Joint tax liability in subcontracting: withholding taxes and how to protect yourself

In short: for labour-intensive works and subcontracting contracts that use the client's capital goods and have a total value above 200,000 euros per year, art. 17-bis of D.Lgs. 241/1997 (introduced by art. 4 of D.L. 124/2019) requires the client to verify that the subcontractor has actually paid withholding taxes on the workers employed. Failing that, the client itself must pay an amount equal to the withholding taxes not paid, plus penalties.

When the verification obligation applies

The rule applies to works contracts, subcontracts, assignments or sub-assignments that simultaneously meet the following conditions: a total annual value above 200,000 euros, predominant use of labour at the client's premises, and use of capital goods owned by the client itself or attributable to it. If even one of these conditions is missing, the specific verification obligation under art. 17-bis does not apply, but the other profiles of joint liability (wage liability, under art. 29 of D.Lgs. 276/2003) covered in the other guides in this pillar remain valid.

What the client must do in practice

Before paying the consideration, the client must request and obtain documentation proving that the withholding taxes deducted by the subcontractor from the workers employed on the contract have been paid. This is typically the F24 payment forms with the corresponding receipt, specifically referring to the workers employed on that contract. If the subcontractor does not provide this documentation, or if omissions emerge, the client must suspend payment of the consideration up to 20% of the total value of the work, or for an amount equal to the withholding taxes not paid if that is lower, and notify the Italian Revenue Agency within 90 days.

The alternative: attestation of tax reliability requirements

The rule provides an exemption from the verification obligation if the contracting or subcontracting company meets specific tax and operational reliability requirements (in existence for at least three years, regularity of overall tax payments, no entries on the tax collection roll or enforceable assessments above the threshold) and demonstrates this with a specific certification (attestation), issued by authorised entities and valid for a limited period. This alternative reduces the recurring administrative burden of checking document by document.

How to protect yourself in practice

• Check whether the contract falls within the scope of application (threshold, labour, capital goods) before assuming that the obligation does not apply.
• Request documentation of withholding taxes paid on a regular basis, not only at the end of the works.
• Check whether the subcontractor can provide the attestation, to simplify the process for ongoing relationships.
• Document every request and response received, so you can demonstrate due diligence in the check if audited.