Response No. 136/2025 – SUBJECT: Codatoriality – Network Contract – VAT Treatment
- Codatoriality and VAT: The inquiry addresses the VAT treatment of codatoriality within a business network, where multiple companies share employees.
- Legal Framework: Codatoriality, as per Italian law, allows companies in a network to share employees, differing from traditional secondment by involving multiple employers simultaneously.
- Court Clarification: The Italian Supreme Court defines codatoriality as a situation where an employee works for multiple companies, each sharing employer responsibilities.
- VAT Implications: The reimbursement of employee costs among network companies is not subject to VAT, as it is considered a mere financial transaction without a direct service exchange.
- Agency’s Position: The tax agency confirms that codatoriality does not meet the criteria for VAT applicability due to the lack of a direct reciprocal service relationship.
Source:
Circular 5/E issued May 16, 2025
- VAT Treatment of Personnel Lending: The circular clarifies that personnel lending or secondment, even if only reimbursed at cost, is subject to VAT from January 1, 2025, following the EU Court’s ruling.
- Implementation Date: Changes apply to contracts signed or renewed from January 1, 2025, with previous practices protected unless contested by tax authorities.
- Alternative Personnel Arrangements: Codatoriality and avvalimento (use of shared resources) are discussed as alternative personnel arrangements, with specific VAT implications.
- Codatoriality Details: Involves shared employer responsibilities among networked companies, with cost-sharing not subject to VAT if no additional remuneration is involved.
- Avvalimento in Public Contracts: Defined as a contract for sharing resources in public tenders, subject to VAT if done for compensation, with specific rules for public administration collaborations.
Source Agenzia Entrate – Circular 5/E
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
