Also in 2024, reduced taxation at 5% is active for productivity premiums or production premiums. Confirmed by the 2024 Budget Law, this is a reduction from 10% to 5% of the replacement tax rate on sums disbursed in the form of productivity premiums or results, within the limit of 3,000 euros gross per year (and in some cases even 4,000). As of 17 June 2024, more than 4 million workers have benefited from it.
In this guide, we explain in a clear and detailed way how subsidized taxation for productivity premiums works, to whom it is entitled and within what limits.
Table of Contents:
What is Concessional Taxation Productivity Premiums
The subsidized taxation of employee production premiums is a reduction from 10% to 5% of the replacement tax rate on sums paid in the form of productivity premiums, results or participation in business profits. Thanks to the measure introduced for the first time by the 2023 Budget Law, then confirmed by the 2024 Budget Law and the 2024 tax reform, employees in the private sector can take advantage of this further reduced taxation for the awards recognized in 2024, up to the limit of 3,000 euros gross per year. The ceiling rises to 4,000 euros if the company concerned involves workers in the organization of work
.
How Concessional Taxation Works
The subsidized taxation to which production premiums are subject works through the application of a replacement personal income tax and regional and municipal surcharges, unless the employee provides express written waiver. Here, in detail, is how productivity premiums are taxed
:
- The total sum of the personal income tax and additional rates is replaced by a single reduced rate in 2024, “replaced” precisely
- The ceiling within which this reduced taxation applies is 3,000 per year or 4,000 euros in some specific cases
- This rate is 5% for the whole of 2024
- To be entitled to reduced taxation, workers must have an employee income of no more than 80,000 euros in the year prior to the year in which the premiums were received
Concessional Taxation Limits
The reduced taxation for productivity premiums at 5% is recognized within the total amount limit of 3,000 euros gross per year. The 3,000 euro limit for the subsidized taxation of premiums can be raised to 4,000 euros if the company involves workers equally in the organization of work. The equal involvement of workers takes place through company organizational schemes that allow workers to be directly and actively involved in innovation processes, improvement of business performance, with increases
in efficiency and productivity.
Production Award Recipients in 2024
According to the report updated in June 2024 on the filing of contracts by the Ministry of Labor, there are more than 4 million workers receiving productivity premiums (4,169,930), of which:
- 2,831,265 referring to business contracts
The average annual value of the prize is 1,483.37 euros.
The Resources
For the intervention, aimed at encouraging companies to recognize this type of compensation, the Government has planned an expenditure of 6.9 million euros for 2024, considering the loss of income from personal income tax and municipal and regional supplements. According to the Report on the trend of productivity premiums, the tax relief measure is having positive feedback. There are 13,597 active contracts, 26.2% more than on the same date in
2023.
