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ENERGY

Why Italy’s fuel prices are among the highest in Europe – and rising

Petrol, diesel and methane prices are surging in Italy along with household energy bills as the price of natural gas spikes across Europe. Here's how much prices are going up - and why the cost increases are hitting Italy so hard.

A station attendant fills a car with petrol.
Methane gas has doubled in price in Italy. Photo by Andreas SOLARO / AFP

Fuel prices overall are now at their highest since 2014, while the cost of Italy’s cheapest fuel source, methane gas, has doubled according to fuel distributors.

Since the beginning of this year, petrol has gone up in price by over 15% according to motoring reports, meaning it now costs €11-13.50 more on average to fill up.

Figures for diesel are similar, with a 14.5% increase since the start of 2021, costing just under €12 extra for a full tank.

That means an expected average of €324 extra spend per family per year to run their vehicle.

Higher fuel prices further swell living costs for people in Italy, as electricity bills shot up by nearly 30 percent from Friday, while gas bills also jumped up by 14 percent.

READ ALSO: Rising energy prices: How to save money on your bills in Italy

Italy’s rising fuel costs for both petrol and diesel are among the highest in Europe, according to this chart using data from the European Commission and petrol station websites.

Only the UK, Finland, Denmark and Sweden are recording higher costs per litre of either petrol or diesel, according to the data.

France and Germany follow Italy for petrol prices while France comes second for diesel.

A man fills his van with petrol.
Fuel prices continue to rise, with methane doubling in cost. Photo: Franck Fife / AFP

In some parts of Italy, drivers with cars running on methane gas can expect to pay up to €2 per kilo – a 100 percent increase on the €1 per kilo that it was last week, according to news reports.

The latest hike, described as ‘skyrocketing’ by various Italian media outlets, marks yet another increase in the cost of this once much cheaper fuel source, as it has in fact reportedly tripled since the start of the year.

Italy’s national distributor of methane gas, Federazione Nazionale Distributori e Trasportatori di metano (Federmetano), stated that the value of methane gas has reached levels “no one would have ever imagined”.

It’s a blow to a sector that has been gaining in popularity, as Federmetano recorded consumption of this fuel in the first half of 2021 as 13% higher compared to the first half of 2020.

The organisation claimed this figure follows the progressive increase in the number of CNG (compressed natural gas) vehicles in circulation over the last five years, which produce much fewer carbon emissions than conventional petrol cars.

The trend threatens to put the entire transport sector that uses this fuel in crisis, with reports of firms that run on methane coming to a standstill.

A plant in Ferrara, Emilia Romagna, has had to close for a few weeks due to “the critical situation that the company is going through as a result of the increase in the cost of methane gas”.

Federmetano has explained that the sudden spike in costs is down to various factors, including low levels of storage at European sites due to a long winter and increased heating requirements, the Asian economy recovering with great demand for energy, ship supplies diverted to Asia and other markets generally willing to pay more.

READ ALSO: When can you switch on your heating in Italy this winter?

Cuts in supplies to Europe from Russia due to scheduled maintenance have also been noted, as have setbacks in authorisations for new imports, as Europe has decreased its production of natural gas.

This has left Italy vulnerable and unable to counter the cost increase as these developments are happening “at a level far above the bargaining abilities of road distribution entrepreneurs,” according to the fuel distributor.

Meanwhile, the cost of petrol and diesel has increased over the past three months, according to data from Italy’s Ministry for the Ecological Transition.

Petrol rose from €1.613 per litre in June to €1.654 per litre in August. For Diesel, the price jumped from €1.473 per litre to €1.505.

Over the last year, all fuel sources have gone up in price, based on the average monthly cost. Going back further to July 2020, petrol was recorded at €1.403 per litre and diesel at €1.289 per litre.

A graph showing the rise in petrol and diesel prices in Italy.
A graph showing the rise in petrol and diesel prices in Italy. Source: Ministry of Ecological Transition

The steep percentage increases are also partly due to the fact that some of Italy’s lowest fuel costs were recorded during the pandemic in 2020, with May seeing the greatest dip in the cost of petrol at €1.365 per litre.

Natural gas price increases are however causing a surge in energy costs across Europe and beyond.

