NEWSLETTER PAYROLL SEPTEMBER 2025

Company cars for mixed use – italian tax authority explains 2025 updates

The Italian Revenue Agency, through Circular No. 10/E/2025, has provided clarifications on the changes to the rules governing the taxation of company cars granted to employees for mixed personal and business use.

The new framework stems from the 2025 Budget Law (Law No. 207/2024) and has been further integrated with transitional provisions introduced by Decree-Law No. 19/2025, later converted with amendments by Law No. 60/2025.

Following the amendment of Article 51, paragraph 4, letter a) of the TUIR, starting January 1, 2025, for newly registered vehicles (cars, mixed-use vehicles, camper vans, motorcycles, and mopeds) granted under agreements signed and effectively assigned from January 1, 2025, the fringe benefit will be calculated as follows:

• 50% of the value based on a conventional annual mileage of 15,000 km, according to ACI tables;

• Reduced to 20% for plug-in hybrid vehicles;

• Reduced to 10% for fully electric vehicles.

The calculation must be made net of any amounts charged to the employee.

This new regime applies only when all of the following conditions are met:

• The vehicle is registered on or after January 1, 2025;

• The usage agreement is signed on or after January 1, 2025;

• The vehicle is effectively delivered to the employee on or after January 1, 2025.

The agreement must be formalized in writing, signed by both employer and employee, and the actual delivery of the vehicle must be verifiable.

For vehicles ordered by December 31, 2024 and delivered by June 30, 2025, the previous rules (in force as of December 31, 2024) continue to apply.
In this case, delivery date prevails, not just the date the contract was signed.

If a vehicle ordered in 2024 but delivered in 2025 would benefit from more favorable tax treatment under the new rules (e.g., an electric car), the new regime may be applied to avoid penalizing the taxpayer.

If neither the new rules nor the transitional provisions apply, Article 51, paragraph 3, TUIR provides that the fringe benefit is determined based on the normal value pursuant to Article 9, TUIR.
Only the portion related to private use of the vehicle is taxable, excluding the business-related portion.
The valuation must be objective, documented, and consistent with the employee’s actual use.

• Contract extensions: if an existing contract is extended, the original tax regime continues to apply.

• Reassignment to another employee:

  • By June 30, 2025: transitional regime applies;

  • After June 30, 2025: general “normal value” rule applies;

  • If both registration and assignment occur in 2025: new regime applies.

 

ASSIGNMENT DATE	REGISTRATION DATE	TAX RULE	REFERENCE
Before July 1, 2020	Not relevant	30% of 15,000 km annual mileage (ACI tables), net of employee contribution	Law No. 160/2019, Art. 1, §§632–633
July 1, 2020 – Dec. 31, 2024	Registered after July 1, 2020	Based on CO₂ emissions: ≤ 60 g/km → 25% 61–160 g/km → 30% 161–190 g/km → 50% >190 g/km → 60%	Law No. 160/2019, Art. 1, §§632–633; Law No. 60/2025
July 1, 2020 – Dec. 31, 2024	Registered before July 1, 2020	Taxed on private-use portion only, excluding business use	Revenue Agency Ruling No. 46/E/2020
Jan. 1 – June 30, 2025	Registered before Jan. 1, 2025	Based on CO₂ emissions (same rates as above)	Circular No. 10/E/2025
Jan. 1, 2025 and onward	Registered after Jan. 1, 2025	Based on vehicle type: Electric: 10% Plug-in hybrid: 20% Other vehicles: 50%	Law No. 207/2024, Art. 1, §48
Jan. 1 – June 30, 2025 (ordered by Dec. 31, 2024)	Either before or after Jan. 1, 2025	Transitional regime based on CO₂ emissions (same as above)	Law No. 60/2025; Circular No. 10/E/2025
2025 Contract Extension (vehicle assigned in 2024)	Registered before Jan. 1, 2025	Original regime at time of initial assignment remains applicable	Circular No. 10/E/2025
2025 Reassignment (vehicle registered in 2025)	Registered after Jan. 1, 2025	Based on vehicle type: Electric: 10% Plug-in hybrid: 20% Other vehicles: 50%	Circular No. 10/E/2025

 

New measures on social safety nets

The INPS, through Circular No. 121/2025, announced the implementation of new regulatory provisions introduced by Decree-Law No. 92/2025, converted into Law No. 113 of August 1, 2025.
These measures aim to strengthen employment and support industrial reconversion processes, with a particular focus on sectors most vulnerable to economic and climate-related crises.

Key updates include:

• Exemption from additional CIGS contributions throughout 2025 for companies located in complex industrial crisis areas.

• Companies with at least 1,000 employees may access CIGS (Extraordinary Wage Supplementation Scheme) until December 31, 2027, allowing for working hour reductions up to 100%.

• Introduction of a special wage supplementation measure for a maximum of 6 months in 2025, aimed at companies with realistic prospects for sale and workforce reabsorption.

• The fashion sector is granted a 12-week extension for wage supplementation, available February 1 – December 31, 2025, with the option for direct INPS payments.

• In the event of extreme weather phenomena (July – December 2025), access to CIG will be granted to the construction, stone-cutting, and mining sectors, without counting toward standard duration limits.

• For agricultural workers, the CISOA scheme is extended to cover seasonal weather-related disruptions, with easier access for fixed-term workers.

The circular provides a comprehensive overview of these provisions along with operational and accounting instructions.

 

 

Economy decree converted – fixed-term contracts

The publication of Law No. 118/2025 (Official Gazette No. 184/2025), converting Decree-Law No. 95/2025 (the so-called Economy Decree), introduced important changes regarding justifications required for fixed-term employment contracts.

Specifically, Article 14, paragraph 6-bis, of Decree-Law No. 95/2025 postpones to December 31, 2026 the deadline for the rule allowing fixed-term contracts to exceed 12 months (up to 24 months) in the absence of collective agreement provisions, based on technical, organizational, or production needs identified by the parties.

This rule had already been extended from December 31, 2024, to December 31, 2025, by Decree-Law No. 202/2024.

Other measures confirmed include:

• Incentives for working mothers;

• Housing contribution benefits for the tourism sector.

 

Expense traceability rules

Law No. 108/2025, converting Decree-Law No. 84/2025 and published in Official Gazette No. 177/2025, confirmed changes to Article 51, paragraph 5, TUIR.

The updated provision specifies that, for the non-taxability of reimbursements related to meals, lodging, travel, and transportation costs incurred using non-scheduled public transport services (e.g., taxis, chauffeur-driven rental services), the traceability requirement applies only to business trips within Italy.

Thus, for business trips abroad, traceability of payments is not required for tax-exempt reimbursement purposes.

The traceability requirement entails that payments must be made via:

• Bank or postal transfer, or

• Other authorized payment methods, as defined by Article 23, Legislative Decree No. 241/1997 (e.g., debit cards, credit cards, prepaid cards, bank checks, or cashier’s checks).

Further confirmed measures include:

• Article 54 TUIR amendments, concerning the determination of self-employment income, where the traceability obligation applies only to expenses incurred in Italy related to meals, lodging, travel, and transportation using non-scheduled public transport services.

• Adjustments to expense deductibility rules, also for corporate income tax (IRES) purposes, under Articles 54-ter, 54-septies, 95, and 109 of TUIR.