Withholding on Professional Services for the Condominium

Whenever the condominium pays a professional, for example a lawyer for a dispute, an engineer for a survey or an accountant for tax advice, it acts as a withholding agent and must apply the 20 percent advance withholding under Article 25 of Presidential Decree 600/1973. The withholding applies to the taxable fee, is paid with the F24 form and must be certified to the professional through the Certificazione Unica.

Which professional services are involved

The condominium frequently relies on professionals for technical and legal activities. The 20% withholding concerns self-employment income arising from the exercise of arts and professions.

• Lawyers for litigation, debt recovery and legal opinions
• Engineers, architects and surveyors for projects, surveys, works supervision and building permits
• Accountants and labour consultants for tax matters and employee payroll
• Technicians for certifications, testing and inspections of systems and common areas
• Safety consultants and advisers for lift and heating system compliance

This withholding is clearly distinct from the 4% on works and services contracts: the professional does not carry out a business contract but an intellectual self-employment service, which is why the 20% rate applies.

The taxable base and the role of professional funds

The withholding is calculated on the fee, but attention is needed for the accessory items shown on the invoice.

• The statutory contribution due to the professional's pension fund, usually a small percentage of the fee, is not subject to withholding
• The recourse contribution, when the professional has no fund and applies the separate INPS scheme surcharge, forms part of the taxable fee and is subject to withholding
• VAT is never part of the withholding base
• Documented expenses advanced in the name and on behalf of the client, excluded from the VAT base, are not subject to withholding

Example: an engineer enrolled in his own fund issues an invoice with a fee of 3,000 euros, a 4% statutory contribution of 120 euros and VAT. The 20% withholding is calculated on the 3,000 euros, that is 600 euros, not on the 120 euros of the contribution nor on VAT.

Professionals under the flat-rate regime

If the professional adopts the flat-rate regime (regime forfettario) they are not subject to withholding, because their income is taxed with a substitute tax. The invoice must carry the wording certifying the exclusion from withholding under the flat-rate rules. In this case the condominium pays the full amount without withholding anything, but remains bound to the other obligations, such as reporting the supplier's data.

Payment via F24 and tax code

The withholding on professional fees is paid with the F24 form, tax code 1040, by the 16th of the month following payment. The condominium's tax code must be indicated as the withholding agent. For non-resident professionals the rate and nature of the withholding may change, with a higher final withholding, and it is worth checking whether double taxation treaties apply.

Single certification and 770

As with all withholdings applied, the condominium must issue the professional the Certificazione Unica, send it to the Italian Revenue Agency by 16 March of the following year and summarise the withholdings in the 770 return by 31 October. The CU is the document the professional will use to offset the withholding in their own return.

Practical tips

Always check the professional's regime on the invoice, distinguish the statutory contribution from the recourse contribution, never withhold on VAT and respect the deadline of the 16th: these are the rules that prevent most mistakes. Keeping the invoice, proof of payment and the CU well organised simplifies preparing the 770 and any audits.

Automatically distinguishing professional suppliers from business ones, correctly calculating the taxable base and preparing F24 and certifications is exactly the kind of work AmministraPro removes from the manager. The features dedicated to withholdings and suppliers are on /funzioni, the plans with costs on /prezzi.