Tax exemption for benefits and allowances provided by businesses to employees.

Recent additions to article 14 of the Income Tax Code, Law n. 4172/2013, Gov.Gazette 167, provide for further reductions in the gross income received by the employee/pensioner.

We define a relationship as a labor one when an individual provides services described in a relative contract with another individual or legal person.

Retribution of any sort, either in currency or in kind (bonuses, sick leave, vacation non taken, non-salary benefits, etc. are also included) form the gross income for an employee. Tax is imposed on the retribution (employment income) and is calculated according to specific quotas.

Recent additions/updates of art. 14 of the above-mentioned law, provide for further exemptions – under conditions – from the calculation of employment income. These amounts, paid by businesses to employees, are:

• An annual benefit of up to €5,000.00/p.a. paid to employees to cover nursery and kindergarten costs.
• A one-off allowance of up to €5,000.00 paid to employees as support for every child and paid up to 12 months after childbirth and any additional amount up to 5000.00€ for any other child of the same parent.

The above apply starting from the year 2024.

For any further information and analysis of the above measures on income tax, please do not hesitate to contact us.