Company cars: tax authorities say the bill will be higher after five years

The Omnibus Decree (the fourth amendment to the previous implementing measures under the tax authorisation) has been submitted to Parliament. The text approved by the Council of Ministers on 10 June has been given the green light by the State General Accounting Office. The funding comes from increased revenue and reduced expenditure resulting from three measures (the extraordinary realignment of discrepancies between accounting and tax values, the increase from 11 per cent to 20 per cent in the withholding tax on dividends paid to European pension funds, and the tax relief on ‘blacklist’ shareholdings), whilst €1.12 million for each of the years from 2028 to 2040 will be drawn from the tax delegation fund.

Apart from these technical aspects, the draft text on which the committees are to give their opinion before it returns to the Council of Ministers (now likely to be after the summer recess) confirms the four measures relating to company cars. A 50 per cent increase in taxation compared with the value determined for previous years, following five years’ use of the same vehicle, with a view to renewing the vehicle fleet. A flat-rate increase of 5 per cent to resolve the complications involved in calculating the value of optional extras not included in the ACI tables and not directly purchased by the employee. Provision for reallocation without altering the taxation rules. The application of the standard value (which is more penalising) – currently applicable if a car ordered in 2024 is allocated to an employee after 1 July 2025 – will be discontinued. These adjustments serve to clarify the interpretative uncertainties that had arisen following the amendments to the 2025 Budget Law, which were adopted with a view to reducing environmentally harmful subsidies (SAD), seeking to use taxation as a lever to encourage the replacement of company fleets with less polluting vehicles.

This is also the direction taken by the 50 per cent surcharge included in the Omnibus Decree, which is intended to target company cars that have been in use for more than five years. This measure is set to affect not only diesel and petrol cars, but also electric vehicles, as the surcharge will apply indiscriminately solely on the basis of the vehicle’s ‘age’ – specifically, if it remains in use beyond 31 December of the fifth year following its first registration. The technical report clarifies that the provision would have ‘the effect of discouraging the retention of the vehicle beyond that period’, but the tax penalty on the older fleet ‘has no impact on tax revenue, as company cars are replaced, on average, before the fifth year of registration’. In any case, this is a measure that could affect around 327,000 cars (see *Il Sole 24 Ore* of 13 June), given that 32 per cent of the fleet currently on the road under long-term hire agreements consists of contracts lasting more than 48 months.

With its 28 articles, the Omnibus Bill does not stop at company cars. The decree provides an opportunity to revisit the tax treatment of dependent family members. In practice, the amendment aims to resolve issues that have arisen from the current wording in welfare schemes – issues that have led to the loss of tax relief. The new measure, in fact, removes the reference to the requirement of cohabitation or the receipt of maintenance payments for the application of tax relief, whilst retaining the requirement that the individual be a dependent family member in other cases. It will apply from the current tax year until 20 December 2025.

The measure affecting self-employed professionals is also eagerly awaited. It provides for a 26 per cent tax rate on tax credits purchased by self-employed individuals. There will also be the option to opt for the new scheme in respect of credits purchased from the 2024 tax year onwards by submitting a supplementary tax return.