With the 2018 Budget Law, a new form of tax relief has been introduced in Italy for entrepreneurs who hire young people with a permanent employment contract.
For the employer，this means a perceptible decrease on labor costs, where the employer hires a new employee that stands in the age range that has been set. In such a case, he/she will have to pay a significantly less amount of social security contributions compared to the amount that is normally due by law.
More specifically, starting from January 2018, a tax benefit equal to 50% will apply on social security contributions tax due for newly hired employees with a permanent employment contract, provided that they are less than 35 years old. Starting from January 2019, these benefits will be limited for employees hired below the age of 29 years.
In three specific cases the tax benefit reaches 100%, namely:
- Where the company hires students or apprentices within 6 months from the role acquisition. This may be applied to young people who attended a job/school alternation apprenticeship and to those who concluded an apprenticeship contract, being hired by the same company;
- Where the company hires young people residing in the south of Italy, but only for the first employment year;
- Where the company hires the so-called “neets”, meaning all people below the age of 29 years that do not study nor have a job, but only for the first employment year.
Thereby the benefits aim to improve employment for young people, to help entrepreneurs and to reduce contracts known as “precarious”, converting them into permanent employment contracts: indeed, they apply where a fixed-time contract, or a professional apprenticeship contract, is converted into a permanent one.
The budget law also introduces strict rules for employers in order to take advantage of these benefits:
- They must not have fired any employee, or group of employees, for a justified objective reason, within 6 months before the actual hiring;
- The dismissal for a justified objective reason, within 6 months from the hiring date of an employee hired with the tax benefit, or of an employee hired in the same area with the same role hired taking advantage of the benefit, will lead to the suspension from the benefit and retrieval of the already enjoyed benefit;
- Where an employer loses the benefit, this does not prevent other employers from hiring the dismissed employee and enjoy the benefits.
It is notable that such strict rules do not apply in cases of subjective justified reasons for dismissals, nor in a cases of contract breach by the employee.
For further information about new tax benefits in Italy for young people hiring, please do not hesitate to contact us via email@example.com