Who withholds, on which fees and on what base

A company in Bologna receives an invoice from an IT consultant registered with the INPS separate scheme: a fee of 3,000 € and an INPS surcharge of 120 €. The accounts office works out the withholding on the fee alone, 600 €, and pays that over. The Treasury is short by 24 €, because the surcharge belonged in the base. The mistake is the client's, not the consultant's.

The withholding agent and its duty

A professional's invoice carries one figure that the professional never receives and the client does not keep: the ritenuta d'acconto. The client holds it back when paying and hands it to the Treasury in the professional's place. That is why Italian law calls the client a sostituto d'imposta, a withholding agent.

The Agenzia delle Entrate page states the duty in one sentence. Employers acting as withholding agents who pay fees for self-employed work must, at the time of payment, withhold 20% as an advance on personal income tax, IRPEF, with a duty to recover it from the recipient.

Three phrases in that sentence carry the whole course. At the time of payment sets the moment: the payment day counts, not the invoice date. As an advance sets the nature: it is a prepayment of the professional's own tax. With a duty to recover says who bears it: the professional, out of whose fee the sum is held back.

The duty does not come from a choice by the client or a clause in the contract. It arises from the payment itself, once the payer is a withholding agent and the payee earns self-employment income. Neither side can waive it by private agreement, however the engagement letter is worded.

For a small business the practical effect is simple and often underrated. Every time it pays a lawyer, an accountant, an architect or a consultant, the bank transfer is not the last step. Behind it sit a payment to the Treasury and a certificate to issue, both of them the business's job.

Which fees are subject to withholding

The page on income subject to withholding opens broadly: fees for self-employed work paid, on whatever basis, to artists and professionals are caught. It then narrows down into a list worth reading one line at a time, because some of its lines do not look like self-employment at first sight.

• Fees for self-employed work, including occasional work and work paid as a profit share
• Fees for services rendered to third parties or in their interest
• Fees for undertaking to do, not to do or to allow something
• Profits from a profit-sharing association where the associate contributes only work
• Profits due to promoters and founding members of Spa, Sapa and Srl companies
• Income from the sale of copyright by the author personally
• Rights to works of the intellect sold by individuals who bought them and are neither traders nor professionals

The first line is the one that matters to most small businesses: the regular professional's bill, and also occasional work by someone with no VAT number. Being occasional does not remove the withholding. The page says so in plain words, including occasional work, and the payer's duty stays exactly the same.

The third line surprises people most. A fee paid because someone agrees not to do something, for instance not to compete for a set period, is on the list. No visible service changes hands, yet the withholding applies just as it would to a consulting assignment.

The page allows one exclusion based on amount. Fees below 25.82 euros for occasional self-employed work are not subject to withholding when paid by public or private bodies whose sole or main purpose is not commercial, unless they are advances on work worth more in total.

That threshold concerns non-commercial bodies and occasional work. A company or sole trader running a commercial business cannot rely on it: for a business the withholding applies from the very first euro, whatever the size of the bill.

The withholding base: what goes in and what stays out

Once it is settled that withholding applies, the trickier question remains: on what amount. The page on amounts subject to withholding warns that the base follows rules of its own, and it sets them out in two separate groups, one for what is included and one for what is left out.

Included, besides the professional fees, are reimbursements at cost for travel, meals and accommodation and every documented expense the professional advanced and the client repaid. This holds even where the receipts for those expenses are made out to the client as well, the party in whose interest they were incurred.

Also included is the INPS contribution charged on to the client by a self-employed worker registered with the separate scheme. The page gives its rate, 4%. This is the line the Bologna company forgot: a pension surcharge, and yet subject to withholding like the fee it sits beside.

Three items stay out. Statutory social contributions borne by whoever pays them. Any surcharge passed on for the national pension fund of the professional's order. Sums repaid for expenses advanced in the client's name and on its behalf, if documented item by item and not incurred to produce the professional's income.

