INFOFLASH PAYROLL MAY 2025

Company Cars as Fringe Benefits: Safeguard Clause – Law No. 60 of 24 April 2025

As labour consultants within an international advisory firm, we highlight the key changes introduced by the 2025 Budget Law, which brought a substantial shift to the tax treatment of fringe benefits related to company vehicles granted for mixed business and personal use. Effective from 1 January 2025, the reform aims to encourage the adoption of low-emission vehicles.

Key Change:

Until 31 December 2024, fringe benefit taxation for company cars was based on the vehicle’s CO₂ emissions.
Starting 1 January 2025, the new system bases the conventional benefit value exclusively on the type of power supply, regardless of emissions.

New Taxation Model:

For newly registered vehicles assigned for mixed use under contracts signed from 1 January 2025, the taxable benefit is equal to 50% of the notional cost of 15,000 km per year, calculated using the ACI (Automobile Club d’Italia) cost-per-kilometre tables, net of any amounts withheld from the employee.

Reductions apply for eco-friendly vehicles:

• 10% for fully electric vehicles
• 20% for plug-in hybrid vehicles

Safeguard Clause – Law No. 60/2025 (Conversion of “Decreto Bollette”, D.L. 19/2025)

To ensure a smooth transition, Law 60/2025 (published in the Official Gazette on 29 April 2025) introduces a safeguard clause. It allows the application of the previous tax regime for:

• Vehicles assigned between 1 July 2020 and 31 December 2024, and
• Vehicles assigned in the first half of 2025, provided they were ordered by 31 December 2024.

If a vehicle was ordered in 2024, but registered and assigned from 1 July 2025, the new taxation rules based on power supply will apply.

Summary Table:

This framework underscores the increasing relevance of sustainable mobility in HR cost planning and reinforces the need for tailored consultancy when structuring remuneration packages involving company cars.