In 2024, there have been important changes regarding Fringe Benefits in Italy , introduced by the recent Budget Law.
The main changes concern the tax exemption limits for benefits granted to employees.
We therefore recommend reading the complete report, drawn up by the Labor Consultant Studies Foundation, entitled "Fringe Benefit: what's new in 2024" , as an in-depth analysis. In this article we will try to briefly summarize the most significant changes, their consequences and causes.
Budget law: 2024 maneuver and Fringe Benefit exemption with a limit of €1000/2000
As we know, in 2024 there have been significant changes regarding Fringe Benefits in Italy, with particular attention to the tax exemption thresholds for employees.
with the new budget maneuver, the Fringe Benefit limit of €3,000 in 2023 has been reduced again.
The new exemption threshold is now 1000 or 2000 euros, depending on whether you have dependent children or not.
● For workers without dependent children, the exemption threshold has been increased to 1,000 euros.
A significant improvement for all workers, compared to the previous 258.23 euros, which allows you to benefit from a greater amount of tax-free Fringe Benefit compared to previous years.
● For workers with dependent children, the exemption threshold has been set at 2,000 euros.
The threshold, reduced compared to 3,000 euros in 2023, was however kept higher than that of childless workers, recognizing the importance of economically supporting families with dependent children
But let's summarize for a moment what Fringe Benefits are...
Fringe Benefits include a wide range of goods and services, including:
● gifts and shopping vouchers;
● company bonuses;
● reimbursement of household utilities;
● first home rent contribution or mortgage interest;
● company car;
● insurance;
● fuel bonus.
Fringe Benefits can be granted to both public and private sector employees , while self-employed workers with a VAT number cannot benefit from these benefits.
Fringe Benefit €2000 with dependent children
To take advantage of the highest exemption benefits, workers are required to demonstrate whether or not they actually have offspring.
To be considered fiscally dependent , children must have a gross income not exceeding 2,840.51 euros, increased to 4,000 euros for children up to 24 years of age.
These requirements must therefore be cyclically verified/confirmed, by 31 December of each year.
But why was this choice made?
Why has the Fringe Benefit limit been moved to 1000 or 2,000 euros in 2024?
The Fringe Benefit limit has been reduced from 3,000 euros to 2,000 euros, for workers with dependent children, and instead raised to 1,000 euros, for workers without dependent children, mainly for budgetary and tax equity reasons.
Here are the main reasons:
- rationalization of public spending
The reduction of Fringe Benefit limits was introduced to contain public spending and to ensure more sustainable management of the state budget.
- Tax fairness
Another reason for reducing the limits was the perception of excessive disparity between workers with and without dependent children.
The objective of the new legislation would therefore be to reduce this gap, while maintaining an advantage for parents, but in a less accentuated way than in the past.
- Adaptation to previous regulations
The revision of the limits also follows a trend of periodic revision of tax breaks, to adapt them to contemporary economic conditions and to correct any misalignments with the needs of the labor market and the working population.
- Targeted incentives
Reducing the limits of Fringe Benefits allows resources to be concentrated on other forms of incentives or benefits that can be more targeted and effective in supporting specific groups of workers or economic sectors, thus ensuring a more efficient use of public resources.
These (cyclical) changes are part of a broader strategy to review tax breaks, to ensure that they are fairly distributed and that they respond to the ever-present needs of the labor market and the population.
How has the non-taxability threshold for Fringe Benefits changed in recent years?
Fringe benefits, i.e. additional benefits compared to the main salary, represent an important part of company welfare.
Over the past 10 years, there have been some significant changes regarding the limits of these benefits.
Before 2016 , the value of Fringe Benefits was totally exempt from taxation for the employee, as long as the amount was not high.
From this moment on, however, a defined limit of 258.23 euros per year in value has been introduced for the goods sold and services provided by the company, which can therefore be considered exempt from taxation.
In 2017 the limit was raised to 516.46 euros per year, only for productivity bonuses paid in company welfare goods and services.
Between 2020 and 2021 , in response to the Covid-19 emergency, the limit was further increased to 516.46 euros for all Fringe Benefit Welfare, not just productivity bonuses.
In 2022, the limit for corporate welfare fringe benefits was therefore increased to 600 euros per year for the employee.
For 2023 , the budget law has again modified the Fringe Benefit limit, setting it at 3,000 euros only for employees with dependent children. This extraordinary measure was aimed at supporting families with children, in economic contexts that are still uncertain and influenced by the direct consequences of the pandemic and the energy crisis.
Therefore, over the last 10 years there has been a gradual increase in the tax exemption limit for Fringe Benefits linked to Corporate Welfare, again scaled down with the changes of the last year, which we have talked about so far.
Obviously the deductibility of Fringe Benefits has always been designed to encourage companies to adopt measures of this type in favor of their employees.
Fringe Benefit and Exemption: Predictions and Future Trends
Fringe Benefit policies have always been dictated by the economic and social needs of the country.
The general trend, however, would seem to be that of greater flexibility and an increase in limits, especially in situations of economic crisis or particular social need.
Any future changes to the exemption threshold should, therefore, reflect the need to support workers and their families in times of difficulty, whilst maintaining a balance between fiscal needs and employee wellbeing.