Anyone who needs to give a car or van to an employee in Italy, or add a vehicle to the fleet, has three options: buy it, take it on leasing (financial lease), or on long-term rental (noleggio a lungo termine). The choice is almost always made on the monthly fee, but the differences that really matter are elsewhere: who manages the deadlines, how much is deductible, what happens at the end of the contract.
This guide puts them side by side. It does not replace your accountant — what is cheaper depends on the company’s tax position — but it gets you there with the right questions.
The three options in a table
| Buying | Leasing | Long-term rental | |
|---|---|---|---|
| Who owns the vehicle | The company | The leasing company, with a final buy-out option | The rental company; it is returned |
| Car tax (bollo) | Paid by the company | Normally paid by the lessee | Normally included in the fee |
| Motor insurance (RC auto) | Paid by the company | Paid by the lessee | Normally included in the fee |
| Maintenance and tyres | Paid by the company | Paid by the lessee | Normally included in the fee |
| Roadworthiness inspection | Paid by the company | Paid by the lessee | Depends on the contract: check it |
| Traffic fines | The notice goes to the company | The notice goes to the lessee (jointly liable) | The notice goes through the rental company |
| End of contract | — | Buy-out or return | Return, with a condition check |
“Normally” is not just caution: rental and leasing contracts vary widely, and each of these services can be included, excluded or optional. The table tells you where to look; the contract tells you how things stand.
The deadlines that stay with you in any case
Long-term rental takes car tax, insurance and maintenance off the company’s plate, and that is its biggest operational advantage. It does not take everything:
- Naming the driver. The notice goes to the rental company, which names the company; from that notice the company has 60 days to say who was driving, otherwise a separate penalty of €291 to €1,166 applies.
- The roadworthiness inspection, when the contract does not include it. On a four-year rental the first inspection falls right at the end of the contract, and sometimes neither party deals with it.
- The end of the contract. Return comes with conditions on the vehicle’s state; whoever notices chargeable damage on the day of return has no time left to fix it. The end date should be recorded months ahead, as a real deadline.
With buying and leasing, every deadline stays with the company: inspection, insurance, car tax, servicing and tyres.
Tax deduction: same rules, different caps
Article 164 of the Italian income tax code (TUIR) governs the deductibility of company vehicle costs, and it applies to all three options: only the cost the cap applies to changes (purchase price, capital portion of the lease, rental fee).
| Vehicle use | Deductible | Cap |
|---|---|---|
| Instrumental to the business (e.g. trucks, vehicles without which the business cannot operate) | 100% | None |
| Given to an employee for mixed use for most of the tax year | 70% | None |
| Not assigned (general business use) | 20% | €18,075.99 on purchase cost; €3,615.20 a year on rental fees |
| Sales agents and representatives | 80% | €25,822.84 on purchase cost; €5,164.57 a year on rental fees |
Three practical consequences:
- The rental cap applies only to the rental portion of the fee, not to included services (maintenance, insurance) if they are shown separately on the invoice. An “all-inclusive” fee that is not broken down falls entirely under the cap.
- The 70% requires a real assignment: the vehicle given to the employee for most of the tax year, with the corresponding benefit-in-kind (fringe benefit) on the payslip. A car “available” to several people stays at 20%.
- Commercial vehicles (trucks, vans) used for the business are generally instrumental assets and do not have these limits.
VAT: 40%
For vehicles not used exclusively for business, VAT is recoverable at 40%: on the purchase, on leasing and rental fees and on running costs (fuel, maintenance). Full recovery applies only to exclusive business use, which must be proven. The flat 40% rate comes from a European Union authorisation, extended several times over the years.
How to choose, in practice
- Few vehicles, heavy use, nobody in the company to deal with garages and policies: long-term rental mainly buys time. You see the cost in the fee, the saving in hours not spent.
- Vehicles kept a long time, over 5–6 years, or vehicles that need fitting out: buying is usually cheaper in the long run, provided deadlines are managed well.
- Leasing sits in between — it finances the purchase without taking vehicle management away from the company.
Whatever the option, a mixed fleet is the norm: three owned vehicles, two leased, four rented. That is where deadlines get lost, because each follows different rules and responsibilities. Recording the contract type and its end date next to each vehicle, together with the other deadlines, is the simplest way not to lose them. The complete overview of deadlines gives the calculation rule for each.
Note
Percentages and limits are those of article 164 of the Italian income tax code (TUIR) and of the VAT rules on company vehicles, checked on 14 October 2026. Vehicle taxation changes often with Italian budget laws, and shareholders and directors follow their own rules: before deciding, check with your accountant. This guide is not tax advice.
Frequently asked questions
How much of a company car is tax-deductible in Italy?
For cars not assigned to employees, 20% of costs, with a cap of €18,075.99 on the purchase cost and €3,615.20 a year on rental fees (art. 164 of the Italian income tax code, TUIR). For cars given to employees for mixed business and private use for most of the tax year, 70% with no cap. For sales agents and representatives, 80% with higher caps. Vehicles that are instrumental to the business are 100% deductible.
How much VAT can be recovered on a company car in Italy?
40%, on the purchase as well as on leasing or rental fees and running costs, for vehicles not used exclusively for business. Full recovery applies only to exclusive business use. The flat 40% rate is authorised by the European Union and has been extended several times.
With long-term rental, who pays the car tax (bollo)?
In Italian long-term rental contracts the car tax is normally included in the fee and paid by the rental company. Check the contract anyway, together with insurance, maintenance, tyres and the roadworthiness inspection.
With rental, who handles traffic fines?
The notice goes to the rental company, which passes on the lessee company’s details; from that second service the company has 60 days to name the driver. Many rental companies also charge an admin fee per notice.
Written and fact-checked by The Busy People. How we check our sources