With Circular letter no. 7/E of March 21, the Italian Revenue Agency provided some clarifications in relation to the new obligation to apply withholding taxes on commissions received by agents and other insurance intermediaries, introduced by Article 1, par. 89, of Law no. 213/2023 (Budget Law 2024).
It is worth recalling that, following the enactment of this provision, the withholding tax due pursuant to Art. 25-bis, par. 1 of Presidential Decree no. 600/1973 on commissions accrued in relation to commission, agency, mediation, sales representation and business procurement relationships has been extended to insurance agents for services directly rendered to insurance companies, as well as to insurance brokers for their relationships with insurance companies and with general agents of public insurance companies or their subsidiaries who render services directly to insurance companies on a reciprocal exclusive basis.
The main clarifications can be summarized as follows:
- Scope of the new withholding tax obligation: the withholding tax obligation also applies to commissions for services directly rendered to insurance companies by persons enrolled in the following Sections of Ivass Register of the intermediaries (so-called “RUI”):
| i. | Section D), i.e., banks, securities investment companies, financial intermediaries pursuant to Art. 106 of Legislative Decree No. 385 of 1 September 1993 (TUB), payment institutions pursuant to Art. 114-septies of the same Decree, and Poste Italiane – “servizi di bancoposta” department, |
| ii. | Section E) of RUI, i.e., external collaborators acting on behalf of other intermediaries, such as employees, partners, producers (the so called “produttori”) and any other intermediary registered under sections a), b), d), e) and f), for intermediary activities performed outside the premises where the intermediary operates, and |
| iii. | Section F) of RUI, i.e., ancillary insurance intermediaries, as defined in Article 1(1) (cc-septies) of Legislative Decree No 209 of 7 September 2005 (Private Insurance Code).
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- Timing: the withholding tax has to be levied on commissions paid from April 1 onwards, no matter they relate to services performed before. The first withholding tax payment will therefore be due by 16 May 2024 (i.e., 16th day of the month following the one in which the withholding was applied). Likewise, if the commissions are directly retained by the agent (on the premiums collected on behalf of the insurance companies) the new obligation applies to commissions retained from April 1 onwards. In such a case, considered that by operation of law the withholding tax is considered levied in the month following the one of retention (and the agent shall remit to the insurance company the amount of the withholding tax to allow the relevant payment) the first payment will therefore be due by 17 June (being the 16th Sunday, i.e., the 16th day of the second month following the one in which the withholding tax was retained).
- Application of the reduced withholding tax rate: in order to benefit from the reduced withholding tax rate, for ongoing insurance relationships the self-declaration of the agent that he continuously makes use of the work of employees or third parties in the conduct of the business shall be provided to the insurance companies by April 16, 2024.
Obligation to certify the withholding taxes levied: as a result of the new withholding tax obligation, the insurance companies will qualify as withholding tax agents and, as a result, shall provide the agents - within the ordinary terms - with the annual statement certifying the commissions paid and the withholding taxes levied (so-called “Certificazione Unica”)
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