Italy is particularly vulnerable to price shocks as it is highly dependent on imports and consumes a large amount of gas.

Some 40 percent of its primary energy consumption is gas, compared with about 15 percent in France, according to official statistics for both countries.

As Covid-19 restrictions ease, more economies are experiencing an upturn and one consequence is a refreshed demand for energy, affecting costs for running cars and homes.

Italian Prime Minister Mario Draghi said last week that many of the reasons for the energy price increases were temporary but called for long-term action, including at a European level, to address the problem, including through diversifying supplies.

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MONEY

From renovations to cinema tickets: The Italian tax ‘bonuses’ you could claim in 2023

Italy's latest budget bill has confirmed which of the tax breaks or 'bonuses' will continue into 2023. From property purchases and renovations to cinema tickets, here's what you could save money on in Italy this year.

From renovations to cinema tickets: The Italian tax 'bonuses' you could claim in 2023

Each year, the Italian government provides a range of tax deductions to encourage residents to engage in economy-stimulating, energy-saving, or otherwise worthwhile projects.

READ ALSO: Flat tax, superbonus and wild boar: What’s in Italy’s 2023 budget?

While the paperwork involved can be a headache, it’s well worth knowing what discounts are available – in some cases they can end up saving you tens of thousands of euros.

Here are the key reductions on offer in 2023.

Superbonus

Italy’s popular ‘superbonus 110’, which offers homeowners the chance to claim a tax deduction of up to 110 percent of the cost of renovation work, has been extended into 2023 under the budget bill – albeit in a reduced form.

READ ALSO: Who can claim Italy’s building superbonus in 2023?

From January the maximum available rebate will drop from 110 to 90 percent, and the scheme will exclude many of those who were previously eligible to claim.

You can read more about the precise changes planned for the bonus HERE.

Furniture and appliances bonus

The 50 percent discount on the purchase of new furniture and energy-efficient appliances for properties which have been renovated will remain available in 2023. 

However, the discount will now only be applicable to expenses of 8,000 euros or less (down from the 10,000 euro limit for 2022).

Find more information on the Agenzia delle Entrate (Italian tax office) website here (in Italian).

You might be able to claim a discount on your washing machine in Italy this year.

You might be able to claim a discount on your washing machine in Italy this year. Photo by Anna Moneymaker / Getty Images via AFP

Earthquake bonus

The sisma bonus provides a reduction in costs related to reinforcing homes in parts of Italy at medium to high seismic risk (categories 1, 2 or 3). 

The incentive allows property owners to claim between 50 and 80 percent of up to 96,000 euros on improvements that will make buildings more earthquake-safe, depending on the extent to which the changes reduce seismic risk.

The extended deadline for completing the renovations and applying for the tax deduction is December 31st, 2024; after this point, the benefit will return to its original value of 36 percent of up to 48,000 euros.

READ ALSO: Six things you need to know about claiming Italy’s ‘Sismabonus’

For more details, see the Agenzia delle Entrate’s Sismabonus website here (in Italian) or get in touch with the Agenzia delle Entrate directly. Find contact information here

Ecobonus

If you carry out work to make your home more energy efficient and eco-friendly, for example by replacing your boiler with a low-carbon alternative, improving insulation, installing solar panels, adding blackout blinds or shutters, or even adding charging points for electric cars, you can claim a significant portion of the expenses back. 

Savings of 50 percent or 65 percent can be claimed, depending on the type of work done; in common areas of condominium buildings, that figure rises as high as 75 percent. 

The current deadline for taking advantage of the bonus is December 31st, 2024; after this date, like the sisma bonus, the benefit will reportedly shrink to 36 percent of up to 48,000 euros per real estate unit.

Italy residents who install solar panels on their homes could claim a large tax reduction.

Italy residents who install solar panels on their homes could claim a large tax reduction. Photo by Bill Mead on Unsplash

First home bonus

People buying their first residential property in Italy are eligible for reductions on registration, mortgage and land registry tax, as well as a lower rate of VAT if the purchase is subject to sales tax.

They can also claim credit against personal income tax on estate agent fees and mortgage interest.

