Company Cars for Mixed Use: Clarifications from the Italian Revenue Agency on Optional Features Paid by Employees

Regulatory Context

In Response No. 233/E dated September 9, 2025, the Italian Revenue Agency provided clarifications regarding the tax treatment of optional features requested by employees on company vehicles granted for mixed personal and professional use. The inquiry stems from the practice adopted by certain companies that, while offering vehicles to employees free of charge, allow them to customize the cars with optional features, the cost of which is deducted directly from their salary.

The Principle of Comprehensiveness

Article 51, paragraph 1, of the Italian Income Tax Code (TUIR) establishes that all amounts and benefits received in connection with an employment relationship constitute taxable employment income. This includes fringe benefits such as the mixed use of a company car.

Paragraph 3 of the same article states that the valuation of goods and services provided to employees must be based on their fair market value, as defined by Article 9 of the TUIR.

The Exception for Mixed-Use Vehicles

Paragraph 4, letter a), of Article 51 introduces an exception to the general rule, stipulating that the value of the fringe benefit related to a company car granted for mixed use is determined on a flat-rate basis using ACI (Automobile Club d’Italia) tables, assuming a standard annual mileage of 15,000 km.

As of January 1, 2025, the Budget Law introduced a graduated tax benefit based on the type of vehicle:

• 50% of the ACI value for traditional vehicles;
• 20% for plug-in hybrid vehicles;
• 10% for battery electric vehicles.

Optional Features Requested by Employees

The core issue addressed in the ruling concerns whether the amounts paid by employees for additional optional features can be deducted from the fringe benefit value. The Revenue Agency clarified that:

Amounts withheld for optional features do not reduce the fringe benefit value calculated according to ACI tables.

In fact, the provision allowing deductions refers exclusively to costs charged by the employer for the personal use of the vehicle, not to additional expenses such as optional features.

Conclusion

The Revenue Agency’s interpretation confirms a restrictive approach to the concept of “amounts withheld” for the purpose of reducing the fringe benefit value. Therefore, optional features, even if paid for by the employee, do not affect the calculation of the fringe benefit.

With this interpretation, the Revenue Agency places responsibility on companies and HR professionals to carefully communicate the nature of salary deductions to employees. For accurate fringe benefit determination, it is essential to assess the nature of such deductions thoroughly.