Circular no. 10/E of 3 July 2025 from the Italian Revenue Agency (Agenzia delle Entrate) provides clarifications on the changes introduced by the 2025 Budget Law for the taxation of company cars. Below is a summary of the key updates.
The new regulatory framework (i.e. the 2025 Budget Law) applies to newly registered vehicles assigned to employees for mixed personal and business use, where the agreement is signed and the vehicle delivered on or after 1 January 2025. This fringe benefit is set at 50% of the cost corresponding to standard annual mileage of 15,000 km, based on the official per-kilometre rates published by the Italian Automotive Club (ACI).
There are some lower tax rates for low-emission vehicles:
◦ 10% for fully electric (battery-powered) vehicles.
◦ 20% for plug-in hybrid electric vehicles.
The key date for the signing of the agreement is the date when the assignment agreement is signed. However, the actual benefit is deemed to be received when the vehicle is delivered to the employee.
To ensure a progressive transition, Decree-Law no. 19/2025 (in force from 3 July 2025) allows the previous tax regime (in place as at 31 December 2024) to continue to be applied in the following cases:
- Vehicles assigned and delivered for mixed use between 1 July 2020 and 31 December 2024. These older rules continue to apply until the planned end of the original assignment period.
- Vehicles ordered by an employer by 31 December 2024, and assigned for mixed-purpose use (delivered) between 1 January 2025 and 30 June 2025, provided the vehicle was registered and the agreement signed between 1 July 2020 and 30 June 2025.
There is a key exception where a vehicle falling under the transitional regime (ordered before the end of 2024 and delivered between January and June 2025) would receive more favourable treatment under the new 2025 rules—such as electric or plug-in hybrid models. In such cases, the more favourable treatment (i.e. under the new Budget Law) is applied.
Where a vehicle does not fall under the above flat-rate taxation rules, the benefit must be calculated based on the general criterion of “market value.” In these cases, only the portion relating to private use is taxable, while business-related use is excluded. This applies to vehicles ordered in 2024 but delivered to the employer after 30 June 2025.
The circular also provides other key clarifications, such as that if the duration of an existing contract is simply extended, the tax treatment remains based on the rules in force when the original agreement was signed.
However, should a vehicle be reassigned to a different employee under a new agreement, the applicable tax regime is the one in force at the time of reassignment.
- If a vehicle already in use on 31 December 2024 (and registered after 1 July 2020) is reassigned and delivered by 30 June 2025 (with the order placed by 31 December 2024), the transitional regime (i.e. the previous regime) continues to apply.
- If reassignment and delivery take place after 30 June 2025, the market-value rule (i.e. “normal value”) must be used.
- If the reassigned vehicle was registered on or after 1 January 2025, and both the new agreement and delivery also occur from that date onwards, the new 2025 rules apply.
