INPS contributions: the effects of the increase in the legal interest rate on civil penalties

L’INPS through the circular no. 2 of 4 January 2023 takes stock of the effects of the change of legal interest rate from January 1st.

The decree of the Ministry of Economyin fact, established a increase of the rate, which rises from 1.25 to 5 percent on an annual basis.

The effects of this increase are identified in the calculation of civil penalties for omitted or delayed payment of social security and welfare contributions and on the payment of pension benefits and social security contributions from INPS.

INPS contributions: the effects of the increase in the legal interest rate on civil penalties

From January 1, 2023 applies the legal interest rate highest in recent years. The decree of the Ministry of Economy and Finance, published in the Official Gazette no. 292 of 15 December 2022, amended the reference percentage which passes from 1.25 to 5 percent.

“The measure of the legal interest rate pursuant to art. 1284 of the civil code is set at 5 per cent on an annual basis, with effect from 1 January 2023.”

This is canonically fixed at 2.5 percentbut is updated annually as established by Civil Code. L’adjustment is based on yield gross annual average of government bonds It is on rate of inflation registered in the year. The main cause of the increase is, in fact, precisely this last value.

There are many aftermath for the citizens involving different aspects, from active repentance at civil penalties for non-payment of INPS contributions.

There circular no. 2, published by the Institute on 4 January 2023, focuses precisely on the latter. There change in the legal interest ratein fact, is reflected on extent of the sanctions for contributions with a deadline of payment from January 1, 2023.

Decree of the Ministry of Economy and Finance of 15 December 2022

Modification of the statutory interest rate

Legal interest rate on civil penalties and pension and social security benefits

The civil penalties apply for omitted or delayed payment of the contributions social security and welfare.

Specifically, the legal interest rate is used for the purposes of calculation of civil sanctions for the hypothesis of reduction of the amountgoverned byarticle 116, paragraph 15of the law n. 388/2000.

The civil penalties they can be reduced up to the extent of the legal interest rate in force in some specific cases:

• companies subject to insolvency proceedings;
• farms affected by exceptional events;
• corporate crisis, reconversion or restructuring of particular social and economic significance in relation to the local employment situation and the productive situation of the sector;
• malicious act of third parties, reported to the judicial authority;
• non-economic entities and non-profit entities, foundations and associations;
• objective uncertainties due to contrasting jurisprudential orientations or administrative determinations on the existence of the contribution obligation.

In this regard, the INPS states that the application of this prediction is subordinate to full payment of the due contributions. The new measure of 5 percent applies to contributions with payment deadline from January 1, 2023.

“For debt exposures pending on the aforementioned date, taking into account the changes in the amount of legal interest that have occurred over time, the calculation of the interest due will be carried out according to the rates in force at the respective effective dates.”

The increase of legal interest rate it is also reflected on payments disbursed by INPS. The measure of 5 percentin fact, is applied for the late delivery of pension treatments and the performance of end of service and of termination of employment from 1 January 2023.

INPS – Circular n. 2 of 4 January 2023

Decree of the Minister of Economy and Finance of 13 December 2022, containing “Modification of the legal interest rate”, published in the Official Gazette no. 292 of 15 December 2022