Circular INPS 63/2019: clarifications and instructions on annual contribution ceiling

The INPS, with circular 63 of 9 May 2019, provided:

• clarifications on payment of contributions for salaries exceeding the annual maximum for contributions and base pensions, as well as on the limitation period for reimbursement claims;
• operating instructions on the recovery of undue contribution, not prescribed, and on the management in the Uniemens flow of the indemnity in lieu of notice.

Let us look at the details of the circular.

The INPS ceiling and prescriptive system of contributions

As from 1 January 1996, following the introduction of the maximum contribution and base pension pursuant to art. 2, paragraph 18, of Law 335/1995, for workers covered by the contributory pension system, salaries beyond the fixed annual limit (102,543 euros for 2019) are not subject to social security or pension contributions.

However, for the calculation of contributions due, employers can use as reference a taxable salary higher than that referred to in the annual ceiling. In this case, the same employer may request reimbursement of excess contributions from INPS on the basis of rules governing undue payments set out in Article 2033 of the Italian Civil Code.

The circular outlines the period for requesting returns, pursuant to art. 2946 of the Italian Civil Code, is 10 years. If this term is not useful, sums will remain at the Institute even if they do not produce social security effects.

In addition, the INPS states Article 8 of the Presidential Decree does not apply to the excess of the above mentioned contribution 818/1957, ‘the scheme of which provides for the acquisition, for the purposes of entitlement to benefits, of contributions unduly paid in respect of which the determination of undue payment is more than five years later than the date on which payment was made‘. This is because the purpose of Article 2(18) of Law no. 335/1995 is precisely to fix an “annual ceiling” for workers without contributory seniority at 31 December 1995, which constitutes not only a mandatory ceiling for the purposes of their contribution base but also the basis of the retirement age. On this point, the Institute refers to Circular 282 of 15 November 1995, in which it had already specified that social security contributions unduly paid are not counted as contributions eligible for retirement.

Recovery of undue non-prescribed contributions

In its circular, INPS points out that, in order to avoid the need to make payments in excess of the ‘annual ceiling’, employers must first identify the correct social security scheme applicable to employees, acquiring their declarations both when the employment relationship is established and during its course.

At the operational level, the employer is then required to declare monthly in the Uniemens flow the scheme applied to each employee by filling in the appropriate section, adding the value “Y” if the worker is subject to the contribution scheme or the value “N” if not.

As for the recovery of excess contribution not prescribed, the INPS points out that it can be requested in the following ways:

1. for time periods prior to the introduction of the Uniemens system: employers must send a specific request for reimbursement indicating, annually, for each worker:

• tax code and personal data,
• salary in excess of the ceiling, and
• the corresponding contribution paid under IVS.

In addition, employers will have to transmit Emens variation flows for the placement of individual personnel.

2. for time periods following the introduction of the Uniemens system: employers must only use the provided regularisation procedure indicating:

• <taxable> <remunerative data>: the taxable amount within the ceiling;
• <Contribution>: the new contribution owed;
• <Maximum Surplus>: salary exceeding the maximum not subject to IVS contribution.
• <ContributoEccMass>: amount of the smallest contribution due.

Management in the Uniemens flow of the indemnity in lieu of notice

Finally, INPS points out in its circular letter that in order to ensure the allowance in lieu of two years’ notice paid to a worker subject to the maximum contribution rate is correctly subject to contribution, reference should be made to the provisions of message 159/2003. It states that the ceiling for the year will apply only to the tranches of allowances falling in the same year. These quotas may be fully, partially or not at all subject to contribution, depending on the value of the ceiling reached and the portion of the indemnity, which temporarily falls within the next year and must be subject to the ceiling of the following year.