If you’re a first-time homebuyer under the age of 36, a couple with one person under the age of 35, or a single-parent family with minor children, you’re eligible for even more savings – provided your household’s ISEE doesn’t exceed 40,000 euros a year.

READ ALSO: What’s an ISEE and when will you need one in Italy?

Certain taxes are wiped out altogether, notary fees are halved, and the state will even guarantee loans of up 250,000 euros. This subsidy, which had been due to expire in 2022, was recently extended until December 31st, 2023.

For more details, see the Agenzia delle Entrate’s website here (in Italian).

‘Green house’ bonus

Back for 2023 (having briefly been trialled in 2016-2018) is the bonus case green, which provides financial incentives to people buying more energy-efficient homes.

Buyers of houses with energy class A or B ratings can benefit from a 50 percent VAT reduction on their purchase until December 31, 2022; however they must buy directly from the construction company or a real estate fund.

Renovation bonus

The bonus ristrutturazione allows you to apply for a 50 percent tax reduction on renovating your property, on expenses up to 96,000 euros, until the end of 2024.

Work might include repairing structural damage, having the wiring replaced, adding a garage, making the property more wheelchair-accessible, installing security systems, removing asbestos or adding safety features such as gas detectors. 

What you can’t claim for is ordinary upkeep and maintenance expenses; to be eligible for a subsidy, the work must involve a significant change or addition to your property.

You can claim significant discounts for making home improvements in Italy.

You can claim significant discounts for making home improvements in Italy. Photo by Stefan Lehner on Unsplash

Garden bonus

If you’re considering adding or renovating green space, you can apply for a 36 percent tax deduction on landscaping, installing irrigation systems, building a well, creating a roof garden or other significant work on your property’s outdoor areas until the end of 2024.

The bonus verde can be claimed on expenses of up to 5,000 euros per property and can be claimed on more than one home in your name. Routine maintenance and upkeep of your garden does not qualify. 

For more details, see the Agenzia delle Entrate’s bonus verde website here (in Italian).

Drinking water bonus

To incentivise people in Italy to ditch plastic bottles in favour of more environmentally friendly alternatives, the government has extended the bonus acqua potabile until the end of 2023.

A 50 percent discount will be available for the purchase and installation of products that provide tap water filtration, mineralisation, cooling or carbonation.

The tax reduction can be applied to expenses of up to 1,000 euros for private individuals, or up to 5,000 euros for businesses.

Psychologist bonus

Italy’s psychologist bonus (bonus psicologo), a voucher for residents looking to access public mental health services, will increase from 600 euros to 1,500 euros in 2023. 

The bonus, which was first introduced by Draghi’s government in July 2022, will remain available to residents with an ISEE below 50,000 euros a year.

However, with just 5 million euros allocated to the scheme this year, down from 25 million in 2022, it’s estimated that only around 10 percent of the roughly 400,000 who have applied will be able to benefit.

See more information about claiming the ‘psychologist bonus’ on the INPS website here (in Italian) 

‘Culture bonus’ for 18-year-olds 

A 500-euro payment made to young people on their 18th birthday to spend on books, museum and cinema tickets and other culture-linked items will be means-tested from 2023.

The existing 18App bonus will be replaced by two new payments: the ‘Carta della Cultura Giovani’ (Youth Cultural Card) and the ‘Merit Card’ (Carta del Merito).

The former will be awarded to 18-year-olds whose households have an ISEE under 35,000 euros, and the latter will go to those who graduated from high school with full marks.

Both bonuses will be worth 500 euros and will be applicable to the purchase of the same items encompassed by the former bonus cultura.

Bills bonus

The bonus bollette or bonus sociale, designed to offset ever-rising gas and electricity bills for lower-income households, will be available to those with an ISEE of up to 15,000 euros in 2023, the threshold having been raised from 12,000 in 2022.

Households with at least four dependent children that have an ISEE of up to 20,000 euros are also eligible.

An estimated 6.2 million people should benefit, up from 5.2 million last year. Those who qualify shouldn’t need to take any action; the discount will be automatically applied to energy bills.

Please note that The Local is unable to advise on or assist with claiming tax deductions. For more information, consult an independent financial advisor or get in touch with the Agenzia delle Entrate. Find contact information here

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