The tax decree linked to Italy’s 2020 Budget Law (article 4 of Decree Law no. 124 of 26 October 2019) further complicates the already multifaceted category of contracting agreements. Under the decree, in fact, also Article 17-bis of Legislative Decree No 241 of 1997, requiring the Principal to pay withholding tax on the salaries of workers employed in the work or service, needs to be complied with.

Whilst the objective is clear - to counter the non-payment of the withholding taxes by those contractors who make their margins by not paying taxes and contributions - the methodology is not so intelligible.

Over the years, the discipline of procurement has been rewritten in many different ways, always in order to counteract outsourcing processes where the operators could be unreliable, with the parallel result, however, of creating a complicated and increasingly cumbersome type of agreement.

Under the new rule, any person acting as a “tax substitute”, when entrusting a company with a work or service, will be required to pay withholding tax on the salaries of the Contractor’s employees. In short, this is a way to expose the Principal to higher risk and troubling complications. Therefore, while the Bersani Visco Decree would just provide a joint and several liability between the Principal and the Contractor (in line, among other things, with all the other regulations, providing that the two parties are jointly and severally liable), there is now a new and direct obligation on the Principal.

But what will be the procedure? Five days before the withholding tax payment deadline, the Contractor shall provide the Principal with the necessary funds to make the payment, sending the list of the workers employed in the contract by certified email (PEC) to the Principal and indicating, the hours worked, the amount of salaries, and the relevant withholding tax. The sheer volume of data alone shows that the matter will be anything but streamlined.

At that point, within the expiry of the tax payment deadline, the Principal shall pay the withholding tax on behalf of the Contractor (without, among other things, having the right to use its receivables to offset the withholding tax to be paid) and shall notify the Contractor of the payment within five days.

In addition to this tight procedure, there are other substantial doubts to which the answer will be given - hopefully – with time passing: from a labour law point of view, for example, what if an employee of the Contractor’s is employed on more than one site? Who will be liable for the payment?

Well, as it often happens, even this time " there is no certainty of tomorrow ".

This article was first published in the January-February issue of FoodService magazine in Italy,