How are different expense categories treated in Italy for reimbursement?

In Italy, expense categories are treated in various ways for reimbursement, and many have specific requirements regarding taxability.

For all expense types, proper documentation is mandatory.

All reimbursable expenses must be supported by valid Italian or foreign tax-compliant invoices or receipts, issued in accordance with Italian tax law (TUIR).

For expenses incurred in Italy, invoices must generally be issued to Velocity Global S.R.L., including full company and VAT details, and must be paid using traceable payment methods only (credit/debit card, digital payment, or bank transfer). Cash payments are not eligible for tax-free reimbursement. Expenses must be strictly indispensable for Velocity Global’s business, approved by the supervisor, and submitted within 45 days to ensure compliant reimbursement under Italian tax regulations

Taxable Categories

Expenses Representing a Benefit in Kind (BiK): Any expense that represents a personal benefit to the employee under Italian tax law is considered taxable and, if exceptionally approved, must be grossed up and processed via payroll.

Meals in City of Habitual Work (Employee Portion): When expenses are incurred in the employee’s city of habitual work, only the portion relating to clients or guests is reimbursable. The portion relating to the employee’s own consumption is not reimbursable and therefore taxable if paid.

Personal Car Fuel (Outside Mileage Rules): Fuel costs for the employee’s personal car are not reimbursable outside the mileage framework and are treated as taxable if submitted.

Mobile Phone Usage: Business usage of a personal mobile phone is taxable and processed via payroll.

Broadband Internet at Home: Home broadband internet is considered a taxable benefit by the Polish tax authorities and must be grossed up and included in payroll.

Non-Compliant Payments (Cash): Expenses paid in cash are not eligible for tax-free reimbursement and are treated as taxable under the Italian 2025 Budget Law.

Expenses with Special Requirements

Meals and Accommodation (Outside City of Habitual Work / Abroad): Meals and accommodation incurred during business travel outside the city of habitual work or abroad are reimbursable up to daily caps, which also include hotel costs:

• Italy: up to EUR 180.76 per day
• Abroad: up to EUR 258.23 per day

Proper documentation must indicate the beneficiary (employee and/or guests) and the business purpose.

Sundry Travel Expenses:

Sundry travel expenses (e.g. laundry, phone, parking, gratuities) are reimbursable up to:

• EUR 15.49 per day (Italy)
• EUR 25.82 per day (abroad)
• All sundry expenses are aggregated toward the daily cap.

Mileage (Private Car): Mileage for the employee’s private car is reimbursable using ACI statutory rates, provided that a detailed mileage schedule is submitted (date, route, business purpose, km driven). Mileage without proper documentation is not reimbursable.

Car Rental and Fuel: Rental car costs are fully reimbursable when supported by an invoice issued to Velocity Global. Fuel is reimbursable only for rental cars. Fuel for personal vehicles is not reimbursable.

Client and Team Entertaining:

• Client meals are reimbursable when strictly business-related and documented.
• Team meals with Velocity Global employees are reimbursable up to EUR 50 per employee, with an annual cap of EUR 258.23 per employee, and require attendee details and business purpose.

Non-Taxable Expenses

These include business travel transportation, accommodation within daily statutory limits, meals during business travel within applicable caps, car rentals, public transportation tickets, computer equipment and software used exclusively for business purposes with prior approval, business-only home office furniture compliant with health and safety rules, minor office supplies and stationery, professional training, approved business travel insurance, and business expenses incurred while working from home where explicitly foreseen in the employment agreement, provided all expenses are strictly business-related, properly documented, traceable, and approved