The two surcharges look alike on paper: a percentage added to the invoice and paid by the client. The page treats them in opposite ways. For the professional fund it gives an example, 4% for chartered accountants, but the rate depends on the fund, so there is no single figure to learn.

Telling advanced expenses apart needs care. Documented costs incurred in the client's interest, such as a site visit, still go into the base. Only sums advanced in the client's name and on its behalf stay out, if unrelated to earning the income and documented line by line, such as a fee paid for the client.

Copyright: a reduced base

Income from selling copyright and rights to works of the intellect follows a rule of its own. The page explains that taxable income is the fees received reduced by 25% as a flat allowance for expenses, a reduction that rises to 40% when the recipient is under 35.

The Agenzia's summary table turns that rule into base percentages. The 20% advance withholding applies to 75% of the fee, or to 60% for the younger author. The rate does not move; what changes is the share of the fee it is applied to.

For a small business this is less rare than it seems. An agency buying from a photographer or an illustrator the rights to an image for its website is paying a copyright fee. Before using the reduced base, ask the author for a date of birth, because age is what fixes the percentage.

The flat-rate professional

Not every professional is subject to withholding. A professional under the regime forfettario, the flat-rate scheme, is outside the ritenuta d'acconto and has to say so on the invoice. The Agenzia's page on e-invoicing for flat-rate taxpayers also explains how: with an extra reason field and set wording.

The required wording reads, in Italian: Operazione non soggetta a ritenuta alla fonte a titolo di acconto ai sensi dell'articolo 1, comma 67, Legge n. 190 del 2014 e successive modificazioni. A client who finds it on the invoice pays the full amount and holds nothing back.

Checking falls to the client before payment, not after. A flat-rate invoice missing the wording leaves a doubt best cleared by asking the professional. Withholding without grounds and failing to withhold when required are two different errors, and they land differently on the two parties.

Three checks before any arithmetic

Before touching any percentage, put three questions to the invoice, always in the same order. The order is not a quirk: each answer can close the matter before the next, and someone who starts from the rate may carefully compute a withholding that was never due.

• Is the fee on the list of income subject to withholding? If not, no withholding
• Does the professional state the flat-rate scheme on the invoice with the exemption wording? If so, no withholding
• Where is the recipient resident, and does the fee go through an Italian permanent establishment? The answer fixes the rate and the nature of the levy
• Only then: which invoice lines make up the withholding base

The third question calls for a document, not a hunch. An Italian name does not prove residence and a foreign address does not rule it out. When in doubt, ask the professional to state it in writing, because the choice between 20% and 30% hangs on that statement.

The last question is where mistakes cluster, for a precise reason: the lines of a professional invoice have similar names and opposite treatments. Keep the base table above within reach until the distinction becomes second nature to whoever pays the bills.

The rates: advance or final tax

The page on rates distinguishes three situations by where the recipient is resident. For a resident professional the withholding is 20% and works as an advance: the professional will deduct it from the IRPEF owed on that year's income.

For a non-resident working on Italian territory the withholding rises to 30% and changes nature: it is a final tax. It settles the matter with the Italian tax authorities on that fee, with no later adjustment through a tax return.

The third situation sits in between. Where the fee goes to an Italian permanent establishment of a non-resident, the withholding drops back to 20% and becomes an advance again. The recipient is foreign, but the income passes through a fixed presence inside the country.

The 30% final tax also covers sums paid to non-residents for the commercial use of works of the intellect, patents, industrial inventions and the like. Here the page cites article 23, paragraph 2, letter c) of the TUIR, the consolidated income tax act, in its 2026 version.

A word on the vintage. This course teaches the rules read on the Agenzia's pages in September 2026. The overhaul of the consolidated tax acts is under way and the TUIR is due to be replaced: once the new text applies, cross-references to articles must be read again at the source, without assuming they stay the same.