Auto bonus: Italian government announces new car discounts of up to €3,000

The Italian government has announced that it will give buyers thousands of euros towards the purchase price of a new car in a new scheme aimed at supporting the automobile sector.

Auto bonus: Italian government announces new car discounts of up to €3,000
Photo by Sarah Brown on Unsplash

Italy’s government on Wednesday announced a 650 million euro ($700 million) stimulus package for the next three years to encourage the purchase of new cars – including older models as well as low-emission electric or hybrid vehicles.

READ ALSO: ‘How we used a government bonus to buy an electric car in Italy’

The decree adopted at a cabinet meeting chaired by Prime Minister Mario Draghi took the money from the “automobile fund”, a budget for which 8.5 billion euros ($9.27 billion) is earmarked until 2030.

Under the new decree, purchases of low-emission electric or hybrid vehicles will be eligible for a bonus of between 2,000 and 3,000 euros.

A 2,000-euro cash bonus will also be available on a wide range of older-generation vehicles, “including those with traditional petrol and diesel engines, as long as they have emissions contained between 61 and 135 grams of CO2 per kilometer”, according to reports from financial newspaper Il Sole 24 Ore.

Further funding is made available to those who scrap older vehicles at the time of purchasing the new car,

The payment will be made directly to individuals “in the event of a purchase with financing, as long as the holder retains ownership of the vehicle for at least one year”, writes Il Sole 24 Ore.

The decree text containing full details of the scheme is yet to be published.

Italy has offered several new car ‘bonuses’ in recent years after it first introduced a discount to tempt drivers to trade in their old cars for lower-emission models back in 2019.

Announcing the new scheme, Economic Development Minister Giancarlo Giorgetti.said: “With this greenlight for bonuses, we are giving a concrete and much-awaited response to the automobile sector which is suffering profoundly at the moment.”

“This multi-year measure will allow companies to get their industrial plans onto the path of development,” he added.

“First the pandemic, the shortage of raw materials and now the war (in Ukraine) are putting a severe strain on this sector which represents one of the jewels of Italy.”

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Italy ranked among worst in Europe for tax burden on families

Working parents in Italy face some of the highest rates of taxation among developed countries, according to a new international report.

Italy ranked among worst in Europe for tax burden on families

Italian employees pay one of the highest rates of tax relative to income of all countries included in a new study by the OECD (Organisation for Economic Co-operation and Development), coming only behind Belgium, Germany, Austria and France.

The OECD report measured the ‘tax wedge’ or tax burden faced by both the employee and the employer in each country last year.

READ ALSO: How much does it cost to raise a child in Italy?

The figure includes income tax paid by workers, and social security contributions, which in Italy are paid by both the employee and employer.

According to the findings, Italy’s tax wedge is especially high for families with children, compared to a single worker with no dependents, ranking fourth-highest in this case among the 38 OECD member countries.

Only France, Finland and Turkey came higher.

In most of the countries studied, there are tax benefits for families with children. That’s because “most OECD countries provide benefits to families with children through cash transfers and preferential tax provisions,” reads the report.


But Italy recorded lower than average reductions, with a decrease of just 8.6 percentage points for family benefits – less than the OECD average of 10 percentage points.

That meant Italy ranked as having the fourth-highest tax wedge for an average married worker with two children, amounting to 37.9 percent in 2021, while the OECD average is 24.6 percent.

The Italian government has recently pledged to do more to help families with the cost of living, including by introducing the Single Universal Allowance (L’assegno unico e universale).

However, this payment replaces various so-called ‘baby bonuses’, meaning the government is scrapping lump sums of hundreds of euros previously paid to help new parents cover the cost of starting a family.

Looking solely at the net tax that a worker pays on income, the same category of employee paid an average tax rate of 18.3 percent in 2021, compared with the 13.1 percent OECD average.

In other words, the take-home pay of an average married worker with two children in Italy, after tax and family benefits, is 81.7 percent of their gross wage, compared to 86.9 percent for the OECD average.

The discouraging figures come after a recent report estimated the total cost of raising a child in Italy up to the age of 18 at €321,617.

For a single employed person with no children, Italy had the fifth-highest tax wedge, slipping slightly from fourth place in 2020.

The tax wedge came to 46.5 percent in 2021 for single workers, while the OECD average tax wedge was 34.6 percent.

READ ALSO: How much parental leave do you get in Italy?

The OECD also reports that, in Italy, contributions and income tax account for 84 percent of the tax wedge, compared to 77 percent on average.

Employment taxation has bounced back for most countries in 2021 following the Covid-19 pandemic, the findings showed.

“Increases to the tax wedge in 2021 have more than offset the sharp declines recorded in 2020 and have seen the tax wedge rebound to higher levels than in 2019, before the pandemic,” the report stated.

Taxation rates for Italian workers remain relatively high despite employment taxation reforms in 2021 that included cutting income tax for lower earners.