Private employees, how profit distribution works in 8 questions and answers
One of the conditions of the new rules is that the company must distribute no less than 10% of the total profits. In eight questions and answers we try to clarify the new regulations
3' min read
Key points
- What incentives are there for workers to whom profits are distributed?
- What group of workers can benefit from this tax incentive?
- What are employee financial participation plans?
- What is the tax treatment of the award of shares in lieu of a performance bonus?
- How is employee management participation implemented: is there an automatic application in spas?
- How is management participation implemented in companies not organised according to the dualistic model?
- What role can joint committees play in the organisation of company work?
- How does workers' consultative participation take place?
3' min read
There are four areas of worker participation in the company provided for by the new law definitively approved by the swenate and inspired by the CISL proposal: managerial, organisational, economic-financial and consultative. But how can workers appoint their representatives on management boards or supervisory boards? How is the participation of workers in the profits and results of the company incentivated, including through share ownership? What happens if shares are distributed as a (voluntary) substitute for negotiated performance bonuses? How are workers involved in decisions concerning the various production and organisational phases of the company's life? In eight questions and answers we try to clarify these novelties.
What incentives are provided for workers to whom profits are distributed?
The new law introduces a transitional amendment to the regulations on the substitute tax on personal income tax and regional and municipal surcharges, on remuneration consisting of performance bonuses and forms of profit-sharing. For 2025, the limit of the total amount to which the 5% substitute tax applies is raised from EUR 3,000 to EUR 5,000 gross, in the event of the distribution to employees of a portion of company profits not lower than 10% of the total profits, carried out in implementation of collective, company or territorial agreements.
What group of workers can benefit from this tax incentive?
Private employees only. Provided they have an employee income not exceeding EUR 80,000 in the year preceding the year in which the emoluments were received. The substitute tax rate is 5% until 2027, then it becomes 10% when fully operative.
What are employee financial participation plans?
Companies may provide for employee financial participation plans, which may identify the instruments of employee participation in the company's capital from among those provided for by the Civil Code in Articles 2349 (shares and financial instruments in favour of employees), 2357 (purchase of own shares), 2358 (other transactions on own shares) and 2441, paragraph 8, (offer of shares for subscription to employees, excluding option rights of other parties), as well as the allocation of shares in lieu of performance bonuses.
What tax treatment is provided for the allocation of shares in lieu of a performance bonus?
In 2025, dividends paid to employees from shares granted in lieu of the performance bonus in an amount of up to EUR 1,500 per year are 50% tax-free.


