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The Italian Revenue Agency hinders the adoption of electric company cars: the case of reimbursing employees for recharging costs

published on 27 October 2025 | reading time approx. 3 minutes

As many electric car users know, but perhaps less so those who interact with them without being familiar with typical usage patterns, electric vehicles are primarily charged at home. This is crucial not only for economic reasons (home charging costs around 25 cents per kWh, compared to 40 cents to one euro at public charging stations), but even more so for practical ones: charging overnight means no wasted time and a full battery in the morning.

In its Response to Tax Rule 421/2023, reiterated in Response 237/2025 (see Il Sole 24 Ore of 11/9/2025) for the case of a company car granted for both private and business use to an employee, the Italian Revenue Agency argued that the reimbursement of the cost of energy used to charge the car at home, even if duly documented, would constitute taxable income for the employee.

It is stated that such energy consumption “is not included among the goods and services provided by the employer, so-called 'fringe benefits', but constitutes an expenses reimbursement incurred by the employee”. The Response specifies that the sums paid by the employer to the employee as reimbursement of expenses constitute income, “with the exception of expenses reimbursed in the exclusive interest of the employer, advanced by the employee for operational efficiency, such as the purchase of low-value capital goods, such as photocopying or printer paper [...]”.

It seems that the Italian Revenue Agency does not realise that the reimbursements in question fall precisely within the exceptions it lists, as they are not reimbursements of personal expenses, but expenses incurred in the exclusive interest of the employer and advanced by the employee for operational efficiency.

In fact, in normal cases, the agreement to grant a car for both private and business use stipulates that the employer undertakes to indemnify the employee for any expenses related to the use of the car, from purchase to maintenance costs, including the cost of energy (whether petrol or electricity) necessary for its operation. Therefore, the cost of recharging is borne exclusively by the employer, as are the purchase and other expenses related to use. On the other hand, due to legislation designed to combat undeclared property rentals, electricity companies are prevented from registering energy supply contracts in the name of persons other than those who have title to the property. Hence the 'operational streamlining' whereby the supply contract can only be registered in the name of the employee or a co-resident family member.

Moreover, it cannot even be considered that the employee is pocketing an untaxed benefit in cash or in kind: the cost of the energy in question is included in the calculation of the cost of the so-called 'fringe benefit' that is taxed in the employee's salary, so that taxing the reimbursement of top-ups would result in double taxation.

This unjustified closed position causes damage that goes far beyond the mere tax issue.

Proceeding in this way not only causes a real block to the spread of electric cars – where company cars could instead provide a decisive shift towards 'green', but also encourages the totally incorrect use of plug-in hybrid cars, even causing an increase in emissions.

If employees were subject to double taxation on the cost of electricity, they would likely avoid recharging their cars at their own expense, opting instead to refuel exclusively with fossil fuels. This would undermine the very purpose for which electric vehicles are designed. Moreover, compared to traditional combustion engine cars, electric vehicles carry the additional weight of dual motorisation and high-voltage batteries, resulting in even higher fuel consumption when not used as intended. And this happens despite the incentives offered by the state to promote their adoption.