Per Diem

Italy’s per diem compliance regulations for business travel are governed by the Agenzia delle Entrate. The tax treatment of per diem allowances depends on whether they are provided as a lump sum, reimbursement of actual expenses, or a mixed system.

• Lump-sum allowances are tax-free up to €46.48 per day for domestic travel and €77.47 per day for international travel.
• If meals and accommodation are provided, reduced limits apply.
• Reimbursed expenses require proper documentation.

For full details, visit Agenzia delle Entrate.

In Italy, per diem allowances for business travel are not strictly regulated by the government but are typically set by companies based on industry standards. Per diems typically cover meals, accommodation, and incidental expenses. While there is flexibility in the amount that can be allocated, any reimbursement that exceeds reasonable thresholds may be subject to taxation as income.

Businesses should maintain records for per diem disbursements, including receipts and a breakdown of expenses. If an allowance exceeds reasonable limits, the excess portion may be considered taxable income by the Italian tax authorities. It’s important for companies to stay informed about local tax rules regarding per diems to ensure compliance​ italianbusinesslawyers.com.

Mileage

In Italy, businesses are allowed to reimburse employees for mileage when using their personal vehicles for work-related travel. The Italian Revenue Agency (Agenzia delle Entrate) establishes the allowable reimbursement rates for mileage, which typically vary depending on the type of vehicle. For 2025, the standard mileage reimbursement rate is €0.45 per kilometer for cars, applicable for the first 15,000 kilometers annually. This rate covers fuel, wear, and maintenance costs associated with personal vehicles used for business purposes. For motorcycles and other types of vehicles, the rates may differ.

To ensure compliance, businesses must maintain accurate mileage logs that document the purpose of the trip, starting and ending points, and the kilometers traveled. The reimbursement amount should be reasonable and substantiated by these records. Any reimbursement that exceeds the prescribed rates could potentially be taxed as income by the Italian authorities. For detailed information, you can refer to Agenzia delle Entrate and their guidelines on mileage reimbursement​ italianbusinesslawyers.com vatabout.com

Italy’s mileage reimbursement rates for business travel are determined based on the official ACI (Automobile Club d’Italia) tables. These tables provide cost-per-kilometer rates for different types of vehicles, including cars, motorcycles, vans, and trucks. The reimbursement is calculated based on factors such as vehicle model, fuel type, and depreciation costs.

To access the latest mileage reimbursement tables, you can visit the official ACI mileage cost portal: ACI Costi Chilometrici​

Paperless

Italy permits businesses to maintain digital records for tax purposes, provided these records meet the authenticity, accuracy, and accessibility standards set by the Agenzia delle Entrate. The digital records must be stored in a format that prevents tampering, and they must be retrievable for audits. Businesses are required to keep these records for a minimum of ten years.

Digital invoicing is supported, and businesses are encouraged to use software that complies with Italy’s regulations on electronic invoicing. The digitized records should be organized, secure, and readily available for inspection by the tax authorities. Failure to comply with digital record-keeping rules can result in penalties. Detailed guidelines on maintaining and storing digital records are available through Agenzia delle Entrate​

italianbusinesslawyers.com vatabout.com

In Italy, businesses must comply with strict digital record-keeping regulations. All business expenses, including travel, must be recorded electronically in compliance with the Sistema di Interscambio (SdI), managed by the Italian tax authority, Agenzia delle Entrate.

Key Compliance Requirements:

1. Electronic Invoicing (Fattura Elettronica):

• Businesses must issue invoices digitally using the SdI system.
• Digital invoices must be in XML format and transmitted through SdI.
• Certain thresholds apply for simplified invoices (up to €400)​
  agenziaentrate.gov.it

2. Electronic Storage of Receipts & Documents:

• Companies must store financial records digitally, ensuring their integrity, authenticity, and accessibility.
• The use of Registratore Telematico (RT) is required for businesses issuing receipts. RT devices automatically transmit sales data to tax authorities​
  agenziaentrate.gov.it

3. Electronic Transmission of Expense Data:

• Businesses must report VAT-related data digitally, following Decreto Legislativo 5 agosto 2015, n. 127.
• For cross-border transactions, data must also be transmitted digitally​
  agenziaentrate.gov.it

4. Alternatives for Small Businesses:

• Those with lower transaction volumes can use the web-based document commercial system provided by Agenzia delle Entrate.
• This requires a continuous internet connection for real-time data entry​
  agenziaentrate.gov.it

Failure to comply can lead to penalties, so companies should ensure they use approved digital tools for record-keeping.

Meals, Benefits & Allowances

​​In Italy, business-related meals are reimbursed, and the Italian tax authority requires these expenses to be within reasonable limits. Companies can reimburse employees for meal expenses incurred during business travel or events, but any expenses that exceed reasonable limits might be subject to taxation.

Employees should submit receipts to substantiate meal-related expenses, and companies are advised to follow the guidelines to avoid excessive claims. If meals are provided by the employer (such as during business meetings or events), these meals are generally not taxed as long as they are business-related . Agenzia delle Entrate website.

Meal and Travel Allowances:

• For business trips within the same municipality as the employee’s workplace, meal and transport allowances are generally considered part of taxable income, except for documented transport expenses.
• For business trips outside the employee’s municipality, three reimbursement methods apply: flat-rate, mixed, and analytical reimbursement. Analytical reimbursements for travel and transport expenses (such as mileage allowances) do not count as taxable income if properly documented

Sales tax rates

In Italy, as of 2025, the VAT (Value Added Tax) rates applicable to business travel expenses are as follows:

1. Standard VAT Rate (22%): This applies to most goods and services, including car rentals, business entertainment, and various general business expenses.
2. Reduced VAT Rates:
   • 10%: Applies to hotel accommodations, domestic passenger transport (such as taxis, trains, and buses), and restaurant services.
   • 5% and 4%: These lower rates apply to specific goods and services such as some food products and certain medical equipment but are less commonly relevant for business travel.
3. Zero-Rated & Exemptions: International and intra-community transport services can be zero-rated, meaning no VAT is charged in some cases (e.g., flights departing from Italy)
   avalara.com

VAT Recovery for Business Travel

Businesses can often recover VAT paid on eligible expenses, such as:

• Hotel stays and accommodation (subject to conditions)
• Restaurant meals
• Domestic transport (excluding flights)
• Conference and training fees

However, entertainment expenses (such as client dinners or leisure activities) are typically non-recoverable.

VAT Compliance

Italian businesses must comply with strict VAT invoicing and record-keeping rules, including e-invoicing requirements. Non-resident businesses providing taxable supplies in Italy must also register for VAT, but some exemptions exist under EU cross-border VAT schemes

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If your business regularly incurs travel expenses in Italy, it is advisable to consult a tax specialist to maximize VAT recovery and ensure compliance with local tax regulations.