New measures effective July 1, 2020
- July 2, 2020
- Reading time: 3 min
Subject: New measures effective July 1, 2020
-Income Tax Credit, tax deduction for earned income, and new tax rules for company cars used for both business and personal purposes
This circular sets forth the regulatory provisions introduced by the 2020 Budget Law and the Decree-Law containing urgent measures to reduce the tax burden on salaried employees, effective as of July 1, 2020.
Although the Decree-Law on measures to reduce the tax burden it provided for two different types of tax wedge reductions applicable based on the amount of total annual income from employment and similar sources, taking the form, respectively, of a supplementary income payment—which led to the repeal of the so-called Renzi Bonus but essentially follows the same rules—and an additional tax deduction.
Both mechanisms for reducing the tax wedge are subject to a recalculation (If the amount subject to recovery exceeds 60 euros, the withholding agent is required to divide the amount into 4 monthly installments starting from the month in which the adjustment is made) based on the period of work actually performed during the year, and given the effective date of the legislation, they will certainly be subject to reproportioning for 2020 (recognized and reproportioned for the July–December 2020 period).
Supplementary treatment of income from employment and similar sources: IRPEF credit
This benefit, which amounts to a total of 1,200 euros, is intended to supplement the net pay of employees whose total annual income does not exceed 28,000 euros. The beneficiaries of this measure, therefore, are workers whose annual income from employment or similar relationships exceeds €8,173.00—that is, workers whose gross tax liability, net of employee tax deductions, is positive.
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