Understanding Italian Withholding Tax

In Italy, businesses must withhold taxes from payments to certain types of suppliers, such as self-employed and contract suppliers. These withholding taxes are remitted directly to the government. Each year, businesses must submit the Model 770 (Modello 770) form to the tax authorities. The Modello 770 form contains information about the suppliers from whom withholding tax has been collected.

In some cases, businesses can defer the recognition of accounts payable value-added tax (VAT) receivable (input) on vouchers for suppliers who are subject to withholding tax until the voucher is paid. The document used to defer the VAT is called notula.

Businesses must also give a certification of all of the amounts that are paid for their services, including detail of the tax withheld, to all their suppliers who are subject to withholding tax.

To track withholding tax records through the withholding tax process, refer to the Withholding Tax Status field. The system automatically updates this field for each tax record, based on the status of the record in the withholding tax process.

Status	Description	Update Programs
0	Withholding tax amounts generated	A/P Standard Voucher Entry (P0411) A/P Speed Voucher Entry (P0411SV) Voucher Match (P4314WB) Store and Forward Voucher Batch Processor (R04110Z2)
1	Voucher paid to supplier	A/P Manual Payments (P0413M) Automatic Payments (P04571)
2	Withholding tax redistributed	Distribute W/T Amount Report (R7404530)
3	Withholding tax paid to government	Withholding Tax Payments (R7404500)
4	Certification printed	Withholding Tax Certification - Italy (R7404027)
5	770 form printed	Model 770 W/T Commission - Free Format (R74094D)