Sustainable mobility – Employee App for home-work-home commute

17 April 2024

The European Directive 2022/2464/EU (Corporate Sustainability Reporting Directive), which came into force on 5 January 2023, is part of the European Green Deal and aims to promote transparency and disclosure of information by companies on the environmental, social and governance-related (ESG) impacts of their activities, through enhanced corporate reporting obligations. In this regard, the so-called ‘Relaunch Decree’ (Decreto rilancio) (Italian Decree-law no. 34/2020, converted into Italian Law no.77/2020) introduced the concept of ‘Mobility Management’ into our legal system, i.e. the promotion of sustainable mobility, as well as the management of private transport demand by changing user attitudes and behaviour.

The legislation currently applies to public bodies and private companies with more than 100 employees per location, with offices in cities with a high risk of air pollution, for which there is also an obligation to appoint a ‘Mobility Manager’ who to produce an annual ‘Home-Work Travel Plan’ for employees, aimed at reducing the use of individual private transport and better organising working hours to limit traffic congestion.

The question addressed to the Italian Revenue Agency

In this regard, the Italian Revenue Agency, a few months before the deadline for the implementation of the aforementioned directive, scheduled for 6 July 2024, has provided Answer no. 74/E of 21 March 2024 providing clarification on the possibility of using sustainable mobility services for the home-work-home commute as part of a company welfare plan, through the use of an App.

The question addressed to the Italian Revenue Agency concerned a company that was considering creating an App to enable employees to access sustainable mobility services, such as car-sharing, bike-sharing, scooter-sharing, electric scooters and others. The App would be used for home-work-home commutes, to optimise and reduce, in terms of environmental sustainability and greater road safety, the social costs and individual transport costs linked to the employees’ commute. In line with these purposes, the applicant clarified that sharing services should only be used where the place of work is in urban or metropolitan areas, allowing the transport to be shared with other users. Charging the use of services to the employer and setting a ceiling for expenditure would allow the quantification of usage and ensure that it would be limited to the home-work-home commute.

The applicant’s question concerned the possibility of including the use of the App, granted to categories of employees or to the majority of employees, among the welfare initiatives excluded from taxation under Article 51, paragraph 2, letter f) of the Italian Income Tax Consolidation Act (Testo unico delle imposte sui redditi, ‘TUIR’).

In its reply to the applicant, the Italian Revenue Agency set out the guidelines to be followed so that services granted to employees can be excluded from employee income in accordance with the provisions of Article 51, paragraph 2, letter f) of  TUIR.

Conditions for the implementation of welfare plans

The Agency pointed out for the exclusion from employee income to apply, the benefits and services granted to employees must firstly (i) be granted to the majority of employees or categories of them, (ii) relate exclusively to disbursements in kind and not to disbursements in lieu of money, and (iii) pursue the specific social utility purposes referred to in Article 100, paragraph 1 of TUIR. In addition, employees using the services must be totally unconnected to the financial relationship between the company and any third-party service provider.

The Italian Revenue Agency had provided guidelines on this point in the past with answer no. 461 of 31 October 2019, confirming that the provisions of Article 51, paragraph 2, letter f) of TUIR also included benefits in kind granted to employees through the company car-pooling service, which could be used through an IT platform and was provided by the employer through a specific contract with a third party. The aim of the service was, in fact, to reduce social and individual costs related to the home-work-home commute, while at the same time increasing employees’ punctuality with respect to working hours and promoting socialising, which also benefitted company work productivity

In line with the position already confirmed, the Italian Revenue Agency therefore reiterated that where an employer provides its employees with an App for accessing sustainable mobility services for the home-work-home commute, as part of a corporate welfare plan, this falls within the purposes of ‘social utility’ identified by Article 100, paragraph 1 of TUIR, and that such services may be considered non-taxable in accordance with the provisions of Article 51, paragraph 2, letter f) of TUIR provided that the conditions described above are fulfilled.

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