How Might Italy’s New Eco Tax Affect Expats?

Italy’s newly minted eco-tax for cars, approved by the country’s upper house of Parliament, is causing quite a bit of confusion.Introduced as part of the country’s budget plan, the ‘eco-tax’ appears to be generating more questions than answers. Is it a tax? A bonus? A rebate? A subsidy? What exactly is this tax and what will it mean for expats living in Italy?

Background

In December 2018, Italy’s government approved a budgetary plan that included a new ‘subsidiary’ eco-tax scheme. This tax – described as a levy on cars with carbon-dioxide outputs that fail to meet new and lower emission standards – offers an incentive for Italian people to purchase green vehicles over traditional gas-guzzling ones. The eco-tax only applies to brand new cars purchased or leased and registered from March 2019 through to December 2021. Cars already in circulation are exempt from the law.

How The Eco-Tax Works

There are two parts to the plan.

The first – the eco-tax – basically means buyers must pay an additional surcharge on the total purchase price of a car if that vehicle does not meet new, lower emission standards. The tax is calculated based on carbon dioxide emissions (grams per kilometre) and is paid at the time of purchase.

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The tax is worked out as follows:

• 161 to 175g/km: €1,100
• 176 to 200g/km: €1,600
• 201 to 250g/km: €2,000
• More than 250g/km: €2,500

The second part of the budget law – the eco-bonus – offers buyers contributions toward the purchase of vehicles with reduced emissions. This bonus (or at-sale rebate) is based on the vehicle type, the amount of CO2 emissions produced, and whether or not the buyer is trading in an older vehicle. To qualify, a car must produce less than 70 grams of carbon dioxide per kilometre. Two-wheeled electric or hybrid vehicles (with a maximum power of 11 kilowatts) must be replacing a more-polluting model to be considered for the program.

Here is how the eco-bonus is calculated:

• Cars emitting less than 20g of CO2 per km: €6,000 (with the trade-in of a Euro 1-4 rated car)
• Cars emitting less than 20g of CO2 per km: €4,000 (without trade-in)
• Cars emitting 70g to 20g of CO2 per km: €2,500 (with trade-in)
• Cars emitting 70g to 20g of CO2 per km: €1,500 (without trade-in)
• Electric or hybrid two-wheel vehicles: 30% discount on the purchase price (up to €3,000 excluding VAT) with trade-in of a similar vehicle rated Euro 0-2.

The eco-taxes and eco-bonuses are applied directly to the purchase price at the time of purchase.

FAQs

The eco-tax applies to:

• Brand-new vehicles
• Seven-passenger and fewer vehicles
• Mopeds, scooters, and motorbikes
• Vehicles with a listed price of less than €50,000 (excluding VAT)

Eco-tax exemptions:

• Second-hand cars and those already on the road
• Compact economy cars
• Vehicles holding eight-passengers or more
• Camper vans, ambulances and wheelchair adapted cars
• Electric or hybrid two-wheelers (maximum 11 kilowatts of power)

The Effect On Expats

The eco-tax or eco-bonus applies to newly purchased vehicles and so does not affect expats any differently than it would an Italian person who is purchasing a car or motorcycle. There are, of course, specific rules and regulations governing the sale and use of cars that differ for expats from EU and non-EU countries, which are outlined below.

European Union Versus Non-European Citizens

Any European Union (EU) citizen (check the list at the end of this article to see if that includes you) is free to purchase a vehicle (new or used) whether or not they live full time in Italy. Non-EU people, on the other hand, must have proof of residency and must provide the following documentation before driving a car off the lot:

• A codice fiscale (personal tax code)
• Passport or government-issued identity card
• Proof of automobile insurance

Once you’ve bought the car, it must be legally registered. To register a car in one’s name as a non-EU citizen, you must have proof of residency and proof that you have a long-stay visa. Citizens from EU member states must also be residents and have proof of health insurance coverage.

Now that you’ve purchased and registered your car, you’re dying to get that baby on the road, right? Not so fast (pun intended)…

Rules For Driving In Italy

In order to operate a vehicle in Italy, you must have a valid driver’s license (patenti di guida). Any license issued by an EU member state is valid for use throughout the European Union. There’s no requirement to exchange it for an Italian license.

Migrants from non-EU countries who hold valid licenses from their home country may drive within Italy for a maximum of one year from the time they acquired residency. Italian law strongly encourages non-EU nationals to obtain an International Driver’s License during this interim period. After the year is over these expats must, by law, obtain an Italian driver’s license. In order to obtain a driver’s license in Italy, you must:

• Be 18 years or older
• Have a medical certificate from your doctor and two passport photos
• Take the theoretical test and, if you pass, obtain your learner’s permit
• Perform the road test in a car
• Have automobile insurance coverage
• Pay the fee

It’s highly recommended that you enrol in a certified driving school (autoscuola), as the exam is only available in Italian and is extremely difficult to pass, even for native Italian people.

EU member countries: Austria, Belgium, Bulgaria, Cyprus, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, United Kingdom, Romania, Slovakia, Slovenia, Spain, Sweden, and Hungary. Citizens from Norway, Ireland, Liechtenstein, Switzerland, and the Republic of San Marino are now EU-equated citizens, meaning no permit of residence is required for them.

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