of age or older will remain;
there will be no increase in the deduction (amounting to 400 euros) for each handicapped child under Law No. 104/1992 and for those who have more than three dependent children (increase of 200 euros for each child from the first);
The additional deduction will disappear if there are at least four dependent children.
Please refer to our News on the Universal Single Allowance, for further detailed information.
(e) Supplementary Tax Treatment
Regarding the Supplementary Income Treatment for employees and assimilated income provided for, pending a review of income support tools, by Decree Law No. 3 of Feb. 5, 2020, converted with amendments into Law No. 21 of April 2, 2020, is recognized for incomes up to 15,000 euros (if the gross tax, calculated in accordance with the provisions of the legislature and with the exclusions provided, is higher than the deduction due under Article 13 paragraph 1 of the TUIR).
Supplementary treatment is also granted if the total income is more than 15,000 euros, but not more than 28.000, provided that the sum of the deductions referred to in Articles 12 and 13 paragraph 1, the deductions referred to in Article 15 paragraph 1 letters a) and b) and paragraph 1b of the Tuir, limited to charges incurred in connection with loans or mortgages contracted until December 31, 2021, and the installments related to the deductions referred to in Articles 15 paragraph 1 letter c) and 16-bis of the Tuir, as well as those related to deductions provided for by other regulatory provisions, for expenses incurred until December 31, 2021, is higher than the gross tax.
The supplementary treatment is recognized in an amount not exceeding 1,200 euros, determined as the difference between the sum of the deductions listed above and the gross tax.
By way of example, we list the deductions to be taken into account for calculation purposes:
Deductions for dependents (limited to those that remain in effect);
Employee and assimilated income deductions;
"for interest expense and incidental charges paid as a result of agricultural loans or mortgages (limited to charges incurred in connection with mortgages or loans taken out until December 31, 2021);