SHARE
COPY LINK

CHILDREN

How Italy’s new ‘Family Act’ aims to increase the plunging birth rate

Italy's parliament approved a new bill on Thursday aimed at supporting parents. Here are the measures being introduced to help make starting a family in the country a more affordable and realistic prospect.

How Italy's new 'Family Act' aims to increase the plunging birth rate
Photo: AFP

“We have approved the Family Act to support parenting, combat the falling birth rate, encourage the growth of children and young people, and the help parents reconcile of family life with work, especially for women,” Premier Giuseppe Conte told reporters after parliament passed the bill.

Italy has suffered a declining birth rate for decades. Some 464,000 births were registered in Italy in 2018 – the lowest on record, ever.

Declining fertility rates, combined with longer life expectancy, has left Italy with a significantly older population. Its median age is now 45.9 years according to EU statistics, compared to the European median of 42.8, higher than in any other European country except Germany.

READ MORE:

The growing demographic crisis, with births falling and life expectancy rising, is thought to be both a symptom and a cause of Italy's chronically stagnant economy.

Italy's government announced last year it would be focusing on measures to curb its shrinking and ageing population. With the act now coming into force, here's what it provides.
 
 
Financial support for all under-18s
 
The Family Act's flagship policy is a “universal” monthly allowance, to be paid from the seventh month of pregnancy until a child reaches 18 years of age. This may be in the form of a direct payment or tax credit.
 
Despite being described as universal, the payments are means-tested and are on a sliding scale depending on a family's income. A maximum of €240 a month is available to parents of a child under the age of 18, with that payment increasing by up to 20 percent for each child born after that. There are also additional allowances for children with disabilites.
 

 
More paternity leave after birth
 
After the government initially said it would increase paternity leave to seven days, the final bill gives ten days of fully paid leave – and makes it mandatory.
 
Each parent can also choose to take a period of two months of additional leave (not transferable to the other parent) “granted regardless of the marital or family status of the working parent”, personal finance website QuiFinanza writes.
 
Ten days may not sound like a great deal to people from many other countries. Fully paid leave for new fathers was only introduced in Italy in 2012, and Italy is still lagging far behind Germany and Scandinavian countries, offering new dads weeks if not months of paternity leave.
 
But it is double the previous provision of five days, and meets the 10-day minimum the EU is trying to get member countries to abide by. 
 
Photo: Tiziana Fabi/AFP
 
Salary supplements for mothers returning to work
 
The bill also includes payments intended to help mothers get back to work following the birth of a child.
 
The Family Act includes “a supplementary allowance paid to working mothers by INPS (the social security office), for the period in which they return to work after mandatory maternity leave”.
 
It's not yet clear how long this period will last or how much the supplement will be worth.

 
More money for childcare
 
The amount of money available to help with the cost of nursery of babysitting will triple – from the current €1,000 up to €3,000 per year, although the exact sum will be dependant on the applicants' income. 
 
The payments will be divided into three income-dependant brackets: €1,500, €2,500 and €3,000.
 
Average nursery fees in Italy are about €500 a month, but in big cities this figure can rise to €700.
 
 
When will these changes come into effect?
 
Disappointingly for anyone imminently becoming a parent, the funds won't be available straight away – in fact, the law gives the government two years to make the contents of the bill into a reality.
 
The flagship universal child allowance policy however may be introduced much sooner as this is being fast-tracked after being processed separately from the rest of the Family Act, in a bill presented to parliament several weeks ago. Italian media reports it could be processed by the end of 2020.
 
Will these measures work to increase the birth rate?
 
The northern region of Bolzano has a considerably higher average rate of children per couple than the rest of Italy – 1.67 compared to 1.3  – a figure that's higher even than the EU average of 1.6. 
 
Bolzano, which enjoys more autonomy than other regions of Italy when it comes to setting policies, has in recent years been offering double as much money in child benefits to its population to encourage them to have children. 
 
There are also special subsidies for Bolzano parents with low incomes and easier access to family-friendly services such as childcare (in the rest of Italy there are only enough nursery spots for one in every four newborns).
 
Womens' labour market participation and inclusion is seen as a major factor in trying to raise the country's low birth rate.
 
Up to 73 percent of women in Bolzano aged 20 to 64 work, compared to 53 percent in the rest of Italy. 

The payments will be divided into three income-dependant bracket – €1,500, €2,500 and €3,000.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

PROPERTY

Italy’s building superbonus: What’s the problem with credit transfers?

There's concern that people trying to claim Italy's 'superbonus 110' now face further delays due to problems getting lines. Here's what's happening and why.

Italy's building superbonus: What's the problem with credit transfers?

There have been numerous changes made to the superbonus scheme in the two years since it was introduced, offering generous discounts to homeowners planning renovation work.

With a potential rebate of up to 110 percent of the cost of works which increase a property’s energy efficiency or reduce the risk of earthquake damage, the bonus has been unsurprisingly popular.

READ ALSO: Nine things we’ve learned about claiming Italy’s building ‘superbonus’

But this popularity has led to widespread delays and left many unsure whether they can start or complete building projects in time to meet the deadlines.

Most delays so far have been due to high demand creating backlogs for construction companies, which are also facing a shortage of builders and materials.

All this has meant some projects took months to get started – while others still haven’t begun at all, and some homeowners have now abandoned their plans altogether as a result.

In recent weeks, a new issue has been reported that looks set to cause further issues for some of those hoping to access the scheme.

READ ALSO: Is it too late to claim Italy’s building ‘superbonus’?

More bureaucratic bottlenecks continue to slow down accessing Italy’s superbonus. Photo by Gianluca Carenza on Unsplash

Homeowners have reported problems with the credit transfer system, or the way people access the government funds to pay for the building work.

