A Digest of recent news – March 2025

In the event that the gross tax determined on the employee’s income exceeds the deduction due pursuant to Art. 13 of TUIR, reduced by an amount equal to EUR 75 adjusted to the period of work in the year, a supplementary allowance of EUR 1,200 is recognised, provided that the total income does not exceed the limit of EUR 15,000. The amount recognised as supplementary allowance is not considered taxable income.^[1]

[1] Art. 1(1), Decree-Law No. 3/2020

Employees with an income not exceeding EUR 20,000 are entitled to a non-taxable allowance, determined as follows:

• 1% for an income up to EUR 8,500,
• 3% for an income between EUR 8,500and EUR 15,000,
• 8% for an income exceeding EUR 15,000.

The applicable percentage is determined according to the employee’s annual income and is automatically applied by the tax withholding agent.

For the purpose of determining the employee’s income, the following sums are also considered, despite not being subject to taxation due to the application of:

• 16 of Legislative Decree no. 147/2015 and art. 5 of Legislative Decree no. 209/2023, where the worker has transferred tax residence to Italy and has opted for the application of the special tax regime for ‘inpatriate’ workers);
• Article 44 of Decree-Law No. 78/2010, in the case of a teacher or researcher who have transferred their tax residence to Italy and to whom the more favourable special tax regime is applied.

income is also taken net of the income of the property unit used as the main dwelling.^[1]

The withholding agent will verify whether the sum is actually due upon tax balance.^[2] In the event that the sum is to be recovered by the withholding agent and exceeds EUR 60.00, it shall be recovered in ten equal monthly instalments.

[1] Art. 1(9).

[2] Art. 1(7).

1.4.1 Further deduction – art. 1(6)(7)

The holder of employment income exceeding a total amount of EUR 20,000 is entitled to an additional deduction from the gross tax as shown below, adjusted to the period of employment.

This further deduction is automatically applied by the withholding agent, who will also verify whether the sum is actually due upon tax balance. In the event that the deduction is not due, and exceeds the amount of EUR 60.00, it shall be recovered in ten equal monthly instalments.

1.4.2 Adjustment of current deductions – art. 1(10)(11)(13)

Deduction limits

Art. 16-ter of TUIR is introduced, according to which, if the taxpayer’s total income exceeds EUR 75,000, deductible charges and expenses may be deducted up to an amount obtained by multiplying a basic amount by a specific coefficient determined on the basis of the number of children in the household.

More specifically, this basic amount is equal to

 EUR 14,000 if the taxpayer’s total income is more than 75,000 euros but not more than 100,000 euros;

 EUR 8,000 euros if the total income exceeds EUR 100,000.

The income taken into account to determine the basic amount shall not include the income of the property unit used as the main residence and that of its annexes.

The table below shows the coefficients which, when multiplied by the above base amount, allow the amount of deductible charges and expenses to be determined.

Deductible medical expenses pursuant to Art. 15(1)(c) of TUIR are excluded from the calculation of the total amount of deductible burdens and expenses pursuant to Art. 16-ter of TUIR.

Significant changes are also introduced to the system of deductions for family burdens under Art. 12 of TUIR.

More specifically, it is now established that the following amounts are deducted from gross tax for family burdens:

• EUR 950 for each child, explicitly providing that the deduction also applies in relation to (i) children born out of wedlock and recognised, (ii) adopted, affiliated or foster children, aged 21 or over but under 30 and (iii) each child aged 30 or over with a disability ascertained pursuant to Art. 3 of Law No. 104/1992.^[1] The previous provision merely established a deduction of €950 for each child, including recognised natural children and adopted or foster children, aged 21 or over,
• EUR 750, divided pro rata among those entitled to the deduction, for each ascendant living with the taxpayer.^[2]

Art. 16-ter(2-bis) of TUIR is introduced, according to which deductions for family expenses are not granted in respect of family members residing abroad if the taxpayer is not an Italian citizen, or a citizen of a Member State of the European Union, or of a State party to the Agreement on the European Economic Area.

[1] Art. 12(1)(c), TUIR.

[2] Art. 12(1)(d), TUIR.

Art. 15(1)(e-bis) of TUIR is amended so that, as of 1 January 2025, an amount equal to 19% of the expenses incurred by the taxpayer for attendance at pre-schools, first-cycle schools and secondary schools of the national education system may be deducted from the gross tax liability for an annual amount not exceeding EUR 1,000 for each pupil or student.

