The Decontribuzione Sud for companies in the South has been extended until 12/31/2023

The Decontribuzione Sud, the incentive aimed at safeguarding employment in the most disadvantaged areas of the country, has been extended until 12/31/2023. After the decision of the European Commission on December 6, which acknowledged the changes in Italian laws supporting businesses in Southern Italy damaged by the War in Ukraine, INPS announced, through message no. 4593/2022, the extension until December 31, 2023 of the social security contribution exemption referred to in art. 1 of Law December 30, 2020, no. 178 (so-called Decontribuzione Sud).

State Aid: Temporary Framework

The 2021 Budget Law had provided for the exemption from social security contributions for workers of companies in the South until 12/31/2029 as follows:

• at a rate of 30% until December 31, 2025;
• at a rate of 20% for the years 2026 and 2027;
• at a rate of 10% for the years 2028 and 2029.

The reduction in contributions was applied until June 30, 2022 as the Italian authorities had submitted the full implementation of the incentive measure to the European Commission, through a Communication entitled "Temporary framework for State aid measures to support the economy in the current COVID-19 emergency (so-called Temporary Framework).

The incentive measure was approved by the European Commission first with decision 4499 Final of June 24, 2022, which extended the measure to 12/31/2022, and subsequently with decision 9191 Final of December 6, 2022, which extended the decision until 12/31/2023.

With the latest communication from the European Commission of December 6, 2022, the maximum amount of aid granted under the Temporary Crisis Framework was also increased, raising the threshold to:

• €300,000.00 for companies active in the fisheries and aquaculture sectors
• €2 million for all other companies

Decontribuzione Sud in brief

As already mentioned, Decontribuzione Sud is an incentive aimed at supporting businesses in the most disadvantaged areas of the country, located in the regions of the South (Abruzzo, Basilicata, Calabria, Campania, Molise, Puglia, Sardinia, and Sicily), with a discount on total social security contributions owed by the employer for each employee.

The companies that can benefit are fishing and aquaculture companies and all companies except those in the primary production of agricultural products and domestic work companies. Financial companies are also expressly excluded.

For the incentives provided for the years 2024 and up to 12/31/2029, further instructions will be issued by the relevant authorities.