INPS classification: new contribution rate cannot apply retroactively

Social security and contributions
INPS contributions: a new company classification cannot be applied retroactively
Court of Cassation, Labour Division

The case arose from an inspection in the course of which INPS had found that a company had failed to pay social security contributions, taking the view that a procurement contract in fact disguised an unlawful supply of labour. Following that finding, the Institute had also altered the company’s social security classification, demanding payment of higher contributions with retroactive effect. After the company’s claims were dismissed in the first two stages of proceedings, the Court of Cassation addressed the issue of when the new contribution classification should take effect.
The Supreme Court reaffirmed that measures by which INPS alters an employer’s classification take effect only from the pay period current at the date on which notice of the change is served. Retroactive effect is an exception and may apply solely where the original classification was determined by inaccurate statements made by the employer at the commencement of its activity. The mere failure to report subsequent organisational or production changes within the company is not sufficient. In such cases, the law provides for specific penalties, but does not permit the different classification to be backdated.
The ruling confirms a principle of particular significance for businesses, limiting the risk that a subsequent revision of a company’s classification might result in the retroactive recovery of contributions on the basis of facts arising after the original registration.