In a country where well over 3 million business trips are made annually by workers of Italian and foreign companies based in Italy, it is important to understand how traveling allowances work. The tax treatment of these allowances, if properly managed, can translate into thousands of euros in tax savings for both companies and employees annually.
A Travel-Heavy Business Environment
According to the Italian National Institute of Statistics (ISTAT), an average Italian company invests around €2,700 per employee annually in business travel expenses. This figure rises in multinational corporations to over €10,000 annually per mobile employee. What tends not to be taken into account, however, is that a significant portion of this outlay can be exempt from income taxation or deducted from corporate income when properly structured.
Where employees travel on business in Italy, they may be paid non-taxable allowances in certain situations. The allowances are set annually and are indexed for inflation and cost of living.
Per diem (daily allowance) rates for 2024 were:
- Domestic travel (outside municipality): up to €46.48/day
- Foreign travel: up to €77.46/day
- Where meal or lodging is provided, tax-free limits are lowered to:
- €30.99/day (domestic)
- €51.64/day (foreign)
Let’s have a look at the example.If a traveling staff member with a foreigner’s earnings gets 20 days a year of per diem at the full rate of €77.46, that works out to €1,549.20 of tax-free income a year—a handy perk that won’t increase the employee’s IRPEF bill.
Mileage payment is extra. Taking an assumption that an employee travels 5,000 km a year on company business, in a private car. ACI rates at the time of writing for an average diesel compact in 2024 indicate payment of around €0.53/km, equating to €2,650—once again, all fully non-taxable if under thresholds.
The Employer Advantage: Deductible, Compliant, Scalable
For the employer as well, the benefit exists. Corporations that effectively handle travel allowances are entitled to claim substantial corporate tax deductions in Italy. Consequently, receipts are not required and flat-rate per diem compensation is entirely deductible.
Reimbursements of actual expenses (with substantiation) are deductible up to:
- €180.76/day for domestic travel,
- €258.23/day for foreign travel.
Hence, an employer who sends an employee on a 10-day business trip abroad can deduct €2,582.30 in travel expenses without the payments being considered as salary.
These deductions immediately lower a company’s IRES (corporate income tax in Italy ) base, currently 24%, and can also minimize the IRAP (regional tax) load, according to the accounting treatment of the travel costs.
| Allowance Type | Scenario | Tax-Free Limit | Employer Deductible | Details |
|---|---|---|---|---|
| Domestic Per Diem | Travel outside home municipality | €46.48/day | Up to €180.76/day | ➕ View |
| Reduced to €30.99/day if meals or lodging are provided. Fully non-taxable under Article 51 TUIR. | ||||
| Foreign Per Diem | Travel abroad for work | €77.46/day | Up to €258.23/day | ➕ View |
| Reduced to €51.64/day if meals or lodging are provided. Must be documented if above base rate. | ||||
| Mileage Reimbursement | Private car used for work | €0.53/km (ACI 2024) | Fully deductible if within ACI tables | ➕ View |
| ACI rates are published annually. Private use of company cars is partially taxable (25–60%) based on emissions. | ||||
| Example Scenario | Consultant: 20 domestic + 15 foreign days + 6,000 km | €5,271.50/year tax-free | ≈ €1,265 in IRES savings | ➕ View |
| Domestic: €929.60 Foreign: €1,161.90 Mileage: €3,180.00 Total: €5,271.50 tax-free + scalable employer deduction. | ||||
Italy’s Legal Foundation: Article 51 TUIR
The regime is governed by Article 51, paragraph 5 of the Consolidated Income Tax Act (TUIR). The paragraph describes an obvious discrimination between:
- Tax-free travel allowances (within predetermined limits),
- Taxable travel allowances (where above limits or inadequately recorded),
- Treatment of company cars, with private use more and more taxable based on CO2 emissions between 25% and 60% of the value of the car.
Furthermore, the last say on non-taxable mileage allowances is the ACI tables, which are released annually and published in the Gazzetta Ufficiale.
Let’s consider an example. A Milan-based consultancy outsources a project manager on:
- 10 domestic trips/year (2 days each),
- 5 international trips (3 days each),
- Drives 6,000 km/year for client meetings.
- Tax-free reimbursement will be approximately:
- Domestic per diem: 20 days × €46.48 = €929.60
- International per diem: 15 days × €77.46 = €1,161.90
- Mileage reimbursement: 6,000 km × €0.53 = €3,180.00
- Total: €5,271.50 of annual reimbursements exempt from income tax.
- Employer deduction (flat-rate method): €5,271.50 directly lowers taxable income, a saving of approximately €1,265 in IRES alone.
Multiply that across the span of a 15-person mobile workforce, and annual tax-advantaged spending is in excess of €75,000, with corporation tax savings of approximately €18,000.
Contact Accounting Bolla today about structuring travel allowances the right way.
Tools to Maximize Accuracy and Compliance
To handle these reimbursements efficiently, organizations today use automatic systems that ensure policy adherence and preserve an audit trail:
- TravelPerk for end-to-end travel management integration,
- VacationTracker.io for mobile workforce management,
- Dochub.com for e-receipt processing,
- GlobalPassport.ai for cross-border compliance management.
These systems help HR and Finance teams enforce consistent travel policies and reduce risks during tax audits.
Therefore, in Italy’s complex tax landscape, traveling allowances are a legal and efficient means of streamlining corporate and compensation expenses. For workers, they yield tax-free earnings and increased financial wellness. For companies, they are a cost-saving mechanism, a transparency creator, and a facilitator of ease of compliance with the tax authorities.
During an era where mobility is synonymous with competitiveness, coming to terms with utilizing travel allowances in Italy is not just sound accounting, it’s good business.
Would you like to read more about this subject? Then take a look at our related articles here, Buoni Pasto in Italy: A Practical Employee Benefit, Mandatory Employee Benefits in Italy and Italian employment contracts: all the useful key informations.
