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Italy: Social Security Holiday for New Hires
5/5/2015
In a further attempt to reduce unemployment and also reduce the reliance on less secure work arrangements such as temporary and fixed term contracts, Italy has taken the innovative step of switching off social security requirements during the first 3 years of employment. Subject to conditions (of course).
Employers that employ new hires prior to the end of 2015 will benefit from an exemption from social security contributions to the pension fund for 3 years and subject to a maximum saving of €8060 per year, per employee. The social security contributions to the healthcare funds will continue to be paid.
So other than the ceiling on the amount that can be excluded what other conditions apply?
- The employee should not have been employed on a permanent contract with any other employer during the 6 months prior to being hired
- The employee must be hired on a permanent contract
- Despite the exemption running for a period of 3 years, it can only be applied to new employees hired in 2015 (the window closes as at midnight on the 31 December 2015)
- It cannot be applied to an employee who has already benefited from the ruling
- It cannot be applied to employees that were employed within the same group of companies in the 3 months prior to the law coming into force (i.e. During the last 3 months of 2014) (even if #1 above is satisfied)
However, as is often the case with tax breaks, with one hand gives, the other takes away – in introducing this new policy the Italian government has repealed a similar allowances granted to employers hiring employees that had been unemployed for a period of 24 months or more which unlike the new regulation was not restricted to employees hired in a certain time period.
There is also concern that the size of the government budget sets aside to operate the scheme may well fall short of requirements and fail to keep pace with the numbers of eligible employees (the budget is set at €1 billion per year for 2015,2016, 2017 and €500m for 2018).
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