5 December 2025
Remuneration and benefits
Company car and options paid by the employee: no reduction of the fringe benefit
Italian Revenue Agency
A company had granted its employees the free use of company cars for mixed business and private use, allowing them to request the installation of optional extras at their own expense, to be deducted directly from payroll. The company asked whether such amounts, paid by employees to personalise the car, could reduce the taxable fringe benefit for tax and social security purposes.
The Italian Revenue Agency clarified that the value of the benefit arising from the mixed use of a company car is determined on a lump-sum basis according to ACI tables, regardless of the actual costs incurred. Consequently, only amounts withheld from the employee for personal use of the vehicle may reduce the taxable amount, whereas sums paid for optional extras or other goods and services related to the car are irrelevant.
In other words, if the employee personally pays for the installation of accessories not included in the ACI value, these expenses do not affect the calculation of the fringe benefit, which remains fully taxable according to the lump-sum criteria. Amounts relating to optional extras must simply be deducted from net pay, without any impact on the taxable employment income base.
