Assindatcolf's proposal

Domestic helpers, with the 50% tax credit a family would save EUR 9,425 a year

The idea is to introduce a new incentive in place of the current contribution deduction for domestic work with a benefit for the irregularity rate in the sector that could drop from 54% to 21% and the emersion of some 460,000 undeclared workers

by Giorgio Pogliotti

5' min read

5' min read

With a 50 per cent tax credit for households to be applied to the expenditure incurred on housekeepers, carers and babysitters, costs would be halved, with a benefit for the irregularity rate in the sector that could drop from the current 54 per cent to 21 per cent, and the consequent emersion of some 460,000 undeclared workers. The advantage in concrete terms? For a carer hired to care for a dependent person on a full-time, co-habiting basis, a family must set aside an annual budget of EUR 16,300 (including salary, holidays, thirteenth month's pay, and severance pay), plus EUR 2,550 in contributions. Applying a possible 50% tax credit would result in a 'discount' of no less than EUR 9,425, out of the total of EUR 18,850.

This is highlighted in the 2024 Report 'Family (Net) Work - Laboratory on home, family and domestic work' by the Assindatcolf Studies Office in partnership with Censis, Effe, Idos Study and Research Centre and Fondazione Studi Consulenti del Lavoro, which looks with interest at the introduction of a tax credit, the tax incentive already in force in France for decades, also in our country.

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The costs to the state and the impact on the underground

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According to Assindatcolf's assumptions, the new measure should be accompanied by the elimination of the current contribution deduction for domestic work of up to EUR 1,549.37 per year and the doubling of contribution charges.

According to simulations, the cost to the State is estimated at 7.8 billion, but looking at the direct effects, it is estimated that this measure could produce not only a new demand for employment in the sector, but also a substantial emersion of irregular employment (60% is assumed). The combination of these two elements would bring the cost down to 3.3 billion. Then the indirect effects must be counted: increased consumption that households could sustain due to the impact of the measure on the household budget and the contribution and tax revenues from the potential new employment of family carers in other jobs (it is estimated that for every 100 family carers 30 employers are caregivers). Net of these conditions, the net cost of the tax credit would fall to 2.6 billion .

Reducing the cost of undeclared work has a significant impact in terms of lost tax revenue and IRPEF evasion. The current irregularity rate, averaged over the last five years 2017-2021, can be estimated at around 54%. With the new measure this could drop to 21%, bringing to light about 460 thousand workers who are now irregular out of an estimated 765 thousand (a total of 1.384 million employed, both regular and not). Considering that undeclared work weighs on the State's coffers about EUR 2.4 billion a year, including missed contribution revenue (EUR 1.5 billion) and IRPEF evasion (EUR 904 million), with the introduction of the 50% tax credit, according to Asssindatcolf's calculations, it could drop to EUR 959 million (EUR 361 million in IRPEF evasion and EUR 598 thousand in contribution evasion).

For 42.3% of households, expenditure on domestic helpers is hardly sustainable

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As of July 2024, 42.3 per cent of households that make use of the services provided by a regular domestic helper stated that this expense has become difficult to sustain. Also worrying, according to the Fondazione Studi Consulenti del Lavoro, is the trend of the last two years, which shows a steady increase in household difficulties. Compared to the surveys conducted in January 2023 and July 2023, the share of households that consider the rising costs unaffordable has increased from 25.6% (January 2023) to 36.9% (July 2023) to 42.3% (July 2024).

Households with an average level of economic wellbeing are those that register the most significant increase in difficulties: the share of those judging expenditure on domestic helpers to be hardly sustainable doubles from 27.9% in January 2023 to 55.2% in July 2024. Among those with a low and medium-low economic level, the criticalities already noted in previous surveys are confirmed: almost eight out of ten assess the expenditure for domestic helpers and carers as no longer sustainable.

The French Model

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France, which already 30 years ago initiated virtuous reforms in the domestic sphere that have led to a 30% reduction in irregular work, while offering significant support to families and workers. In May 2024, Assindatcolf organised a meeting between the Parliamentary Intergroup on Domestic Work and a French delegation to study the 'French model', a complex system of benefits that provides a EUR 2 relief for each hour worked by the domestic worker and a 50% tax credit for the employer.

The combination of these elements produces a reduction by more than half of the cost borne by the family, which from 20.27 euro (hourly cost including pay - equal to 11 euro - and social security contributions) becomes 9.13 euro. A universal mechanism, immediately usable (thus also ahead of tax return times) and dematerialised because it is online.

The Italian system

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The regularisation of 2020 favoured the emersion of a significant number of domestic workers, bringing the irregularity rate down to 51.8%, but according to estimates by the Fondazione Studi Consulenti del Lavoro (Labour Consultants Studies Foundation), the employment contraction in domestic work over the last two years is expected to be accompanied by an increase in undeclared work estimated at around 54% by 2023. According to these projections, in 2023 out of 1,384,000 domestic workers, 632,000 will be regular and 753,000 irregular.
In Italy, a domestic employer is entitled to access limited and insufficient tax benefits, such as the deductibility of contributions paid for his or her domestic helper, caregiver or babysitter, but up to a maximum limit of €1,549.37 per year. Only in the case of a carer hired to care for a dependent person with an income below 40,000 euro is there a minimal deduction of what has been spent on the salary, to a maximum of 399 euro per year, or 19% of 2,100 euro

Zini (Assindatcolf): time to rethink the tax system for domestic work

"Assindatcolf's historic battle," says association president Andrea Zini, "has always been to get families to deduct the full cost incurred for domestic staff. However, over the past few years the country's economic situation has worsened and this has made it increasingly unaffordable to resort to in-home assistance, especially for non-self-sufficiency. This makes it necessary to rethink the tax system, to solve not only the problem of costs but also that of undeclared work. Results that could be achieved with the introduction of tax credits, an instrument that can reach a broader range of deductibles and in a fairer way'.

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