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Split payment: invoicing an Italian public body without collecting the VAT
The module’s worked examples, then cases to attempt before revealing their solution · 4 sections · 478 words · 5 min
Worked example
Elena's invoice to the council
Elena invoices the council €8,000 net for maintaining its workstations. At the standard rate the tax is 8,000 × 22% = €1,760, and the invoice totals €9,760. The council transfers €8,000 to Elena and pays the €1,760 to the Treasury itself. In Elena's own VAT settlement that €1,760 does not appear as tax to pay.
Worked example
The architect and the planning office
Paolo, an architect under the ordinary regime, prepares a survey for a council's planning office for a €3,000 fee plus €660 of VAT at 22%. The council applies the article 25 withholding of Presidential Decree 600/1973 to the fee. Under paragraph 1-sexies split payment does not apply: Paolo collects the €660 of VAT and settles it as usual, while the withholding follows its own rules.
Worked example
Elena's quarter
Over the quarter Elena invoices only public bodies: €30,000 net and €6,600 of VAT, all paid over by the customers. On computers and licences she pays €2,000 of deductible VAT. Her settlement shows no output tax, so the balance is a €2,000 credit carried forward to the next period.
Practical case
Three invoices from a grounds-maintenance firm
In October a grounds-maintenance company issues three invoices, all at the standard rate. The first goes to a town council listed as an administration in the IPA Index, for €5,000 net. The second goes to a transport company whose capital is held 40% by a Region and 35% by a Province, for €2,000. The third, for €1,000, goes to a limited liability company wholly owned by three private individuals, which is not a public administration and has no public administration, body, foundation or company among its shareholders. The company applies no withholding and no customer is liable for the tax under any other rule. How much does the company collect on each invoice, and who pays the VAT over?
Hint: For each customer ask whether it falls under paragraph 1 or paragraph 1-bis, adding up the public stakes, then work out VAT at 22% and separate the net amount from the tax.
Show the solution
Invoice to the council: a public administration, so split payment applies. VAT 5,000 × 22% = €1,100; the company collects €5,000 and the council pays €1,100 to the Treasury. Invoice to the transport company: the combined public stake is 40% + 35% = 75%, not less than 70%, so letter c) applies. VAT 2,000 × 22% = €440; the company collects €2,000 and the customer pays the €440 over. Invoice to the private company: it is not an administration under paragraph 1, not a public economic body or a foundation, and has no public shareholder, so no letter of paragraph 1-bis reaches it and invoicing is ordinary. VAT 1,000 × 22% = €220; the company collects €1,220 and settles the €220 itself.
Answer: It collects €5,000, €2,000 and €1,220; the customers pay over €1,100 and €440, the company settles €220
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