New Measures Effective from July 1, 2020

Subject: New measures effective from July 1, 2020

-IRPEF Credit, tax deduction for employment income, and new taxation for company cars with mixed private/business use

This News outlines the regulatory provisions introduced by the 2020 Budget Law and the Decree-Law containing urgent measures for the reduction of the tax burden on employment income, effective from July 1, 2020.

Regarding the Decree-Law on tax burden reduction measures, it has introduced two different types of tax wedge reduction, applicable based on the annual total amount of employment and assimilated income. These are implemented respectively as an integrative income treatment, which led to the abolition of the so-called Renzi Bonus but substantially follows the same rules, and an additional tax deduction.

Both tax wedge reduction mechanisms are subject to a recalculation (Should the amount subject to recovery exceed 60 euros, the withholding agent is required to spread the amount over 4 monthly installments starting from the month of adjustment) based on the actual period of work performed during the year, and given the effective date of the legislation, they will certainly be subject to a recalculation for 2020 (recognized and prorated for the July-December 2020 semester).

Integrative treatment for employment and assimilated income: IRPEF Credit

This treatment, with a total amount of 1,200 euros, aims to supplement the net salary of employees whose total annual income does not exceed 28,000 euros. Therefore, the beneficiaries of this measure are employees whose annual income from employment or assimilated relationships exceeds 8,173.00 euros, i.e., employees whose gross tax, net of employment deductions, is positive.

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