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On December 27, the House passed the budget law for 2021, the law that establishes each year how, where and when tax revenue will be managed and public money spent. The law, which is also often referred to as an “economic maneuver,” was approved with 298 votes in favor, 125 against and 8 abstentions and must now receive Senate approval before December 31. The final vote on the budget law is scheduled for Tuesday, December 29, or at the latest on Wednesday 30: the government will deposit the trust, and it will not undergo any change with respect to the one approved in the Chamber. Any change in the law would, in fact, imply a new step to the House: the budget law must be approved before the end of the year, otherwise Italy would enter the so-called interim exercise, which the government wants to avoid.
The interim budget exercise is an instrument with not exactly clear limits, to which the Constitution makes only a brief and rather obscure reference. In fact, Article 81 says: “The provisional exercise of the budget cannot be granted except by law and for periods that do not exceed a total of four months.” Two things follow from these meager words. The first is that if a budget law is not passed, Parliament must still pass a law to start the interim exercise: there is no automatic procedure that can be carried out without the vote of the Chambers. The second: this provisional exercise cannot last more than four months, at the end of which the actual budget law must be approved.
What’s in the budget law?
The text approved in the Chamber, which except for surprises will receive the approval of the Senate, foresees allocations of 40,000 million euros. The main measures of the maneuver refer to work: the freezing of layoffs will extend until March 31, 2021 and the free layoff fund (that is, paid in full by the state) for the employees of the most affected companies due to the crisis due to the coronavirus emergency, it will be extended in more than 12 weeks. Between January 1 and March 31, 2021, workers will be able to take advantage of the ordinary termination fund and between January 1 and June 30, 2021, the exception fund, that is, the one that can request all types of companies, regardless of the number of employees.
Regarding the self-employed workers most affected by the pandemic, the budget law introduces a new form of income support, the “ISCRO”, an acronym for “Extraordinary income and subsidy for operational continuity.” It will be a kind of redundancy fund reserved for VAT numbers (but only for those registered in the separate management of the INPS) and will provide support for six months, from a minimum of € 250 to a maximum of € 800 per month. Those who in the year prior to the application will have the right to demonstrate that they have had an income from their own account that is 50% lower than the average of the previous three years and in no case higher than 8,145 euros. To obtain the “ISCRO” it will also be necessary to be in compliance with the contributions and be registered for VAT purposes for at least 4 years.
Also for VAT figures, the budget law will allocate a fund of one billion euros to guarantee the so-called “white fiscal year”: the professionals and freelancers most affected by the pandemic by 2021 will not have to pay social contributions. Those who in 2020 have had a turnover loss of at least a third compared to 2019, and a total turnover of less than 50 million euros, can have this exemption.
The maneuver also provides for tax relief for companies that hire young people under 35 years of age, with special incentives in the South. For new permanent hires, and for the transformation of fixed-term contracts into permanent contracts carried out in the 2021-2022 biennium, contribution reductions of 100 percent are foreseen for three years. For those who hire in Abruzzo, Molise, Campania, Basilicata, Sicily, Puglia, Calabria and Sardinia, the relief rises to 4 years. A 100% relief is also foreseen for those who hire unemployed women in the south and without work for at least 24 months in the rest of Italy.
The maneuver then allocates 3,000 million euros for 2021, which will become five in 2022, for the so-called “single allowance for children” that will be paid from July 2021 to workers for each dependent child up to 18 years of age. The budget law will also refinance the so-called “baby bonus” for all those born in 2021, will pass the mandatory paternity leave of 7 to 10 days and will launch a fund of 50 million euros for companies that help to return to work of women who have recently had a child. Families with an ISEE of less than 20,000 euros will be able to request a mobile device – cell phone or tablet – with an Internet subscription on a free loan for one year.
The budget law also extends the possibility of accessing the so-called “Superbonus 110%” until December 31, 2021, provided that at least 60 percent of the restructuring project has been completed by June 30. The “Superbonus 110%” is a tax break for renovations that improve the energy efficiency of buildings. The “Superbonus” allows you to deduct from the IRPEF – the personal income tax – 110 percent of the expenses incurred for specific improvements of the building, within certain limits of expenses. And therefore, in fact, fully recover the expense within a period of five years, also obtaining an additional deduction of 10 percent.
In 2021, the ceiling for the “furniture bonus” also rises to 16 thousand euros, the deduction of 50 percent for expenses incurred for the purchase of furniture and appliances, which until the end of 2020 were expected to cost a maximum of 10 a thousand euros. The reimbursement, in the form of a tax deduction, will take place for ten years. The maneuver also allocated 20 million euros to a “water bonus” of 1,000 euros for interventions to replace plumbing appliances and bathroom equipment with reduced drainage and limitation of water flow.
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