2025 BUDGET LAW APPROVED: KEY INNOVATIONS IN LABOR LAW
2025 Budget Law was approved last December 28, 2024.
The main changes regarding labor law are:
Par. 385 – productivity bonuses: Extension of the reduced 5% tax rate on productivity bonuses for the years 2025, 2026, and 2027. All conditions for the performance bonus remain unchanged, such as:
- The performance bonus must be included in a company or territorial contract;
- The performance bonus must be variable in amount;
- The payment of the bonus must be linked to measurable increases in productivity, profitability, quality, efficiency, and innovation.
Par. 386 and subsequent – corporate welfare: To reduce the tax wedge, the tax-free threshold for low-value goods and services provided by employers to employees has been raised for the 2024 tax period from the structural value of €258.23 to:
- €1,000.00 for all employees;
- €2,000.00 for employees with dependent children.
Additionally, amounts paid or reimbursed by employers to new hired employees for rent and maintenance expenses of rented buildings in 2025, up to €5,000 annually, do not count as taxable income. This exemption applies to workers hired from January 1, 2025, whose income did not exceed 35,000 euros in the year prior to hiring and who have transferred their residence to the municipality of the workplace more than 100 kilometers from their previous place of residence.
Par. 395 and subsequent – tax reduction for night and overtime work: For employees of tourist and hotel structures, from January 1, 2025, to September 30, 2025, a 15% tax rate is applied to gross wages for night work and overtime performed on holidays.
Par. 399 and subsequent – labor cost: The increase in the deductible cost for new hires provided by Article 4 of Legislative Decree No. 216 of December 30, 2023, is extended for two tax periods after December 31, 2024. According to this provision, the cost of newly hired personnel with permanent employment contracts is increased by 20% for income determination purposes. Employment increases are considered if the number of permanent employees at the end of the following tax period exceeds the average number of permanent employees in the previous tax period.
Par. 189 and subsequent - Social Safety Nets and GOL Program: Measures are introduced to support workers and promote employability, mainly through the provision of social safety nets and training programs. The Extraordinary Wage Guarantee Fund for cessation of the company activity under Article 44, D.L. 109/2018, is extended for 2025 for a maximum total period of 12 months. For companies of national strategic interest with at least 1,000 employees undergoing complex reorganization plans, the Ministry of Labor and Social Policies may authorize, upon request, an additional period of extraordinary wage guarantee until December 31, 2025, to safeguard employment levels and the company's skills. The Worker Employability Guarantee (GOL) program is also strengthened, allowing regions to allocate resources to training initiatives for workers identified in the National Recovery and Resilience Plan.
Par. 217 and subsequent – parental leave: The budget law enhances parental leave by extending its duration and increasing the allowance for parents. Specifically, a third month of parental leave paid at 80% of the salary is introduced, to be taken within the child's sixth year of life.
Par. 48 – company cars: the percentage for calculating the remuneration value of company cars granted for mixed use with contracts signed from January 1, 2025, increases from 30% to 50% of the amount corresponding to the conventional mileage of 15,000 kilometers, according to ACI tables. This calculation percentage is instead reduced to 10% for fully electric vehicles and to 20% for plug-in hybrid vehicles.
