Split Payment and the Condominium: When It Does Not Apply

Split payment is the mechanism whereby the buyer pays the VAT shown on the invoice directly to the Treasury and pays the supplier only the taxable amount. It is governed by Article 17-ter of Presidential Decree 633/1972 and applies to public administration and certain publicly controlled or listed companies. An ordinary condominium is not among these entities: it therefore pays the supplier the invoice including VAT, applying no split. Confusing the two regimes leads to payment errors and invoices to correct.

How split payment works

Under the ordinary regime the supplier collects both the taxable amount and the VAT from the customer and then pays the VAT to the State. With split payment the flow changes: the customer pays the supplier only the taxable amount and withholds the VAT, paying it directly to the Treasury. The mechanism was created to counter VAT evasion in dealings with public administration, where the risk of the supplier failing to pay was considered higher.

Why the condominium is excluded

The scope of split payment is defined by law and covers public administrations subject to mandatory e-invoicing and certain companies identified by statute. When it carries out no commercial activity, a condominium is a private entity without a VAT number, treated as a final consumer for VAT purposes. It is not among the entities for which split payment is provided, so it does not apply the mechanism.

How the condominium pays the supplier's invoice

The condominium pays the supplier the full invoice amount, taxable plus VAT. The only deduction the manager makes, where the conditions apply, is the withholding tax on payments relating to contracts for works and services, acting as a withholding agent. This withholding has nothing to do with split payment: it concerns the firm's direct taxes, not VAT.

• The VAT on the invoice is paid in full to the supplier, not to the Treasury
• There is no split-payment VAT report or payment for the condominium
• The withholding tax on works contracts remains due and is paid using F24
• The invoice shows VAT in the ordinary way, not the split-payment note

Do not confuse split payment and reverse charge

Another mechanism that shifts the settlement of VAT is reverse charge, provided in construction for certain services between VAT-registered entities. Here too an ordinary condominium, not being a VAT-registered entity, normally receives the invoice with ordinary VAT and does not apply the reversal. Split payment and reverse charge are distinct regimes, both alien to a private condominium: the manager must be able to recognise them so as not to accept incorrect invoices.

If the supplier issues the invoice in split payment

A supplier may, through a registration mix-up, issue the invoice to the condominium with the split-payment note. In this case the manager must report the error and request a corrected invoice, or a variation note, because the condominium is not required to pay the VAT to the Treasury and would pay the tax twice if it applied the wrong note.

The case of a condominium with a VAT number

There are special cases where a condominium carries out a commercial activity, for example letting advertising space or antenna sites, and opens a VAT number for that activity. Even in these cases the classification must be assessed carefully together with a tax adviser, because special VAT regimes require specific checks on the individual relationship. The general rule remains that an ordinary condominium does not apply split payment.

Telling the VAT regimes apart, checking that invoices are correct and managing withholding taxes is easier with software that guides the manager through the entries. With AmministraPro suppliers' invoices are recorded with the correct amounts and withholdings, reducing the risk of errors: the features are shown on the /funzioni page and the plans on the /prezzi page.