The previous text of this provision limited the deductible expenses to EUR 800.

A sixth sentence has been added to Art. 51(5) of TUIR, pursuant to which the expenses for board, lodging, travel and transport effected by means of non-scheduled public transit services are not taxable on condition that they have been paid by bank or postal payment or through payment systems that guarantee the traceability and identification of the payer. By way of example, bank transfers, forms of electronic payment (digital payment) by means of automatic teller machines, debit or credit cards or prepaid cards, e-wallets (mobile wallets) and special computer applications constitute traceable payment systems.^[1]

Non-scheduled public bus services are defined as ‘those that provide collective or individual transport of persons, with a complementary and supplementary function with respect to scheduled public transport by rail, car, sea, lake and air, and that are performed, at the request of the transported person, in a non-continuous or periodic manner, on routes and according to timetables established from time to time’;^[2] i.e. taxi services with a car, scooter, watercraft and animal-drawn vehicles as well as rental services with driver and a car, scooter, watercraft and animal-drawn vehicles.^[3]

Concerning expenses relating to hotel, food and beverage services, as well as travel and transport by means of non-scheduled public bus services, Article 54(6-ter) of TUIR is introduced, by virtue of which these expenses are deductible from self-employment income if

• charged analytically to the client or reimbursed analytically on the occasion of employee travel or paid to self-employed workers,

and

• payment is made by bank or postal transfer or by other payment systems provided that they ensure traceability.

The traceability of payments is a necessary condition for these expenses to be subject to the deductibility regime of employment expenses for the purpose of determining the tax base of resident companies and commercial entities.^[4]

The above provisions apply:

• from the 2025 tax period (Art. 1(83),
• for the purposes of the regional tax on business activities (IRAP) pursuant to Legislative Decree No. 446/1997.

[1] Art. 23, Legislative Decree No. 241/1997.

[2] Art. 1(1), Law no. 21/1992.

[3] Art. 1(2), Law no. 21/1992.

[4] Art. 95(3-bis) and 108(2) of TUIR.

For the purposes of determining the taxable value of newly registered cars, motor vehicles for mixed use, motor caravans, motorbikes and mopeds granted to the employee for both personal and work-related usage under a contract entered into after 31 December 2024, the taxable value is equal to 50% of the amount corresponding to a conventional mileage of 15,000 kilometres^[1], calculated on the basis of the cost per kilometre determined by ACI^[2]. For the purposes of determining the taxable value of newly registered cars, motor vehicles for mixed use, motor caravans, motorbikes and mopeds granted to the employee for both personal and work-related usage under a contract entered into after 31 December 2024, the taxable value is equal to 50% of the amount corresponding to a conventional mileage of 15,000 kilometres, calculated on the basis of the cost per kilometre determined by ACI.^[3]

It is also provided that, for the purposes of calculating the benefit, the amount corresponding to a conventional mileage of 15 thousand kilometres is taken at the lower percentage of:

• 20% for plug-in hybrid electric vehicles,
• 10% for exclusively electrically powered battery vehicles.

Car value charts for the year 2025 were published in the Ordinary Supplement to the Official Gazette of 30 December 2024, No. 304.

[1] Art. 51(4)(a), TUIR.

[2] Automobile Club Italia.

[3] Art. 51(4)(a), TUIR.

The increase of the non-taxable threshold limit from EUR 258.23 to EUR 1,000^[1] is confirmed for the years 2025, 2026 and 2027 upon goods supplied and services rendered to employees. The exemption regime is also applied on sums disbursed or reimbursed to employees for the payment of

• household utilities (electricity, gas, water),
• home (primary residence) rental expenses,
• interest on home (primary residence) mortgage.

Where the worker has dependent children – including those born out of wedlock, adopted, affiliated or fostered – the limit is further raised to EUR 2,000; the worker concerned is required to inform the employer of the tax code of the dependent children.

It should be noted that a dependent child is a child who has not yet reached the age of twenty-five and has an income – gross of deductible expenses – not exceeding EUR 4,000.00; this income limit is reduced to EUR 2,840.51 if the child has reached the age of twenty-five.^[2]

[1] Art. 51(3), TUIR.

[2] Art. 12(2), TUIR.

We remain available for any further clarification.