A company, in its role as withholding agent, asked the Revenue Agency whether, for the correct application of tax and social security withholdings, the amounts withheld from employees for optional features they requested on vehicles assigned to them for mixed use should or should not be deducted from the taxable base of employment income, as governed by Article 51, paragraph 4, letter a) of the TUIR.
The Agency responded to this question with Tax Ruling No. 233/2025, examined below.
The Revenue Agency’s Response
Article 51, paragraph 4, letter a), of TUIR – establishing the principle of the so-called onnicomprensività of employment income – provides that the value of vehicles granted for mixed use is subject to taxation “net of any amounts withheld from the employee.”
However, according to the Revenue Agency (see Circular No. 326/1997), this exclusion does not apply to all amounts withheld from or paid by the employee in connection with the assigned vehicle, but only those that may be required by the employer for personal use of the vehicle itself, as determined on the basis of the ACI tables.
The taxable base for vehicles granted for mixed use, as set out in the exceptions to the “normal value” criterion (Article 9 of TUIR) instituted by Article 51, is calculated by a flat-rate (forfetaria) method using the ACI tables. This is the general rule.
The 2025 Budget Law (Law No. 207/2024), in order to promote less polluting transport and align with ecological transition goals at both EU and national levels, introduced, from 1 January 2025, some derogations to the said flat-rate determination – specifically, to the taxable percentage of that normal value.
In particular, the taxable share of the ACI value is as follows:
- for traditional vehicles (petrol/diesel/LPG/methane, etc.): 50%
- for plug-in hybrid vehicles: 20%
- for fully electric vehicles: 10%
Returning to the general rule discussed in the Tax Ruling, Article 51, paragraph 4, letter a) of TUIR provides for a flat-rate determination of the value to be taxed for a vehicle when it is granted to the employee for mixed use, anchoring it to the per-kilometer operating cost identified by the ACI tables. These tables are determined on the basis of:
- annual costs not proportional to mileage or
- (all) costs the vehicle owner must bear in any event, regardless of how much the vehicle is used; and
- annual costs proportional to mileage; that is, all costs directly or indirectly connected to the degree of use of the vehicle.
Optional features – which are not necessary for performing work duties and, on the contrary, exclusively for the benefit of the employee – are not included in the determination of this value.
Hence, where an employee pays amounts for additional benefits tied to a company vehicle granted for mixed use, those amounts cannot reduce the flat-rate value of the vehicle determined under the cost per distance in the ACI tables.
More specifically, the Agency “considers therefore that, if the applicant withholds from employees sums for additional optional features to be installed on vehicles granted for mixed use, which are not included in the valuation determined in the ACI tables, those sums do not reduce the value of the fringe benefit to be taxed under Article 51, paragraph 4, letter a), TUIR.”
In conclusion, “any sums paid by the employee for the purchase of optional features must be withheld from the net amount paid in the payroll.”
