Italian Ministry of Economy and Finance has recently published a Decree that establishes the application methods for Corporate Income Tax deductions related to cost of new permanent employment contracts signed in fiscal year 2024.

Based on Legislative Decree 216 of 30th December 2023, which introduced the possibility of deduction of 120% of the cost of new permanent hires in 2024, Italian Official Journal (Gazzetta Ufficiale della Repubblica Italiana) has published on July 3rd 2024 a new Ministry of Economy and Finance Decree, which includes the methods of application of the above mentioned deductions.

In particular, companies are allowed to increase in 20% the amount of personnel expenses for the purpose of income computation of fiscal year 2024.

The eligible base for the determination of the applicable increase should be the lower of the following:

  • Personnel cost for the new permanent contracts established in 2024.
  • Overall increase in personnel cost in comparison with previous fiscal year.

Furthermore, the Decree includes an additional deduction of 10% for those personnel costs connected to hiring of new permanent employees which fall under the protected categories as specified in Legislative Decree 216, which include, among othe:, people with disabilities, young people who meet the conditions for young employment incentives, women victims of violence or employees in low-income areas.

The deductions, available for 2024 fiscal year, are only applicable for companies having profit and experiencing an increase of both the number of permanent employees and the total number of employees compared to the average of prior period.

Companies under liquidation process and companies operating for less than 365 days before the beginning of 2024 fiscal year are not eligible for the application of these deductions.

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All information contained in this publication is up to date on 2024. This content has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this chart without obtaining specific professional advice.No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this content, and, to the extent permitted by law, AUXADI does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this chart or for any decision based on it.