The so called Tax Decree (Law no. 157/2019 of 19 December 2019 implementing Law Decree no. 124/2019) introduced new regulatory requirements for services agreements that will have an impact on outsourcing and IT contracts as well as on those contracts where a considerable amount of manpower is utilized (e.g. logistics, maintenance services, etc.).
The new rules apply as of January 1, 2020 and require (i) immediate attention due to the sanctions potentially applicable as well as (ii) changes to contracts (including those currently in place) and (iii) adoption of new internal procedures.
In a nutshell, the Tax Decree provides that:
- Customers of services agreements or contracts for works having the following features:
- yearly amount higher than 200,000 Euro;
- intensive labor activities at the customer’s premises / facilities;
- use of equipment / tools (e.g. computers) owned by or available / referable to the customer;
are due to require the providers (and subcontractors) to deliver evidence of payment of the social security contributions relating to the employees employed for the performance of the services / works.
- Within 5 working days following the deadline for the payment of the contributions, the provider is required to deliver to the customer the above proof of payment as well as the list of the relevant employees (identified by their tax number) employed for the performance of the services / works in the previous month, including a detail of the number of working hours spent by each employee for the services / works, the amount and quota of their salary attributable to the services / works, and the amounts of the social security contributions paid by the provider.
- If the provider does not comply or does not pay the contributions in full or in part, the customer is required to suspend the payment of the provider’s invoices up to the 20% of the contract value or the amount of the contributions not paid by the provider, as well as inform the Tax Authority. If the customer does not do that, the customer is subject to the payment of a fine equal to the sanction applicable to the provider. It is to note that this is in addition to the joint liability regime applicable to customers and providers for the payment of the providers’ employees’ social security contributions.
- Certain exceptions apply, in particular where the provider is able to show that it meets certain parameters and delivers to the customer a special certification issued by the Tax Authority.