INPS: Clarifications on tax exemption for hiring women

In circular no. 32 of 22 February 2021, INPS provided the first clarifications on using the contribution exemption, introduced by the 2021 Budget Law, to recruit female workers carried out in the two years 2021-2022.

Regulatory framework

Article 1, paragraph 16, of Law 178 of 30 December 2020 (the “2021 Budget Law“) states that the contribution exemption for hiring women workers in the 2021-2022 period under Article 4, paragraphs 9 to 11, of Law no. 92 of 28 June 2012 (the Fornero Reform), is 100 per cent up to €6,000 yearly.

Paragraph 17 of the same article specifies that the exemption application is subject to the requirement of a net increase in the employer’s employment, calculated based on the difference between the number of workers employed in each month and the average number of workers employed in the previous 12 months.

According to the EU law conventional criterion, to identify the employment increase, the number of employees is calculated in Annual Work Units (AWU).

The circular does not provide any operational instruction since the benefit application is subject to the European Commission authorisation. After this authorisation, a new message will be issued concerning the compilation of the contribution declarations by employers who intend to access the benefit.

Employers entitled to the benefit

All private employers, including non-entrepreneurs and employers in the agricultural sector, are eligible for the benefit.

The exemption from social security contributions does not apply to Public Administrations, which can be identified by referring to Article 1, paragraph 2, of Legislative Decree of 30 March 2001 no. 165.

Workers entitled to the exemption

An express reference made by the 2021 Budget Law indicates that the incentive is a natural extension of the Fornero Reform regulations.

The concept of “disadvantaged women“, for whom the exemption is applicable if hired, includes the following categories:

• women aged 50 or over and “unemployed for more than 12 months”;
• women of any age who reside in regions eligible for funding under the European Union’s structural funds and who have not had regular paid employment for at least six months;
• women of any age who work in professions or activities in sectors characterised by a pronounced gender employment gap and “who have not had regular paid employment for at least six months;”
• women of any age, wherever they reside, “who have not had regular paid employment for at least 24 months.” The 24 months preceding the recruitment date must be considered, and it must be verified that during that period, the woman was not employed under a contract lasting at least six months or a coordinated and continuous collaboration with an annual remuneration higher than €8,145 or, self-employed such as to produce a yearly gross income of more than €4,800.

To receive the benefit, either a long-term state of unemployment (more than 12 months) or compliance with the inactivity requirement (the woman must be “unemployed“) is required, along with other conditions.

The late submission of the compulsory electronic communications relating to the establishment and modification of an employment or staff leasing agency relationship entails the loss of a part of the incentive related to the period between the relationship’s starting date and late communication date.

Types of incentivised employment relationships and exemption duration

The incentive is available for:

• employment under fixed-term contracts;
• Employment under permanent contracts;
• change of a previous subsidised employment relationship into permanent.

As for its duration, INPS specified that the incentive would be available for

• up to 12 months for fixed-term employment;
• 18 months for permanent employment;
• for 18 months from the date of recruitment if there is a change of a fixed-term employment relationship into permanent.

The incentive can be suspended when there is a compulsory absence from work due to maternity, allowing for a period of temporal deferment.

Incentive requirements

The right to benefit from the incentive is subject to a net increase in employment and compliance with incentives’ general principles established by Article 31 of Legislative Decree no. 150/2015, under the following conditions laid down in Article 1 paragraph 1175 of Law no. 296/2006, namely:

• social security contribution obligation compliance (DURC);
• absence of violations of the fundamental rules for the protection of working conditions and compliance with other legal obligations;
• compliance with collective national, regional, local and company bargaining agreements signed by the employers’ and workers’ trade unions that are nationally comparatively more representative.

Under Article 2 paragraph 32, of Regulation (EU) no. 651/2014, the net increase in employment is “the net increase in the number of employees in the establishment compared to the average for a reference period. Jobs eliminated during that period are to be deducted, and the number of workers employed full-time, part-time or seasonally is to be calculated, taking into account fractions of annual work units.”

As already clarified in question no. 34/2014 of the Ministry of Labour and Social Policies, the employer must verify the actual workforce present in the 12 months following the facilitated hiring and not “estimated” employment.

If the employer should find a net increase in employment in terms of Annual Work Units at the end of the year following the hiring, the monthly quotas of the incentive already received are “consolidated.” Otherwise, the incentive cannot be legitimately applied, and the employer must return the individual quotas of the incentive already received in the absence of compliance with requirements through the relevant procedures.

Under Article 32, paragraph 3, of Regulation (EU) no.  651/2014, is applicable if the net employment increase is not realised because the previously available job(s) became vacant due to:

• voluntary resignation;
• disability;
• retirement due to age limit;
• voluntary reduction of working hours;
• lawful dismissal for a justified objective reason.

Combination with other incentives

The exemption can be combined with other exemptions within the limits of the social security contribution, and if there is no express prohibition to combine with different schemes for additional exemptions.

If the exemption can be combined with another benefit, for applying the second benefit it is necessary to refer to the “due” contribution or “due” residual contribution because of the first exemption applied.

The sequence which allows combinations of exemptions under the rules approved, in chronological order, on the assumption that the last exemption introduced in the system is combined with the previous on the residual “due” contributions.