Prepared by Marzio Scaglioni and Leila Rguibi
In recent years, the tax treatment of Company cars provided for personal and business use has become an increasingly important topic for both employers and employees. The rapid technological evolution, particularly the widespread adoption of electric and plug-in hybrid vehicles in corporate fleets, along with recent regulatory changes, has given rise to new interpretative questions that the Italian Tax Authority (also, the “ITA”) is frequently called upon to address.
In this context, two recent rulings by the Italian Tax Authority (No. 233/2025 and no. 237/2025) establish some key principles concerning practical issues that are highly relevant to companies, HR departments, and labour consultants.
Specifically, in the cases examined, the companies requested clarification from the ITA regarding the calculation of the fringe benefit value when employees contribute to the costs incurred by the Company, either for optional extras added to Company vehicles (Response No. 233/2025), or for the electric charging of the vehicle (Response No. 237/2025).
In both cases, the ITA adopts a conservative approach, justified by the following considerations:
- The calculation of the fringe benefit is entirely based on a flat-rate method and “does not take into account the actual costs incurred for vehicle use, nor the actual mileage driven by the employee. It is, therefore, entirely irrelevant whether the employee covers all or part of the cost components included in the ACI per-kilometer rate.”
- the employer who decides to provide the employee with a company car may also provide other goods or services, either free of charge or not, such as a parking space or storage facility for the vehicle. These additional benefits must be assessed separately in order to determine the correct amount subject to tax and social security contributions.
- Lastly, Article 51, paragraph 4, letter (a) of the Italian Income Tax Code (TUIR), which states that the value of vehicles granted for personal and business use is taxable “net of any amounts possibly withheld from the employee,” should be interpreted as referring not to any and all sums withheld from or paid by the employee in relation to the vehicle, but only to amounts specifically requested by the employer for the personal use of the vehicle, calculated based on the ACI tables.
In light of the above, the ITA concludes that if the employer deducts amounts from employees’ remuneration, either for optional extras installed on Company vehicles or for electricity costs related to the private use of the car, these amounts cannot affect the fringe benefit value determined using the ACI tables. Instead, the above amounts must be deducted directly from the employee’s net salary.
In conclusion, in a constantly evolving regulatory environment, the correct application of tax rules regarding company cars is essential to prevent disputes and ensure a correct personnel management. In case of doubts or the need for further clarification, consulting with a labor advisor remains the most effective way to navigate ongoing regulatory developments and the evolving interpretations of the ITA.
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