Everything you need to know about the Italian Budget Law of 2022

Law no. 234, also known as the 2022 Budget Law or Legge di bilancio, passed on December 30, 2021 and was published in the Official Gazette of the Italian Republic. The €32 billion budget affects taxes and employment, and amends a number of public benefits. But what exactly is the Budget Law, and what kind of changes are in store for Italians? 

We’ll give you an overview of the structure of this important law and go over some of the  most significant changes you may expect.

Legge di bilancio is a document that projects government spending and revenue for the coming year. Each year on December 31, the Italian Parliament approves the government’s proposed budget for the following year, allowing the Chamber of Deputies and the Senate of the Republic to oversee the way the government spends money. The law outlines the financial forecasts for the following year and defines the resources needed to achieve any objectives agreed upon at the governmental and European level. It also includes an updated, three-year budget draft. 

The Budget Law is broken down into several sections:

• Deficit, calculated as the difference between the final spending and the final revenues (net balance).
• The total deficit to be covered by loans.
• The amount of funds allocated to “special” budgets. 
• The maximum amount allocated for the renewal of public sector contracts.
• Appropriations to refinance spending outlined in current laws.
• Long-term spending forecasts, which depend on the financial resources available each year.

In order for the law to go into effect, the following four phases must take place:

• The Drafted Budgetary Plans (DBP) must be sent to EU institutions by October 15.
• The government passes the budget law draft, which is then submitted to the Parliament for approval by October 20.
• Feedback from European institutions must be received by November 30.
• The Parliament must approve the final text by December 31. Ad hoc adjustments are provided to implement any necessary changes.

Once all of these conditions are met, the law goes on January 1st of the following year.

The Budget Law for 2022 increased the allocation of resources from €30 billion to €32 billion to make room for a wide range of policies related to the tax system, labor market, and several fiscal reductions and investments. Here is a list of major goals outlined by the upcoming Budget Law:

• Reducing the tax burden and addressing the tax wedge, regional production taxes, and personal income tax.
• Extending the 110% super bonus (for environmental renovations) until December 31, 2022, 2023, or 2025—if applicable.
• Upholding the façade bonus at 60% for 2022.
• Extending other bonuses for building renovations, including the standard energy “eco bonus,” the seismic bonus, the furniture bonus, and the green bonus until December 31, 2024.
• Instituting tax deductions of up to 75% for the removal of architectural barriers.
• Extending discount options and transfer of the credit (until 2025 for the 110% super bonus).
• Extending the bonus for drinking water filtration systems (until December 31, 2023).
• Extending the investment bonus 4.0 (until June, 2026).
• Refinancing the TV and decoder bonus for 2022.
• Allocating resources and measures to support agricultural projects.
• Ending the government cashback bonus.
• Postponing the plastic tax (a measure intended to discourage the use of single-use plastic) to January 1, 2022, and of the sugar tax (a tax on the consumption of sweetened beverages) to January 1, 2023.
• Reducing VAT on sanitary pads, from 22% to 10%.
• Introducing a four-year rent bonus corresponding to 20% of one’s rent and a maximum amount of €2,400. This measure targets young people between 20 and 30 whose income does not exceed €15,493.71.
• Introducing 10-day mandatory paternity leave within the first five months of the birth, with a gradual future increase of up to 3 months. The measure covers fathers of natural, adopted, or foster children.
• Introducing measures to support gender equality, including a tax relief for working mothers and allocating additional resources to the Gender Equality Support Fund.

For a full overview of the new developments of the Budget Law, take a look at the original text published in the Official Gazette.

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