HOW IT WORKS
Performance Bonus to the Pension Fund
The performance bonus serves a dual purpose. On one hand,
Contributing the performance bonus to the Fondapi Pension Fund is advantageous. Let’s discover why!
What is the performance bonus?
Also known as productivity bonus, the performance bonus is additional compensation that the company grants to its employees when there are increases in productivity, profitability, quality, efficiency, and innovation. By law, these improvements must be verifiable and measurable.
The Preferential Tax Treatment
The preferential tax treatment for the performance bonus applies to all private sector workers who, in the year prior to receiving the bonus, did not exceed an employment income of €80,000.
The 2016 Stability Law introduced tax benefits in the performance bonus regulations. It consists of a substitute tax for IRPEF and regional and municipal surcharges. The applied tax rate is 10% for amounts up to €3,000 gross paid as performance bonus.
Furthermore, receiving this bonus up to €3,000 gross does not contribute to the worker’s taxable income. However, if the bonus exceeds this limit, the portion above €3,000 will be subject to ordinary taxation.
Performance Bonus to the Pension Fund
In 2017, an update to the 2016 Stability Law added the option to contribute the performance bonus to the Pension Fund.
Is it Advantageous to Contribute the Performance Bonus to the Pension Fund?
The answer is: yes!
This new option represents an enormous advantage for workers who wish to use it. In fact, if the performance bonus is converted into pension fund contributions:
- it is not taxed at all. Not even with the 10% substitute tax;
- it does not contribute to the worker’s taxable income. Even if it exceeds the normal deductibility limit of €5,164.57.
The tax exemption is, moreover, absolute. The amount or amounts related to the bonuses will not be taxed even during the benefit phase (redemption, pension benefit, RITA, or advance payment).
Finally, we remind you that both the employee and the company must inform Fondapi of their intention to contribute the performance bonus to the Fund. This requires completing and submitting the “Performance Bonus Declaration” form according to the procedures specified on the form itself.
It's also advantageous for companies to contribute the performance bonus to the Pension Fund
First, they can deduct the costs from IRES. Additionally, while the INPS contribution for the performance bonus in the paycheck is slightly above 23%, if it’s contributed to the Pension Fund, it drops – as a precautionary measure – to 10%! Yes, 10% as a precautionary measure, because it should actually be zero (0%), but pending INPS ruling, the 10% substitute application is recommended.
Finally, thanks to these tax benefits, for the same costs to the company, it provides higher economic value to its employee.
An example:
| wdt_ID | wdt_created_by | wdt_created_at | wdt_last_edited_by | wdt_last_edited_at | Voci | Voci sp. | Formule | Premio in busta paga | Formule | Premio a Fondapi |
|---|---|---|---|---|---|---|---|---|---|---|
| 1 | admin_fondapi | 27/07/2024 09:23 | admin_fondapi | 27/07/2024 09:23 | (A) Costo netto azienda | 2.971,00 | 2.508,00 | |||
| 2 | admin_fondapi | 27/07/2024 09:23 | admin_fondapi | 27/07/2024 09:23 | (B) costo lavoro* | 909,00 | 300,00 | |||
| 3 | admin_fondapi | 27/07/2024 09:23 | admin_fondapi | 27/07/2024 09:23 | (C) risparmio IRES | -938,00 | -792,00 | |||
| 4 | admin_fondapi | 27/07/2024 09:23 | admin_fondapi | 27/07/2024 09:23 | (D) Premio lordo al dipendente | 3.000,00 | 3.000,00 | |||
| 5 | admin_fondapi | 27/07/2024 09:23 | admin_fondapi | 27/07/2024 09:23 | (E) Contributi INPS conto lavoratore | 276,00 | 0,00 | |||
| 6 | admin_fondapi | 27/07/2024 09:23 | admin_fondapi | 27/07/2024 09:23 | (F) IRPEF | 0,00 | 0,00 | |||
| 7 | admin_fondapi | 27/07/2024 09:23 | admin_fondapi | 27/07/2024 09:23 | (G) Imposta sostitutiva 10%** | 272,00 | 0,00 | |||
| 8 | admin_fondapi | 27/07/2024 09:23 | admin_fondapi | 27/07/2024 09:23 | Netto in busta | 2.452,00 | 0,00 | |||
| 9 | admin_fondapi | 27/07/2024 09:23 | admin_fondapi | 27/07/2024 09:23 | Prestazione netta futura da Fondapi | 0,00 | 3.000,00 | |||
| 10 | admin_fondapi | 27/07/2024 09:23 | admin_fondapi | 27/07/2024 09:23 | * Contribuzione inps + oneri vari (30% circa) | ** Calcolata al netto del contributo INPS (E) |
Note: This assumes an employee with an annual gross salary of €25,000.
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