The Italian government has announced the country’s financial measures for 2018. Signed off on by president Sergio Mattarella on October 29, the highlights of next year’s “Manovra” include no change to VAT, discounts for bus and train season tickets, and more police and fire jobs.
Italian value-added tax will not rise in 2018, although it is scheduled to increase in 2019 and 2020. 10% VAT will go up by 1.5% in January 2019 and a further 1.5% in 2020. 22% VAT will increase by 2.2% in 2019 and by an additional 0.7% in 2020 and another 0.1% in 2021. Excise tax will also go up in 2019.
DISCOUNTS FOR BUS AND TRAIN SEASON TICKETS
Commuters will be able to deduct their transport season tickets. The 2018 Budget foresees discounts of up to 250 euro on local, regional and interregional transport costs. Employees (and their household members) can also agree refunds on season tickets with their employers as a sort of “bus-train bonus”, which will not be part of their taxed income.
80 EURO IRPEF BONUS
The income threshold for obtaining the famous 80-euro IRPEF bonus have been increased. Introduced by the Renzi administration in 2014, the 24,000 euro limit has been raised to 24,600 and 26,000 to 26.600. The move saves the 80 euro paid to state employees, which upon contract renewal would have exceeded the threshold currently in place for the bonus.
YOUNG EMPLOYMENT BONUS
2018 sees the arrival of a permanent bonus for hiring people under age 30, which – solely for 2018 – also applies to fixed contracts for those under 35. Also confirmed is the tax break of 50% of social security contributions with a threshold of 3,000 euro for three years, which drop to just one year if an apprenticeship contract is converted into a permanent employment contract. The bonus can be transferred regardless of age and increases to 100% if a company hires an individual following a “school-work” agreement. (“Alternanza scuola-lavoro” is mandatory for all students in Italy in the final three years of high school; one of the main changes of Law 107/2015, known as “La Buona Scuola”.)
TAX WITHHOLDING FOR RENTED PROPERTIES
It won’t be pegged but a two-year extension is on its way in for the 10% tax withholding applied to rental property contracts. The measure is only valid for residential real estate.
A one-year extension is arriving for the energy bonus. But the main new feature is a 36% discount up to 5,000 euro for those adding green areas to outdoor spaces around existing buildings. Discounts will also apply for irrigation systems, the creation of wells, greenery and hanging gardens. The energy bonus drops from 65% to 50% for new windows, solar panels and the replacement of air con and heating systems.
The 2018 Budget strengthens previous measures introduced by the government with a 10% increase in social security for large households (up to 540 euro), in addition to broadening the number of people who can access the social inclusion income, especially for households with an unemployed person over the age of 55.
PRE-COMPLETED VAT DECLARATION
Italy’s self-employed will be able to make use of a pre-completed VAT declaration if you issue electronic invoices. The Inland Revenue (“Agenzia delle Entrate”) will prepare documents for regular financial reports, a draft for the annual VAT and income declaration, and drafts for the F24 forms, used to pay duties.
TAX BREAK FOR FARMERS
Farmers under the age of 40 who register their business in 2018 will be entitled to tax breaks for three years. 66% for 12 months and 50% for a further 12 months.
TRACEABILITY OF PAYMENTS
Incentives will be introduced for all those who agree to the traceability of payments received and made in excess of 500 euro. The 2018 Budget envisages the shortening to three years of the time within which checks may be made by the inland revenue (it is currently set at five years). This measure is part of a set of activities aimed at combating tax evasion.
MORE POLICE AND FIRE OFFICERS
In 2018 the hiring of 7,394 police and fire officers will be begin over the next five years. The move is aimed at upping nationwide security, combating terrorism and preventing fires. More specifically, 1,953 jobs with the Italian state police, 2,155 Carabinieri, 1,125 finance police, 861 prison police and 1,300 fire service. Individuals employed by the police force will receive meal tickets if their station has no canteen.
OVERSEAS FINANCIAL ACTIVITY
The 2018 Budget introduce measure against Base Erosion and Profit Shifting operated by companies with the sole aim of paying less taxes.
Following recent Southern Italian earthquakes, the government has earmarked 12 million euro to L’Aquila and surrounding municipalities. The urban free lands in Emilia and Lombardy will be extended until 2019, in addition to a stop on municipal tax (IMU) on unusable real estate throughout 2018. A 10 million euro fund has been confirmed for 2018, increasing to 20 million in 2019 and 2020 to rebuild Casamicciola Terme and Lacco Ameno, on Ischia.
IRI – COMPANY TAX
Company income tax (IRI) has been postponed by a year. IRI is a 24% income tax for sole traders and limited liability companies with regular accounting that which scheduled to come into effect in 2017.
GROUP DISMISSAL TAX
For every individual affected by group dismissal from industrial and commercial companies with more than 50 employees, employers will be obliged to pay 82% of the upper limit of the monthly New Social Insurance for Work (Naspi), compared to the current 41%, for a maximum of three years of employment. (At the moment, companies pay a maximum of 1,470 euro for every dismissed person, while the new measure could reach a maximum of 2.940 euro.)