Italian Budget Law 2020: Tax Relief for the Recruitment of Young People under 35

The latest data from Istat (National Institute of Statistics) shows that the unemployment rate among young people in Italy has reached 28.7% and is thus particularly worrying.


To cope with this alarming situation, while at the same time favoring companies that, despite their interest in recruiting new employees, are concerned about the resulting tax burden, the 2020 Budget Law has appropriately provided for the prolongation of a measure originally introduced by the 2018 Budget Law, which provides tax relief for employers who employ young people with an open-ended contract.


In particular, according to the draft law which shall be approved, private employers (including companies, professional offices, associations, foundations, non-profit-making organisations, etc.) may benefit from a scheme that relieves the social security burden, provided that they hire at least one new employee whose age is under 35 with an open-ended contract, by 31 December 2020. In addition, this scheme may also be used by employers who, in order to stabilise employees already recruited with fixed-term contracts who also fulfil the above-mentioned age requirement, convert such contracts into open-end ones.

The relief granted to employers consists of an exemption from the payment of 50% of their employees’ total social security contributions, with a maximum yearly amount of EUR 3000 each. The relief is granted for the recruitment of employees qualified as workmen, clerks or company executives (recruitment of managers is excluded).


Lastly, it may be noted that the Draft Budget Law 2020 further extends the incentives encouraging the recruitment of people younger than 35 years old in the regions of Abruzzo, Molise, Campania, Basilicata, Sicily, Puglia, Calabria and Sardinia. In this case, the contribution exemption is up to 100% of the employees’ total social security contributions due by the employer, which may amount  to a maximum of EUR 8,060  per year and can be combined with other exemptions or reductions in the rates of funding provided by the legislation in force, limited to the period of their application.


In order to avoid that the measure may provide an incentive for companies to dismiss workers already hired in order to replace them with “subsidized” workers, it is provided that in the six months preceding the date of subsidized recruitment, the employer must not have made individual dismissals for justified objective reasons, or collective dismissals, in the same production unit. Moreover, in the six months following the facilitated hiring, the employer must not proceed with the dismissal for justified objective reasons of the same facilitated worker or of another worker employed in the same production unit and classified with the same qualification as the worker hired with the exemption.