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Italian Lower House Approves 2015 Budget

by Ulrika Lomas,, Brussels

03 December 2014

Unlike in recent years, the Government's 2015 Budget Bill (legge di stabilità) has succeeded in passing through Italy's lower house, the Chamber of Deputies, without substantial amendments, and will now immediately progress for further discussion in the Senate.

Those measures approved by the Chamber include that the EUR80 (USD100) per month income tax deduction, which was first paid on a temporary basis in May this year, will be maintained next year; the tax credits for home restructuring and energy saving expenses will remain unchanged for a further year; and a buy-to-let income tax credit will be introduced for purchases of energy-efficient new or renovated residential properties rented out at a locally subsidized rent for at least eight years.

In addition, businesses who take on new full-time employees (not on fixed-term contracts) during 2015 will receive both an exemption from payment of social security contributions, subject to a cap of EUR6,200 per employee, and also the inclusion of their labor costs in the calculation of the regional tax on production (IRAP).

The Government's plans to expand the list of goods that would be subject to a reverse charge for value added tax (VAT) purposes from 2015 has also been passed, but is subject to approval from the European Commission.

In an addition to the Bill, which had earlier proposed a reverse charge on real estate and construction services, the Chamber approved (subject to European Union agreement) that the reverse charge should also cover the retail sector. The reverse charge shifts the obligation to account for VAT to the recipient, instead of the supplier, to counteract fraud.

After the Chamber's approval, Economy Minister Pier Carlo Padoan professed that he "is convinced that the Budget Bill will allow Italy to begin a reversal in fortune, in terms of economic growth and employment, that has been awaited for years, and to confront 2015 with increasing confidence."

TAGS: tax | business | value added tax (VAT) | energy | law | employees | tax credits | food | legislation | social security | Italy | tax breaks | construction | retail | individual income tax | services | Economy

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