Company cars: new fringe benefit rules based on vehicle age
Pay and Benefits Company Cars: New Rules Incoming on Fringe Benefits Based on Vehicle Age and Reassignment Council of Ministers
The Council of Ministers has approved, in preliminary examination, a new corrective legislative decree to the tax reform which, once definitively approved and published, could significantly amend the tax treatment of company cars granted to workers for mixed personal and business use. Among the most notable innovations is the link between the taxable value of the fringe benefit and the age of the vehicle. For cars less than five years old from registration, the percentages currently in force would continue to apply; for older vehicles, the taxable value would instead be increased by 50%, resulting in higher taxation for the worker. The measure is intended to encourage the renewal of company car fleets towards vehicles that are more efficient from an environmental standpoint. The decree also introduces a flat-rate increase of 5% to account for optional extras and accessories not valued under the reference tables, thereby filling a gap that had previously given rise to uncertainty in application. It is further clarified that the reassignment of a vehicle to a different worker constitutes an ordinary allocation and does not give rise to any particular tax aggravation. Finally, a transitional regime is envisaged for vehicles ordered by 31 December 2024 and assigned by 31 December 2025, which will retain the previous tax treatment. It nevertheless remains advisable to await the definitive approval of the measure in order to verify the final content of the new provisions.
