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

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:

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