Procurement: the first clarifications from the Italian Tax Authority

On 13 January 2020, on the occasion of the Forum of accountants and accounting experts held in Milan, the Italian Tax Authority responded to some doubts closely related to the concrete application of the Tax Decree.

First of all, it has been affirmed that employment agencies as governed by Chapter I of Title II of Legislative Decree 276/2003 are also covered by the new rules.

It was also noted that the amount of 200,000 Euros is to be understood in reference to the annual amount entrusted to an individual business. If one and the same client has entrusted several works, the totality of the works and services entrusted by it must be added together. If, on an annual basis, the result leads to the threshold under examination being exceeded, a copy of the payment proxies relating to the payment of withholding tax on the salaries of directly employed employees must be requested from the contractors/subcontractors/trusted agents.

In essence, the coordinating rule described applies indiscriminately to all works entrusted by the same client.

Paragraph 5 of art. 4 of the Tax Decree provides for a system of exemption from reporting obligations under certain conditions. These conditions, in the opinion of the Italian Tax Authority, must be met jointly.

In order to verify the fulfilment of the payments made in the tax period to which the tax returns submitted in the last three years refer, account must be taken of payments made for amounts in excess of 10% of the amount of income or remuneration as resulting from the returns.

The Italian Tax Authority also observed that the payments to be taken into account in the tax account, when a company finds itself in a condition of tax loss for which (according to the law) it is not required to pay tax, do not only concern income tax but also VAT.

Finally, the Italian Tax Authority claims that in order to allow the client to verify that the withholding tax has been paid by the contractor/subcontractor/trusted agent, copies of the payment proxies relating to the payment of withholding tax relating to an individual worker may be cumulative. In order to carry out the checks imposed, in fact, it is sufficient to verify the existence of a correlation between the payment proxies, which may therefore concern all the workers employed by the same client, and the list of the names of all the workers sent to it by the contractor or subcontractor.

The above is subsequent to Resolution 108/2019 with which the Italian Tax Authority again has clarified that:

• the quantification of the separate payments for each customer must be carried out on the basis of objective parameters (e.g. the number of hours spent in the execution of the specific job order) and
• the regulatory provision applies with reference to withholdings made as from January 2020, also with regard to procurement/subcontracting/tender contracts concluded before 1 January 2020.