A law was recently approved modifying the rules relating to the federal target group reduction for first recruitments from 2024[1]. A target group reduction is a reduction in employer’s social security contributions. The restriction that has been introduced has two components.
First, the benefit for recruiting a first employee has been lowered to a maximum of EUR 3,100 per quarter – EUR 900 less than the current amount. This lowering of the amount applies not only to recruitments from 1 January 2024, but also to the reductions already ongoing for a first recruitment.
Second, the target group reductions also cease to apply from the fourth recruitment. As a result, from 1 January 2024 a target group reduction can only be claimed for the first three recruitments. Unlike the first measure, this second restriction does not apply to current target group reductions, so fourth, fifth and sixth recruitments currently ongoing (effective before 1 January 2024) will not be affected. If a business intends to make a fourth, fifth or sixth recruitment, it is advisable to act quickly by scheduling these recruitments before 1 January 2024 and actually employing the employees before this date. This will ensure that these reductions can still be claimed.
[1] Act 16 October 2023 containing various provisions on social affairs, BS 31 October 2023.