Cars for employees, commercial agents and exclusive working vehicles: 70, 80 and 100%

An SRL gives Davide, one of its salespeople, a 35,000 € car that he also drives at weekends. If the director drove it, the company would deduct 20% within the 18,075.99 euro ceiling. Granted to the employee for most of the year, the deduction rises to 70% of the full cost. In return, Davide is taxed on a benefit in kind through his payslip.

The vehicle granted to an employee

Letter b-bis) of article 164 allows 70 percent of the costs of vehicles given to employees for mixed use for most of the tax period. The share applies to every cost of the car: depreciation or rent, fuel, insurance, servicing. Among the bands that tolerate some private use, it is by far the most generous.

The lira cost ceilings sit inside letter b), and letter b-bis) does not refer to them. That is why the 70 percent share applies to the vehicle's full cost, without bringing it down to 18,075.99 euros. On an expensive car the gap compared with the director's car becomes very wide, as the next example shows.

If the assignment covers less than half the year

When the car is granted for less than half the period, letter b-bis) does not apply for that year and the vehicle falls back under the general rule in letter b): 20 percent within the cost ceiling. A car handed to a salesperson in September is therefore deducted in its first year just like the owner's car.

Proof of the assignment comes from employment paperwork: the assignment letter with the handover date, the terms of use, and any amounts withheld from pay. These are the same documents used to value the employee's benefit, and an audit will compare them with the company's deductions.

The other side: the benefit taxed on the employee

For the worker, a mixed-use car is pay in kind, and article 51, paragraph 4, values it on a conventional basis. The starting point is the per-kilometre running cost shown for the model in the national tables of the Automobile Club d'Italia, applied to a notional 15,000 kilometres a year.

The employee is taxed on 50 percent of that amount for a conventional car, 20 percent for a plug-in hybrid and 10 percent for a battery electric car. Anything withheld from the worker for using the car is subtracted. Once the fifth year after first registration has passed, the value goes up by 50 percent.

The ACI tables are published by the Ministry of Economy by 31 December and apply from the following year. This course does not quote their values, which vary from model to model. What matters for the business is the overall picture: the 70 percent deduction is matched by income in kind for the employee, which runs through payroll.

Two adjustments complete the calculation. If the car carries accessories or fittings that the tables do not value and that the worker did not buy personally, the value rises by 5 percent. Amounts withheld for those accessories are also deducted from the value, not just those charged for using the car itself.

The choice of powertrain therefore changes the worker's benefit, not the company's deduction. The 70 percent of letter b-bis) applies in the same way to a combustion, hybrid or electric car: for the business, the only thing that varies is the starting cost of the vehicle and of its running expenses.

Commercial agents and sales representatives

For those working as commercial agents or sales representatives, the letter b) percentage is raised to 80 percent. The ceilings are higher too: 25,822.84 euros of purchase cost for motor vehicles and 5,164.57 euros a year for rental payments, in place of 18,075.99 and 3,615.20 euros.

The higher band covers vehicles used by the person carrying on the agency or representation business, whose job consists of visiting customers on behalf of the principals. Every other condition stays the same: fuel must be paid by card, and the gain on sale counts in proportion to the depreciation deducted.

The same car across the four bands

Setting the bands side by side shows how much depends on who drives the car. The table uses a 35,000 euro car with, purely for the exercise, a yearly depreciation charge of 7,000 euros, plus 3,000 euros a year of running costs paid in a traceable way.

The comparison does not say which option is best; it says what the tax rules recognise in each case. Granting a car to an employee shifts part of the cost onto their income in kind, and the exclusive-asset band demands a pattern of use few businesses can genuinely prove. The choice is organisational before it is fiscal.

Selling a car granted to employees

For 70 percent vehicles too, the gain follows the proportion in paragraph 2: it counts to the extent depreciation was deducted. If the company always deducted 70 percent of the charges, 70 percent of the gain enters taxable income on sale, and the same proportion applies to any loss.

Things get harder when a vehicle changes band during its life, for instance when it moves from a salesperson to the director. The proportion is then built by adding up the depreciation deducted year by year, each at its own percentage. That is why the fixed-asset register should record the tax charge for every year.

The exclusive working vehicle, deductible in full

Letter a) allows the full cost for vehicles intended to be used exclusively as working assets in the company's own activity, and for vehicles assigned to public use. It is not enough for the car to be very useful for work: it must be the means through which the business carries out its core activity, and serve no other purpose.

• The vehicle is the tool of the company's own activity, not just a way of getting around
• There is no private use at all, not even occasional or in the evening
• Vehicles assigned to public use fall within letter a) in any case
• Without records of exclusive use, the vehicle falls back into letter b) and its 20 percent

Registering the car to the company does not change the band. A company car that the director also drives for personal errands stays at 20 percent with the cost ceiling, exactly like a sole trader's car. What counts for article 164 is how the vehicle is used, not who owns it.

Vehicles article 164 does not list

The article applies to the vehicles it names: cars and motor caravans under letters a) and m) of article 54 of the Highway Code, motorcycles and mopeds, and in letter a) also private aircraft, ships and pleasure boats. A vehicle of a different category follows the general deductibility rules for business income.

The vehicle's category is shown on its registration document, and that is where the analysis starts. A vehicle approved in a category the article does not mention is subject neither to the 20 percent share nor to the cost ceiling. It still has to meet the accruals and relevance principles, like any other business asset.

Fuel for cars granted to employees remains subject to paragraph 1-bis: the company deducts it at 70 percent only if it is paid by electronic card. Giving the salesperson a fuel card in the company's name solves two problems at once, proof of payment and control over the car's consumption.

What to keep for each vehicle

• The registration document, which shows the vehicle's category
• The purchase invoice, or the rental or lease contract with its term
• The signed and dated letter assigning the car to the employee
• The schedule of amounts withheld from pay for using the vehicle
• The fuel card statements
• The fixed-asset register with the tax charge for each year

With these documents every band applied can be justified in minutes. Without them, the declared percentage becomes hard to defend, and the extra deduction built up over several years can come back as tax to pay, together with the penalties and interest that go with it.