2025 Budget Law: Traceability of Travel Expenses
Article 10 of the Draft Budget Law for 2025 introduces stricter measures regarding the traceability of expenses related to meals, lodging, and non-line transport services starting from January 1, 2025.
Starting with the tax period following the one ending on December 31, 2024, payments for meals, lodging, travel, or transport with non-line carriers (e.g., taxis or chauffeur-driven rental vehicles, or “NCC” as defined under Article 1 of Law 21/1992) must be made via bank or postal transfer or through traceable means as per Article 23 of Legislative Decree 241/1997 (e.g., credit/debit cards, prepaid cards, or bank checks).
Expense Reimbursement for Employees
The first key amendment concerns the reimbursement of expenses for meals, lodging, transportation, and travel using taxis or NCC services. Specifically, Article 10 introduces a new provision in Article 51, paragraph 5 of the Italian Income Tax Code (TUIR), stipulating that such reimbursements will not be considered taxable income for employees, collaborators, or corporate directors, provided the expenses are paid using traceable methods.
This rule applies broadly to all reimbursed expenses under paragraph 5, including those for inter-municipal travel, which are already subject to full taxation for employees.
Deductibility Limits
The law also impacts the deductibility of these expenses for the taxpayer covering the costs.
- For artists and professionals, the new paragraph 6-ter of Article 54 of the TUIR maintains existing deductibility limits (e.g., 75% for hotel and restaurant expenses, within a 2% cap of gross receipts). However, it stipulates that deductibility applies only if the expenses for meals, lodging, taxi, or NCC services are paid via traceable methods and are either:
- Charged to the client; or
- Reimbursed for travel carried out by employees or independent contractors.
- For Companies (under Article 95 of the TUIR), expenses for meals, lodging, and itemized reimbursements for transport (taxis or NCC) will only be deductible if paid through traceable methods. This applies to both directly incurred costs and expenses reimbursed via expense reports.
- The deduction of representation expenses under Article 108 of the TUIR will also require traceable payment methods from 2025 onwards, subject to the limits set by the Ministerial Decree of November 19, 2008.
Application of VAT to Staff Secondments Starting January 1, 2025
An amendment introduced during the conversion of the “Infringement Relief” Decree (Decree-Law No. 131/2024), approved by the Chamber of Deputies and awaiting Senate review, abolishes Article 8, paragraph 35 of Law No. 67/1988. This provision had previously excluded VAT from personnel secondments involving only reimbursement of related costs.
Key Changes
The abolition will apply to personnel secondment agreements signed or renewed on or after January 1, 2025. Actions taken by taxpayers before this date will remain valid, provided no final assessments have been issued.
This change aligns Italian legislation with the EU Court of Justice’s ruling in San Domenico Vetraria (Case C-94/19, March 11, 2020), which deemed personnel secondments subject to VAT—even if only cost reimbursements were involved. The Court found that:
- Personnel secondments constitute a taxable supply of services for VAT purposes.
- A direct link exists between the service provided and the consideration received, satisfying the “onerousness” criterion required under Directive 2006/112/EC.
Broader Implications
The repeal of Article 8, paragraph 35 also impacts other similar arrangements regulated analogously under VAT law and deemed incompatible with EU law.
For example, temporary labor supply agreements under Article 26-bis of Law No. 196/1997 (the “Biagi Law”) exclude from the VAT taxable base (as per Article 13 of Presidential Decree No. 633/1972) the reimbursement of wage and social security costs paid by the user company to the labor supplier. Following the EU Court’s reasoning, this exclusion is now considered unlawful.
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