How does an employer benefit from the social security exemptions?
Employers must apply for an authorization code to the Istituto Nazionale della Previdenza Sociale(INPS) under the Company benefiting from relief under Article 3 of Legislative Decree 104/2020.
They are required to self-certify:
- The total hours of salary supplement from which employees benefitted in the months of May and June 2020 allocated to the same registration number;
- The overall remuneration that employees would have been entitled to for working hours not performed;
- The full social security contributions paid by the employer calculated on the salary referred to in the previous point;
- The amount of exemptions.
The INPS specifies that the request for the code must be sent before the transmission of the contribution report relating to the first salary period in which the exemption itself is presented.
After verifying the employer’s data, INPS will attribute the authorization code for the contributory position valid from August 2020 until December 2020. They will communicate this to the employer through the Social Security Tax Box.
How is the exemption calculated?
It is equal to double the hours of salary supplement already applied to the months of May and June 2020, with the exclusion of the premiums and contributions due to INAIL (Istituto Nazionale per l’Assicurazione contro gli infortuni sul Lavoro):
- The basis for calculation is salaries lost in the months of May and June 2020, which must be increased by the additional monthly installments
- It is necessary to take into account the full contribution rates due in theoretical terms and not any tax relief due in the aforementioned monthly payments
- The actual amount of the exemption applied cannot exceed employer contributions due in the individual months in which the measure is applied, up to a maximum period of 4 months.
It is understood that the exemption may also, where possible, be applied for the entire amount of the application relating to a single monthly salary.
INPS specifies that an employer choosing to access exemption for the duration of the designated period will not be able to make use of any additional salary supplements connected to the COVID-19 emergency, except when the additional CIG supplements relate to a different productive unit.
Are there social security exemptions for new hires?
Article 6 of Legislative Decree 104/2020 provides for the total exemption of social security contributions payments due by employers for new permanent hires employed from 15th August 2020 up until 31st December 2020, with the exclusion of apprenticeship and domestic work contracts. Article 7 includes fixed-term or seasonal employment contracts in the tourism and spa sectors during the same period, limited however to the period stipulated in the contract and up to a maximum of 3 months.
Who is eligible for this new measure?
All private employers, not limited to businesses, can access the benefit, except for the agricultural sector.
The following are also entitled to the benefit:
- Public financial bodies
- Autonomous public housing institutes transformed according to various regional laws into public financial bodies
- Entities that, as a result of privatization processes, have been transformed into joint-stock companies, albeit with fully public capital
- Former IPAB assistance bodies transformed into associations or foundations under private law, as they lack the requisites to become an ASP, and disclosed in the Register of Legal Bodies
- Special companies constituted as a consortium, under Articles 31 and 114, Legislative Decree 267/2000
- Reclamation consortiums
- Industrial consortiums
- Moral bodies
- Ecclesiastical bodies.
How is the exemption for new hires calculated?
The exemption is equal to the social security contributions payable by the employer, with the exclusion of premiums and contributions due to INAIL, up to a maximum amount of €8,060 on an annual basis, recalculated and applied monthly for a maximum of 6 months from the start date of permanent employment/conversion and, for temporary relationships or seasonal employment contracts in the tourism and spa sectors, for the duration of the relationship, up to a maximum of 3 months.
The maximum threshold for exemption from employer contributions regarding the monthly pay period is equal to €671.66 (€8,060/12) and, for employment relationships established and terminated during the month, this threshold must be re-proportioned by assuming €21.66 (€671.66/31) as the daily amount of contribution exemption.
The maximum monthly exemption threshold that can be applied is equal to the lower amount between the deductible contribution due and the annual subsidy ceiling re-calculated monthly.
In the case of part-time employment contracts, the benefit ceiling must be proportionally reduced. If an employment relationship is on a part-time basis at 50%, the maximum amount of exemption applied to each month will be equal to €335.83 (€671.66/2).
The following contributions are not subject to relief:
- Premiums and contributions due to INAIL
- Contributions, where due, to the Fund for the Provision of Employees in the Private Sector of Severance Pay as per Article 2120 of the Civil Code
- Contributions, where due, to the Funds referred to in Articles 26, 27, 28 and 29, Legislative Decree 148/2015, as well as to the Intersectoral Territorial Solidarity Fund of the Autonomous Province of Trento and the Bilateral Solidarity Fund of the Autonomous Province of Bolzano-Alto Adige
- Contributions, where due, to the Solidarity Fund for the Aviation Sector and the Airport System
- Contributions of 0.30% of taxable salary intended, or in any case assignable, to the financing of interprofessional funds for continuous training
- Contributions that are not of a social security nature and those conceived to provide elements of solidarity to reference pension schemes (see Circular No. 40/2018). In cases of conversion of temporary contracts or their stabilization within 6 months of expiry, the additional contribution of 1.40% for fixed-term contracts is applied where due.
The exemption has a duration of 6 months for permanent hires/conversions. For temporary contracts, it has a duration equal to the period of the contract and up to a maximum of 3 months. In the case of conversion into a permanent contract and if that exemption has already been granted to the temporary contract, an exemption may be applied for a further 6 months from the date of conversion. The period of application of the incentive can only be suspended in cases of compulsory absence from work due to maternity, allowing, in this case, the temporal deferral of the period of application of the benefit. The benefit is, in any case, limited by the resources specifically allocated.
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