Italy Tax Agency Clarifies VAT Treatment of Co-Employment Costs Under Business Network Contract

The Italian Revenue Agency May 19 issued Letter No. 136/2025, clarifying the VAT treatment of co-employment costs under a business network contract. The taxpayer, a company formed under a business network contract, hired staff under a co-employment arrangement and allocated the applicable costs to other associated companies. The taxpayer contended that VAT wasn’t applicable to the reimbursement of the co-employment costs within the network and sought clarification on whether the correct VAT treatment may be applied to such charges. The Agency clarified that the reimbursement: 1) served to charge each network company the cost of dependent personnel in proportion to ...