Some readers of The Local have told us their projects have been put on hold as they’ve been informed by their surveyor or building contractor that financing for the bonus is frozen.

But this issue doesn’t seem to affect all projects or homeowners hoping to access the funds. So what exactly is going on?

One issue is that some banks have stopped buying credit – and therefore lending – in recent months, due to increasingly complex bureaucracy and confusion over the procedure for accessing the bonus.

Meanwhile, billions of euros’ worth of fraudulent claims led the government to introduce stricter rules on accessing the fund, which has in many cases blocked access to credit for months, stalling renovation projects.

The increasing difficulty of obtaining credit has caused ever-worsening supply chain issues.

READ ALSO: How Italy’s building bonuses are delaying the restyle of one-euro homes

In fact, 33,000 businesses are said to be at risk of bankruptcy due to blockages caused by the anti-fraud measures, according to the CNA (Confederazione Nazionale dell’Artigianato e della Piccola e Media Impresa), which represents Italian small business owners.

This equates to some €2.6 billion in credit accrued by suppliers that is yet to be reimbursed, blocked by the halt on lending from the banks.

According to CNA data, more than 60,000 companies have gained credit but no liquidity: that is, no actual money has been received.

The knock-on effect of this is that the superbonus, after having contributed to last year’s increase in GDP, now reportedly risks causing the bankruptcy of many companies and the loss of 150,000 jobs in the construction sector.

Along with almost half (48.6 percent) of the companies the CNA surveyed facing bankruptcy, more than two-thirds (68.4 percent) predict a blockage to their building jobs, leaving construction sites empty and unfinished, while one in five building companies is unable to pay employees.

For homeowners this means there’s a chance renovation projects could be further delayed, or abandoned.

However, according to Italian media reports, it looks likely that the state will need to provide funding to cover the costs and avert a serious economic and social crisis.

How did this happen?

Since it was introduced, the superbonus has undergone some 14 changes and it has been blocked six times, according to Gabriele Buia, president of ANCE, National Association of Building Contractors, (Associazione nazionale costruttori edili).

In response, companies tried to find ways around the credit blocks by finding other banks willing to pay the credit.

Some companies are still in this process, and without payment, works remain on hold.

This bottleneck is causing “very serious problems” in an “anarchic and unregulated” market, according to Buia, with many firms already having done the work but unable to get the credit back, leading to further supply chain issues.

“Two years ago, it was the Wild West. Anyone could get credit to use the bonus – a person, company or business. Due to that, the authorities lost track of sales and plenty of fraudulent claims slipped through the net,” tax expert Nicolò Bolla of Accounting Bolla told us.

“Everything stopped. Then they regulated too much, creating more bureaucracy and delays. So now, they’ve deregulated a little to reopen the transfer of credit,” he added.

The credit transfer system is complex and keeps causing delays to accessing the bonus. Photo: Annie Gray on Unsplash

Along with the reasons above, banks also faced rising inflation, which in part caused them to stop lending.

“Somebody needs to offset the tax at some point. Many banks wanted to buy the credit and resell it to larger banks, but any credit that couldn’t be offset in their taxes got wasted.

“It made the banks less willing to buy credit, which in turn slowed down companies’ and individuals’ ability to access it,” he added.

Now, to keep better track of projects, Italy’s tax office (Agenzia delle Entrate) has introduced new tracking systems in its latest ruling.

READ ALSO: The hidden costs of buying a home in Italy

What continues to cause concern is the timeframe for accessing the superbonus.

Single family homes only have just under four months to complete 30 percent of overall works, with a final deadline of total completion by December 31st, 2022.

As delays roll on and home renovators have already waited for months and months, is there the danger of being left with a half renovated home with the bills to pay?

Worryingly, “absolutely” is the response from Buia.

“Without liquidity, construction sites will either come to a standstill or not start. And they will remain at a standstill until they are certain that their credit will be granted,” he stated.

Are there other ways to access credit for the superbonus?

There are a few routes to obtaining Italy’s superbonus.

The option of offsetting tax from income is likely only financially viable for very high earners (in the highest tax bracket), as any unused tax discount gets lost.

Let’s say your renovation costs come to €100,000, which are tax deductible at 110 percent for five years.

You would then be eligible for a tax break of €22,000 every year for five years, but it all depends on how much income tax (‘Irpef’) you pay to begin with.

If your yearly tax bill comes to less than the tax break, you lose the deduction and will end up footing the rest of the renovation bill.

READ ALSO: Do you have to be Italian to claim Italy’s building bonuses?

Note the latest changes specify tax deductions for the superbonus will be spread over four years, not five as previously.

Little surprise, then, that the other two options to access the funds – transferring the credit (cessione del credito) or discount on the invoice (sconto in fattura) – have been more popular.

It effectively means you either trade the tax credit for cash to an Italian financial institution, such as a bank, for the credit transfer, or directly to your contractor or supplier for the discount on the invoice.

Using the credit transfer system means you’ll get cash back that you paid, directly in your bank account.

It’s a slightly riskier route than a discount on the invoice, as the latter means the the supplier recovers the bonus on your behalf, taking a slice of it as a fee.

So, you get less of the bonus but you don’t have to deal with the paperwork and the contractor takes the burden of getting the credit.

“The easiest option is the discount on the invoice,” according to Bolla.

“It takes care of the credit transfer. If you deal with the bank yourself, it takes some expertise and requires a little knowledge of technology and the system, such as downloading and uploading invoices.

“Contractors have multiple sales, so they are more trained to do that,” he added.

However, as noted, since suppliers have also struggled to get the credit, building projects may be queued until these companies can get reimbursed.

See more in our Italian property section.

SHOW COMMENTS