Ruling No. 7/2026 addresses the determination of the “theoretical annual income” relevant for the recognition of the benefit provided under Article 1, paragraphs 4 and 5, of Law No. 207 of 30 December 2024 (Budget Law 2025), offering operational guidance on how to count employment days in cases involving unpaid absences.
The ruling is particularly significant for withholding agents, who are required to verify eligibility for the benefit and accurately determine its amount where employment relationships formally remain in force but remuneration is wholly or partially unpaid.
The case
The request for a ruling was submitted by a Local Health Authority (ASL), acting as a withholding agent, seeking clarification on how to calculate the amounts to be granted to employees pursuant to Article 1, paragraphs 4 and 5, of the Budget Law 2025.
The applicant refers to Circular No. 4/E of 16 May 2025, which provides examples for calculating the “theoretical annual income” where a taxpayer has worked only part of the year.
In such cases, theoretical income is determined by proportionally relating employment income to the number of employment days and multiplying the result by 365.
Against this background, the ASL asked how to correctly identify the “employment days” to be considered when an employee, while formally employed, receives no remuneration for certain days of the year (for example, unpaid leave, unpaid permits, or suspensions from work).
Two scenarios were specifically outlined:
- partial absence of working days during the year;
- total absence of working days during the year.
The question submitted
According to the applicant:
- in cases of partial absence, “employment days” for the purpose of calculating theoretical annual income should include only those days for which the employee actually received remuneration, applying by analogy the criterion used for employment tax credits under Article 13 of the TUIR;
- in cases where no days were worked during the year, if contractual arrears or ancillary compensation unrelated to actual service are paid, the benefit provided by the Budget Law 2025 should not apply.
Opinion of the Italian Revenue Agency
The Italian Revenue Agency first reconstructs the relevant legal framework, referring to Article 1, paragraphs 4 and 5, of the Budget Law 2025, which grant employees with total income not exceeding EUR 20,000 a non-taxable amount calculated by applying a percentage to employment income, with the percentage varying according to income brackets.
Solely for the purpose of identifying the applicable percentage, employment income must be annualized through the determination of a theoretical annual income.
Referring again to Circular No. 4/E of 16 May 2025, the Agency reiterates that where work is performed for only part of the year it is necessary to:
- determine the employment income the taxpayer would have earned had he or she worked the entire year;
- identify the applicable percentage based on the theoretical income;
- apply that percentage to the income actually received.
With respect to the concept of “employment days,” the Agency also recalls the guidance provided in Circular No. 4/E of 18 February 2022 on employment tax credits, according to which days for which no income is due, nor any form of deferred remuneration, must be excluded from the calculation (for example, unpaid leave).
The Agency’s conclusions
In light of the above, the Italian Revenue Agency concludes that:
- for the purposes of calculating theoretical annual income, “employment days” must be limited to those days for which the employee actually received remuneration;
- in cases of partial absence, days on which the employee received no compensation must not be counted;
- in cases where no days were worked during the year, if the amounts paid (although subject to ordinary taxation) do not relate to the 2025 tax year, the benefit provided under Article 1, paragraphs 4 and 5, of the Budget Law 2025 must not be granted.
Final remarks
Ruling No. 7/2026 provides operationally relevant guidance for withholding agents, confirming that the concept of “employment days”, including for the calculation of theoretical annual income, must be interpreted consistently with the criteria already adopted for employment tax credits.
The clarification underscores the importance of correctly identifying periods that were remunerated, in order to avoid the erroneous granting of undue benefits and to ensure proper application of the provisions introduced by the Budget Law 2025.
In this context, A&P Firm assists employers in analyzing employee positions, verifying the criteria for calculating theoretical annual income, and supporting withholding agents in the correct application of tax relief both at the payment stage and during year-end adjustments.