Italy’s tax authority clarified that from 1 January 2025, staff secondment reimbursements covering only salary and related costs will be subject to VAT under new or renewed agreements.
Italy’s tax authorities issued Circular No. 5/E on 16 May 2025 clarifying how value added tax (VAT) applies to the secondment or loan of personnel under legislative changes.
Following amendments introduced by Law Decree No. 131/2024, staff secondments where the receiving company reimburses only the salary and related costs are now considered taxable transactions and subject to VAT.
The Senate of the Italian parliament approved Law Decree No. 131/2024 on 6 November 2024, introducing changes to the VAT treatment of staff secondments in Italy.
These rules apply to agreements made or renewed from 1 January 2025 onward. Existing arrangements remain unaffected unless a final tax assessment has already been issued.
The circular provides detailed guidance on how the new rules apply, including in cases involving temporary staffing and co-employment. It aims to help businesses understand and comply with the updated VAT treatment.
