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29.11.2013 - Tax exemptions for employees

Tax exemptions for employees are the kind of tax benefits that reduce the IRPEF tax presented on the pay slip.

Those exemptions are calculated on the basis of the total revenue and the number of days worked.

In order to determine the level of exemption we are entitled to, it is necessary to multiply the taxable income (base salary minimo tabellare + cost-of-living allowance contingenza + long service bonus scatti di anzianità + 'superminimo' bonuses superminimo – INPS contributions) by the amount of monthly salaries, so that the total revenue is established. On the basis of that result, the following formula are applied:

TOTAL REVENUE UP TO 8000 € 1840 € under the following circumstances:
a) The amount of the tax exemption must not be less than 690€
b) If the contract of employment is a fixed-term one, the tax exemption must not be less than 1380 €
TOTAL REVENUE FROM 8001 € TO 15000 € 1338 € + the result of the following calculations:
502 € * (15000 – total revenue) / 7000
TOTAL REVENUE FROM 15001 € TO 55000 € 1338 € * the result of the following calculations:
(55000 – total revenue) / 40000
THE RESULT MUST BE COMPRISED IN THE FIRST THREE DIGITS AFTER THE DECIMAL

If the total revenue exceeds 23,000 € but is less than 28,000 € the tax exemptions for employees presented above increase by the following:

from 23.000 up to 24.000 euro: 10 €

from 24.001 up to 25.000 euro: 20 €

from 25.001 up to 26.000 euro: 30 €

from 26.001 up to 27.700 euro: 40 €

from 27.701 up to 28.000 euro: 25 €

EXAMPLE

Base salary: 1383,19 €

+

Long service bonus: 15,68 €

=

GROSS AMOUNT: 1398,87 €

-

INPS CONTRIBUTIONS (9,19%): 128,56 €

=

TAXABLE INCOME: 1270,31 €

*

the number of days worked: 14

=

TOTAL REVENUE: 17784,34 €

LET’S NOW APPLY THE FORMULA PRESENTED IN THE CHART:

1338 * (55000 – 17784,34) / 40000 = 1244,86 €

The amount of 1244,86 € is then the annual tax exemption we are entitled to

Subsequently, the result of this calculation is distributed proportionally to the time worked in the year and divided per month, lowering the amount of the tax on the pay slip.

All the articles dedicated to Italian pay slips are available under the following links:

The first article ‘How to read and understand Italian pay slips (busta paga)?’

The second article ‘Social security contributions’

The third article ‘How to read and understand Italian pay slips: IRPEF gross tax’

For more information and assistance contact us

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