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Updated as of: February 4, 2025, 12:09 AM
Policy Shift Opens Doors for Electric Vehicles in Italy
Italy has long trailed behind its European neighbors with an electric vehicle (EV) adoption rate stagnating at just 4%. However, recent legislative changes could signal a shift towards a greener automotive future. The newly enacted budget law introduces a noteworthy reform aimed at streamlining taxation for company cars—those vehicles offered to employees as part of their compensation package.
A Transformative Approach to Taxation
The previous tax framework in Italy failed to differentiate between electric vehicles and traditional petrol or diesel models that produce up to 160 grams of CO2 per kilometer. The new legislation aims to rectify this by applying varied tax rates depending on the technology utilized in the vehicle.
Categorization Challenges and Incentives
Despite these reforms, there remain significant shortcomings within the new regulations. Tax liabilities now hinge more on technology type rather than actual emissions—a departure from true “technology neutrality.” For instance, battery electric vehicles (BEVs) benefit from a reduced tax rate of just 10%, while plug-in hybrid electric vehicles (PHEVs) face higher taxes at 20%, which raises questions about their classification as ‘clean’ technologies. Moreover, all internal combustion engine (ICE) vehicles are uniformly taxed at a hefty 50%, regardless of whether they are compact models like the FIAT Panda or luxury SUVs—leading to an illogical scenario where high-emission cars over the threshold of 190 g CO2/km receive unexpected tax breaks compared to earlier regulations.
The Market Impact and Company Cars
This overhaul is poised to increase tax obligations significantly for over 80% of salary cars registered annually in Italy—predominantly petrol and still largely diesel models—while only about 3% will see any form of unjustified rebates under this new system. Conversely, taxes have been markedly reduced for electric automobiles, establishing an appealing differential that could influence market trends dramatically; currently, company cars comprise around 40% of all new vehicle registrations in Italy—with half classified as salary cars.
A Call for Comprehensive Fleet Reform
The recent adjustments concerning salary car taxation represent merely one facet of more extensive reforms needed within corporate fleet policies. Current parameters regarding depreciation write-offs and VAT deductions fail to incentivize cleaner vehicle use and maintain benefits that favor more polluting alternatives instead. Additionally, it’s critical that registration fees align with higher standards established by other nations within Europe; presently, these charges fall short comparatively.
The Political Landscape Ahead
Pushing back against EU mandates aimed at ensuring zero carbon emissions by all newly sold vehicles post-2035 is prevalent among Italian stakeholders—and this contentious issue has become deeply embedded within European political dialogue risk jeopardizing broader climate objectives across Europe. Nevertheless, faithful adaptations like those seen with corporate car taxes illustrate tangible victories possible through policy reform focused on sustainability.
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