Last updated: 29 October 2026 · Written by the Peoitaly team, Employer of Record and payroll specialists in Italy.
Key takeaways
- Short answer: fringe benefits are goods and services an employer gives employees on top of salary, such as vouchers, a company car or accommodation. In Italy they are part of taxable employment income, unless an exemption applies.
- In 2026, fringe benefits are tax-free up to €1,000 a year per employee, or €2,000 for employees with dependent children. The limit also covers utility bills, rent and mortgage interest on the main home paid or reimbursed by the employer.
- If the limit is exceeded, the whole amount becomes taxable, not only the excess.
- Electronic meal vouchers are tax-free up to €10 a day from 2026 (paper vouchers €4).
Fringe benefits help Italian employers reward staff in a tax-efficient way. The rules have changed several times in recent years, and the general limit that applied until 2024 (€258.23 a year) has been replaced for 2025–2027 by much higher thresholds. This guide explains what counts as a fringe benefit in Italy, what is tax-free in 2026 and how the main benefits are valued.
What are fringe benefits?
Fringe benefits (benefit in natura or compensi in natura) are goods and services an employer gives an employee in addition to salary: shopping or fuel vouchers, a company car for private use, accommodation, a mobile phone, payment of household bills. They can be given to individual employees, unlike corporate welfare plans, which must be offered to all employees or to categories of employees.
Under Italian tax law, everything an employee receives in connection with their job is, in principle, taxable employment income. Fringe benefits are taxed at their value unless a specific exemption applies. Source: TUIR (Presidential Decree 917/1986), art. 51
What is the tax-free threshold for fringe benefits in 2026?
| Employee | Tax-free limit per year (2025–2027) |
|---|---|
| All employees | €1,000 |
| Employees with fiscally dependent children | €2,000 |
Within this limit the employer can also pay or reimburse household utility bills (water, electricity, gas), rent and mortgage interest on the employee’s main home. The thresholds were set by the 2025 Budget Law for 2025, 2026 and 2027. Source: Law 207/2024 (Budget Law 2025), art. 1, paragraphs 390–391
- Not a deductible: if the total value in the year exceeds the limit, the entire amount is taxed, not just the part above it.
- Declaration needed: to use the €2,000 limit, the employee must tell the employer they are entitled to it and give the children’s tax codes.
- All employers count: benefits received from other employers in the same year are added together.
€1,001 of benefits is fully taxable; €1,000 is fully tax-free. Track the total during the year.
Meal vouchers
Meal vouchers (buoni pasto) follow their own rules and do not count towards the €1,000/€2,000 limit. From 1 January 2026 they are tax-free up to:
- €10 a day for electronic vouchers (it was €8);
- €4 a day for paper vouchers.
Any value above these amounts is taxed as salary. Source: Law 199/2025 (Budget Law 2026), amending TUIR art. 51, para. 2, letter c)
Designing a benefits package for staff in Italy? We set it up in payroll the tax-efficient way.
Talk to PeoitalyCompany car
A company car used for both work and private purposes is taxed on a flat-rate value, not on its actual private use. The value is a percentage of the cost of driving 15,000 km a year according to the official ACI tables, after deducting any amount the employee pays. The percentage depends on the type of vehicle: the standard rate applies to petrol and diesel cars, and lower rates apply to plug-in hybrids and fully electric cars. The rules were revised in 2025 and 2026, so the right percentage should be checked for each vehicle and assignment date. More on this in our article on company cars through an Employer of Record.
Accommodation
If the employer provides housing, the taxable benefit is the difference between the property’s cadastral income (plus related costs paid by the employer, such as utilities) and any amount the employee pays. If the employee is required to live there for work, only 30% of that difference is taxed. For buildings not registered in the land registry, the value is based on market or regulated rent. Source: TUIR, art. 51, para. 4, letter c)
Fringe benefits vs corporate welfare
Fringe benefits are often confused with corporate welfare (welfare aziendale). The difference matters for tax:
- Fringe benefits can be given to individual employees and are tax-free only up to the yearly limit.
- Welfare services, such as education, care, health or recreational services, are tax-free without a monetary limit when offered to all employees or to categories of employees, as provided by TUIR articles 51 and 100.
How fringe benefits are valued
Unless a flat-rate rule applies (as for cars and accommodation), fringe benefits are valued at their normal value: the average price charged for the same goods or services under free competition, at the same time and place. The value must appear on the payslip. Regular benefits in kind are also included in the pay used to calculate TFR, unless the collective agreement says otherwise.
Frequently asked questions
What is a fringe benefit?
A good or service an employer gives an employee in addition to salary, such as vouchers, a company car, accommodation or payment of household bills. In Italy it counts as employment income unless an exemption applies.
Are fringe benefits taxable in Italy?
Yes, in principle. In 2026 they are tax-free up to €1,000 a year per employee, or €2,000 for employees with dependent children. Above the limit, the whole amount is taxable.
What is the fringe benefit limit for 2026?
€1,000 a year, raised to €2,000 for employees with fiscally dependent children. The limits apply for 2025, 2026 and 2027 and also cover utility bills, rent and mortgage interest on the main home.
How much are meal vouchers tax-free in 2026?
Up to €10 a day for electronic meal vouchers and €4 a day for paper vouchers. They do not count towards the fringe benefit limit.
How is a company car taxed in Italy?
On a flat-rate value: a percentage of the ACI cost of driving 15,000 km a year, lower for plug-in hybrids and electric cars, less any amount paid by the employee.
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Book a callUpdated October 2026. This article provides general information; the tax treatment of a specific benefit should be checked with a payroll or tax adviser.
