Performance Bonus or Company Welfare? The €5,000 Threshold Applies to Both

Anyone working at a company that pays performance-related bonuses has some good news, and it came just days ago from Italy’s Revenue Agency. The 2026 Budget Law had already raised the favourable tax threshold for these bonuses from €3,000 to €5,000, taxing them at a reduced flat rate of 1% instead of ordinary income tax. What was missing was a clear answer to a very practical question: what if an employee, instead of taking the bonus as cash, chooses to convert it into company welfare: shopping vouchers, tuition reimbursements, supplementary pension contributions? Does the new threshold still apply, or is it only valid for cash payouts?

The Revenue Agency’s Answer

With ruling no. 22/E of June 9, 2026, the Agency settled the question clearly: yes, the €5,000 cap applies even when the bonus is converted into benefits. The technical reasoning rests on the fact that the rule governing company welfare (paragraph 184 of Law 208/2015) explicitly references the regulations on productivity bonuses, and therefore automatically follows their updates – including this year’s higher threshold.

What Actually Changes

In practice, not much changes in form, but quite a lot changes in substance. An employee who earns, say, €4,500 in bonus can choose to receive it with the reduced tax rate, or direct the full amount toward welfare services, while still staying within the new favourable cap. The specific limits set by Article 51 of the Italian Tax Code for each type of benefit remain in place, of course – the higher general threshold doesn’t override those rules, it works alongside them.

Why It Matters for Companies’ Organizational Choices

This clarification, more than it might seem at first glance, has a direct bearing on companies’ organizational choices. In recent years, many businesses have shifted a growing share of variable pay toward welfare tools, not only for tax reasons but because they better address people’s real needs – parents managing school fees, or employees caring for a family member, to name two common cases. Knowing these plans remain just as competitive after the threshold increase reinforces choices companies have already made.

A Compensation Tool, Not a Fallback

For anyone working on compensation design, incentive plans, or pay policies aimed at retaining people, this ruling is a useful piece of the puzzle: it confirms that company welfare isn’t a “fallback” alternative to a cash bonus, but a tool that now enjoys the same favourable conditions.

More Room to Manoeuvre for 2026-2027

Over the 2026-2027 period, companies have more room to build genuinely rewarding incentive plans – both for employees who prefer to see the bonus in their paycheck, and for those who’d rather turn it into services that improve their everyday life. A tax advantage that, communicated and structured well, can also become a real lever for employer attractiveness.