Subject: New measures effective July 1, 2020
-Employee income tax credit, employee income tax deduction, and new taxation for mixed-use company cars
This circular reports the regulatory provisions introduced by the Budget Law 2020 and the Decree Law containing urgent measures to reduce the tax burden on employees, effective July 1, 2020.
As for the Decree-Law on measures to reduce the tax burden, this provided for two different types of tax wedge reductions applicable according to the amount of total annual employee and assimilated labor income, and they take the form of a supplementary income treatment, respectively, which involved the repeal of the so-called Renzi Bonus but essentially follows the same rules, and an additional tax deduction.
Both tax wedge reduction mechanisms are subject to reproportioning (In the event that the amount subject to recovery is more than 60 euros, the withholding agent is required to accrue the amount in 4 monthly payments starting from the one in which the adjustment is made) by reason of the period of work actually performed in the year, and given the effective date of application of the regulations, will certainly be subject to reproportioning for 2020 (recognized and reproportioned for the six-month period July-December 2020).
Supplementary treatment of employee and assimilated income: IRPEF credit
This treatment, the total amount of which is 1,200 euros, is intended to supplement the net paycheck of the employee whose total annual income does not exceed 28,000 euros. The beneficiaries of this measure, therefore, are workers whose annual income from dependent or assimilated labor relations is more than 8,173.00 euros, thus, workers whose gross tax net of employee deductions is positive.