New Taxes and Benefits for Young Freelancers [P1]

The progressive tax on freelance work will extend until 2027 and will also apply to younger workers. The draft budget bill, approved by the General Administration of State and transmitted to the Chamber, extends social contributions related to contractual increases and shift work, introduces new ones related to salary increments of young employees, and introduces partial exemption from dividends received instead of performance bonuses.

Manpower 2027 includes higher benefits exempted from taxes in cash compensation for young parents without children, extension of integrated treatment for tourism and public services, and partial exemption from dividend income earned instead of bonus payments based on results.

The measures apply to private sector employees with varying income limits for each benefit. New bonuses in pay slips do not add up: those who claim reserved tax on behalf of young people lose the other supplementary taxes, and those working shifts can reduce their tax payments by renouncing. In summary: Art. 6 of Budget Law No. 2027 imposes an additional 5% tax on increases paid by employers to contractually renewed employees from 2024 to 2027, starting from 2026 earnings until €330,000; Art. 7 extends the 15% tax on night work, holidays, and rotating shifts to 2027, subject to annual income not exceeding €1,500 and previous year's total income not exceeding €400,000; Art. 44 introduces only an additional 1% tax on salary increments up to €2,500 for individuals born after 1997 as an alternative to the 5% or 15%.

The Ministry of Finance has announced that the threshold for fringe benefits will be €1,000 in 2027, increasing to €2,000 for those under 31 or with dependent children. Article 8 extends the integrated tax treatment of 15% for workers in tourism, hospitality, and thermal energy until September 30, 2027.

In 2027's payroll deductions: The measures for private employees' payrolls are four supplementary taxes on IRPF and additional taxes, with rates of 5%, 15%, and 1%, plus exemptions from fringe benefits and dividends. Starting January 1, 2027, all these apply to the new Unified Income Tax Law (DLgs. No. 117/2026). The rules follow the law draft and can change during parliamentary debate, which must be approved by both Chambers before December 31st.

The contractual increases are up by 5%. Employees working for private sector companies with dependent income of $2026 until €33,000 pay an additional 5% on top of their increased remuneration from January 1, 2024 to December 31, 2027, following contract renewals signed from January 1, 2024 to December 31, 2027. Article 6 of the DDL places tax deductions for contractual increases under new Art. 360-ix of the Unified Text: the substitute tax absorbs IRPEF and additional regional and local taxes, applies except where renounced... [P4] The 2027 Maneuver introduced new benefits into the payroll deduction envelope for young workers, such as the extension of integrated treatment for tourism and public works, and partial exemption from dividends received instead of a performance bonus.