[Italy] Tax cuts and pension changes in 2023 Budget

In Italy, the new right-wing government signed off on its first budget on November 22. Its primary focuses were on curbing soaring energy bills and cutting taxes from next year for payroll workers and the self-employed, Reuters reports.

The package now goes to parliament where it must be approved by year-end. Some of the key changes are summarised below:

Windfall tax and cryptocurrencies

A hike in a windfall tax on energy companies that have benefited from the surge in oil and gas prices is due to bring some 2.5 billion euros. The tax rate rises from 25 per cent to 35 per cent from January to July 2023 and, unlike today, will apply to profits instead of revenues.

The budget will also tax capital gains on cryptocurrencies but details are not yet available.

Tax cuts for employees

Around 4.2 billion euros have been allocated to reducing the "tax wedge" - the difference between the salary an employer pays and what a worker takes home - with the benefit going to low-income workers.

The tax rate on productivity bonuses of up to 3,000 euros is cut to 5 per cent from 10 per cent. Fiscal incentives were introduced to encourage hiring on open-ended contracts of women under 36, fixed-term workers and people drawing the "citizens' wage" jobless benefit.

Self-employed tax cuts

For self-employed people, the budget lifts the ceiling on annual income tax with a single 15 per cent rate to 85,000 euros from 65,000 euros. The same 15 per cent rate is applied to any increase in income compared with the previous three years, with a cap of 40,000 euros.

“Citizens’ wage” poverty relief scheme

In 2023, able-bodied people of working age will only be able to draw the benefit for a maximum of eight months, ahead of the complete abolition of the scheme from Jan 1, 2024.

Pensions

In 2023 Italians will be able to draw a pension from the age of 62 provided they have paid in at least 41 years of contributions.

The current rule - put in place for just this year by the previous government - allows people to retire at 64 provided they have worked for 38 years.

The budget also extends an early retirement scheme for women to 2023, with adjustments. Beneficiaries will be able to draw a pension at 58 if they have at least two children, at 59 with just one child and at 60 otherwise.

In Italy, the new right-wing government signed off on its first budget on November 22. Its primary focuses were on curbing soaring energy bills and cutting taxes from next year for payroll workers and the self-employed, Reuters reports.

The package now goes to parliament where it must be approved by year-end. Some of the key changes are summarised below:

Windfall tax and cryptocurrencies

A hike in a windfall tax on energy companies that have benefited from the surge in oil and gas prices is due to bring some 2.5 billion euros. The tax rate rises from 25 per cent to 35 per cent from January to July 2023 and, unlike today, will apply to profits instead of revenues.

The budget will also tax capital gains on cryptocurrencies but details are not yet available.

Tax cuts for employees

Around 4.2 billion euros have been allocated to reducing the "tax wedge" - the difference between the salary an employer pays and what a worker takes home - with the benefit going to low-income workers.

The tax rate on productivity bonuses of up to 3,000 euros is cut to 5 per cent from 10 per cent. Fiscal incentives were introduced to encourage hiring on open-ended contracts of women under 36, fixed-term workers and people drawing the "citizens' wage" jobless benefit.

Self-employed tax cuts

For self-employed people, the budget lifts the ceiling on annual income tax with a single 15 per cent rate to 85,000 euros from 65,000 euros. The same 15 per cent rate is applied to any increase in income compared with the previous three years, with a cap of 40,000 euros.

“Citizens’ wage” poverty relief scheme

In 2023, able-bodied people of working age will only be able to draw the benefit for a maximum of eight months, ahead of the complete abolition of the scheme from Jan 1, 2024.

Pensions

In 2023 Italians will be able to draw a pension from the age of 62 provided they have paid in at least 41 years of contributions.

The current rule - put in place for just this year by the previous government - allows people to retire at 64 provided they have worked for 38 years.

The budget also extends an early retirement scheme for women to 2023, with adjustments. Beneficiaries will be able to draw a pension at 58 if they have at least two children, at 59 with just one child and at 60 otherwise.