Household utilities disbursed as fringe benefits.

As mentioned in the introduction, Article 12 of the Aiuti Bis Decree, in addition to introducing expenses incurred for household utilities into the fringe benefit framework, raised the exemption limit to 600 euros, derogating from Article 51, paragraph 3 of the TUIR, which established a maximum threshold of 258.23 euros.

The wording of the rule had led to the assumption that the exemption itself legitimized the criterion that ordinarily characterizes the third paragraph of Article 51, according to which in the case of fringe benefit disbursements in excess of the exemption threshold, the entire amount disbursed annually in compensation in kind was taxed and subject to contribution. The "exemption" criterion found its application as a result of the harmonization of tax bases. The majority opinion held that the exemption also covered this aspect, guaranteeing possible taxation only on the portion exceeding the non-competition limit to taxable labor income.

The uncertainty was resolved with Circular No. 35/E of the Internal Revenue Service, which clarified that the provision contained in Article 12 of the Aid-Bis Decree only derogates from the contents of Article 51, c. 3 of the TUIR, and that therefore, once the exemption threshold is exceeded, the entire amount, including the portion of the value below that limit, will have to be taxed.

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The subjective scope of the Aiuti Bis Decree is the same as that of Art. 51, c. 3 of the TUIR, i.e., limited to holders of income from employment and income assimilated to that of employees, so typically it also includes coordinated and continuous collaborators as well as scholarship recipients. Furthermore, as stated in Circular No. 35/E "given that the rule refers to the regulations dictated by the aforementioned paragraph 3 of Article 51 of the TUIR, and not also to those dictated by paragraph 2 of the same article, it is believed that the fringe benefits under consideration can be paid ad personam". The employer, therefore, will no longer be obliged to draft regulations or sign a union agreement if it decides to give the benefit only to certain, specific, employees.

Regarding the objective scope of the rule, the agency offers a more nuanced interpretation. Regarding the non-competition in income of the sums reimbursed or disbursed by the employer for the payment of household utilities, it specifies that such expenses must be incurred for real estate for residential use owned or held, on the basis of a suitable title, by the employee, spouse or family members, regardless of the existence of residence or domicile. Additional cases subject to reimbursement concern utilities in the name of the condominium or landlord who owns the property, provided that a form of analytical charge is provided within the lease agreement to the tenant employee, or his or her spouse or family members, assuming that they actually bear the expense.

The application of the relief within the limits of Article 51, c.3, TUIR entails fulfillments on the part of the employer. In particular, he will have to get and keep, for possible audits, the relevant documentation justifying that the employee or his family members have incurred the reimbursed expense, or, alternatively "may acquire a declaration in lieu of affidavit, pursuant to Presidential Decree No. 45 of December 28, 2000, by which the worker certifies that he or she is in possession of documentation proving payment of household utilities."

The statement with the purpose of identifying expenses, should contain the following:

• The invoice number and bill holder (and if different from the worker, the relationship with the worker);
• The type of users;
• The amount paid;
• Date;
• Payment methods;
• A self-declaration that the bills have not already been reimbursed even in part either by the employer from whom reimbursement is sought or by others.

For the purpose of possible audits by the Internal Revenue Service, the employee should keep copies of documents showing the expense incurred, in addition to the functional self-certification to avoid multiple reimbursements in relation to the same expense.

Finally, Circular No. 35/E expands the time limit, specifying that utilities referring to invoices issued in 2023 are also reimbursable no later than Jan. 12, 2023, due to the expanded cash principle, as long as they relate to consumption in 2022.

Three thousand euros. Such is the new threshold of exempt in-kind benefits (or utility reimbursements) arranged by our executive by means of the so-called "Aid Quater" DL.

The decree, No. 176/2022 published on Nov. 18, 2022, contains an Article 3 Paragraph 10 that provides a substantial amendment to the former Article 12 Paragraph 1 of Decree Law No. 115 dated 09.09.2022 (converted into Law No. 142 dated Sept. 21, 2022).

If, as we have seen, the choice of the previous government was to determine an increase in the exemption threshold of the so-called benefits in kind, referred to in Article 51 paragraph 3 of the TUIR, as well as that of delivering, for the first time, the possibility of counting the payment of sums aimed at the reimbursement (or refunds) of energy, water or natural gas bills up to a value of 600.00 euros per employee, the current executive, still confirming the opportunities created by the previgent, wants to allow a conspicuous use of the welfare credit under discussion, raising it to 3,000.00 euros per recipient.

Let's be clear about one thing: if we were not in an economic emergency that will hopefully have to stabilize downward as far as costs and commodity supplies are concerned, opening up to evolved welfare systems, such as household utility reimbursement, would surely project Italy among the most forward-looking countries as far as direct welfare policies are concerned.

In any case, it seems clear, at least for now, how the opening to new types of benefits appears tied to contingent factors as well as relegated to 2022.

Indeed, the issue is time: while the grant of a three thousand euro annual value for goods and services in kind (as well as bill refunds) seems very flattering, let us remember that this value will have to be spent by January 12, 2023, in order to fall within the 2022 annuality, where the rule confines it.

Thus, there may be a rush to spend these values, clearly if the company wishes to do so.

Warning: are we sure this was the executive's intent? To make exempt the provision of goods and services in kind that might not even relate to "expensive energy"? All with a decree, aid quater, the third article of which is thus headed "Support measures to cope with high utility bills"

After all, the rule is, for the time being, an unconverted decree law and not interpreted by either the Internal Revenue Service or INPS (although interpretations other than the literal text do not seem conceivable-perhaps).

And, if so, we hope in the timing. The tax (and social security, at this point) equalization is approaching.