Italy: Joint Liability Of The Customer And The Contractor For Tax Debts, Withholdings And Social Security Contribution

Last Updated: 18 October 2012
Article by Batini Colombo Saottinis' Tax Team

1. INTRODUCTION

Article 13-ter of the Law Decree nr. 83 dated June 22nd 2012, converted into the Law nr. 134 dated August 7th 2012, has modified again the tax discipline of the joint liability between customer, contractor and subcontractor originally set by article 35 of the Law Decree nr. 233 dated June 7th 2006.

While article 4 paragraph 31 of the Law nr. 92 dated June 28th 2012, has made additional changes to the joint liability between the customer, the contractor and the subcontractor for what concerns salaries and wages and pension and social security contribution payments, originally ruled by article 29 of the Legislative Decree nr. 276 dated 10.09.2003.

2 THE NEW DISCIPLINE OF THE JOINT LIABILITY BETWEEN THE CUSTOMER, THE CONTRACTOR AND THE SUBCONTRACTOR FOR TAX PAYMENTS

Under the effect of the new discipline introduced by the Law Decree 83/2012 converted into the Law 134/2012, the contractor is liable together with the subcontractor toward the Italian Tax Authority for:

  • withholding taxes due on salaries and wages;
  • VAT due by the subcontractor for services rendered under a subcontracting agreement.

Particular duties and liabilities are foreseen also for the customer.

Former discipline

We'd like to remind that the former discipline was introduced by article 2 paragraph 5-bis of the Law Decree nr. 16 dated March 2nd 2012 converted into the Law nr. 44 dated April 22nd 2012.

Official clarifications

With its Circular Message nr. 40 dated October 8th 2012, the Italian Tax Agency has issued important clarifications on the new discipline introduced by art. 13-ter of the Law Decree nr. 83/2012 converted into the Law 134/2012, regarding:

  • the effective date for these new rules:
  • the set of documents required to certify the correct payment of withholding taxes on salaries and of the VAT, in order to exclude the liability of the contractor and the final customer.

Here below you can find said discipline and last clarifications.

2.1 Area of Enforcement

Said rules for liability of the contractor and the customer becomes applicable with relation to contracting and subcontracting agreements for services signed by:

  • entities signing those agreement being a VAT subject;
  • entities subject to corporate income tax (IRES) ;
  • Italian State and Public Institutions.

Exclusions

The so called "Contracting Stations" set by article 3 paragraph 33 of the Legislative Decree nr. 163 dated April 12th 2006 are excluded from the above mentioned rules.

They are:

  • Public Customers Administrations:
    • State Administrations;
    • Local Public Institutions;
    • Other Non-economic Public Entities;
    • Associations, Unions and Consortium made by the above mentioned;
  • Other subjects foreseen by art. 32 of the Legislative Decree 163/2006:
    • Public Works dealers that are not awarded administrations;
    • Public Companies that are not considered public institutions.

2.1.1 Effective Date

With relation to the effective date of this new rules, the Italian Tax Agency has clarified that they have to be applied to contracting/subcontracting agreements signed starting from August 12th 2012.

2.1.2 Joint Liability Between the Contrcator And The Subcontractor

Under the effects of the new discipline set by art. 13-ter of the Law Decree 83/2012, the contractor is jointly liable with its subcontractor for the payment to the Italian Tax Authority of:

  • All withholding taxes on salaries and wages;
  • The VAT due by the subcontractor for services rendered under the subcontracting agreement.

2.2 Limitations To The Joint Liability Of The Contractor

Said liability is applied within the limit of the amount due by the contractor to the subcontractor. With respect to the former discipline the time limit of two years has been abolished.

2.3 Exclusion Of The Joint Liability Of The Contrcator

The joint liability fails if the contractor verifies:

  • that the above mentioned payments, already expired, have been properly made by the subcontractor, obtaining the relevant documentation;
  • before paying the subcontractor.

2.4 Release Of A Specific Certification

The confirmation of the correct payments can also be released through a certification issued by an Italian Chartered Accountant .

2.5 Suspension Of Payments Due To The Subcontractor

The contractor can hold payments due to the subcontractor until this last one hasn't produced all the required documentation.

2.5.1 Verifications By The Contractor – Effective Date

The Tax Agency has clarified that, since the new rule introduces new fulfilments for the contractor, they become effective starting from the 60° day following the enforcing date. Therefore all documents relating payments made by the subcontractors must be verified with relations payments made to subcontractors starting from October 11th 2012, with relations to contracts signed from August 12th 2012.

2.5.2 Notifications From The Authorities

All notification from authorities regarding the subcontractor within the term of decadence are made also to the person or company jointly liable for the above mentioned payments.

2.6 Obligations For The Customer

The customer can pay the agreed amount to the contractor only after obtaining from this last one the proofs of payments related to taxes, withholdings and VAT, already expired, done by the same and by its subcontractors.

2.7 Suspension Of Payments Due To The Contractor

The customer can suspend the payment of amounts due until the contractor exhibits all the documents mentioned above.

2.7.1 Enforcement Of Obligations For The Customer

The Tax Agency has clarified that, since the new rule introduces new fulfilments for the contractor, they become effective starting from the 60° day following the enforcing date.

Therefore all documents relating payments made by the subcontractors must be verified with relations payments made to subcontractors starting from October 11th 2012, with relations to contracts signed from August 12th 2012.

2.8 Fines Applicable To The Customer

The customer is subject to an administrative fine from Euro 5.000,00 to Euro 200.000,00 if:

  • hasn't fulfilled the above mentioned obligations in terms of verifications before paying the contractor;
  • payments due by the contractor and its subcontractors are not correctly made at the due dates.

Therefore, under the effects of the new discipline, the customer is not subject to a true joint fiscal liability with the contractor and its subcontractors, but is addressed with a specific administrative fine of a relevant amount if he pays the agreed amounts without making the needed verifications on correct payments.

2.9 Notifications From The Authorities

All notification from authorities regarding the contractor within the term of decadence are made also to the person or company jointly liable for the above mentioned payments.

3 DOCUMENTS PROVING THE PAYMENTS MADE BY THE CONTRCATOR AND SUBCONTRACTORS

The Tax Agency has clarified that the contractor/subcontractor has to demonstrate the regular payment of withholdings and VAT in order to avoid the charge of the above mentioned liabilities.

3.1 Release Of A Specific Certification By A Chartered Accountant

The new rules foresee that the proof of correct fulfilment of all duties can be substituted by a certification issued by an Italian Chartered Accountant or an HR Professional Consultant.

3.2 Release Of A Specific Subsitutive Declaration By The Contractor And By The Subcontractor

The Italian Tax Agency has clarified that the above mentioned certification can be substituted by a self declaration issued by the contractor/subcontractor:

  • declaring that all duties (payments) have been correctly and timely fulfilled;
  • under terms and conditions of the Republic Presidential Decree nr. 445 dated December 28th 2000.

3.2.1 Substitutive declaration's contents

Under the clarifications by the Tax Agency, the above mentioned substitutive declaration has to include:

  • the period when the VAT concerning the works' execution has been calculated and if some particular regimen has been applied (i.e. reverse charge);
  • the period when withholding taxes on salaries have been paid and if they have been off-set with tax credits;
  • F24 (payment forms) details;
  • The confirmation that VAT and withholdings include the ones referable the same contract agreement.

3.2.2 Criminal Penalties

The release of false declarations involves also criminal law and related penalties liabilities.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Batini Colombo Saottinis' Tax Team
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.