Article 4 of Decree Law no. 124 of 26 October 2019 introduced as from 1 January 2020

• for all clients of contracts for the supply of services, including those with consortium's members, sub-contracts and "contractual relations characterized by the prevalent use of manpower at the client's place of business whereby the supplier uses assets owned by the client or attributable to the same in any way",
• whose annual amount of services exceeds euros 200,000.00

the obligation to verify the correct application and remittance of the withholding taxes levied on the salaries of the individuals working on the relevant service contract, by asking the suppliers to provide, within 5 working days after the deadline for the payment, the relevant documentation and, in case of failure to transmit the above, suspending any payment due and sending a communication to the Tax Authorities within 90 days.

However, such documentary obligations may be superseded if the supplier provides its clients with a specific certification, attesting the tax compliance (so called "DURF"), granted by the Tax Authorities and certifying that the company has complied with its tax return and payment duties and has no pending tax or social security contribution final payment requests for amounts exceeding euros 50,000.

The measures adopted by the Government in order to deal with the Coronavirus emergency have not postponed the entry into force of the obligations at issue. However, some of the Covid-related measures have further complicated the regime under article 4 of Decree Law 124/2019. In particular:

• the effectiveness of the DURF (which normally has a 4-month term) is extended to June 30 for companies that already obtained it as at 29 February 2020 (Article 23 of Decree Law 23/2020);
• for companies that have not yet obtained the DURF, Circular 8/E of the Tax Authorities clarified that the controls referred to in Article 4 of Decree Law 124/2019 do not apply to suppliers that benefitted from the suspension applicable to the remittance of withholding taxes. It is therefore necessary to verify whether the supplier may benefit from the suspension of tax payments provisions set out in the various COVID-19 related measures. In particular:
• for the month of March, the suspension is granted to suppliers depending on (i) the activity performed, (ii) whether their operating/registered office was based in the so called "red zone" or (iii) whether they had revenues not exceeding 2 million euro in 2019 (Articles 61 and 62 of Decree Law 18/2020; 8 of Decree Law 9/2020);
• for the months of April and May, the suspension is granted to suppliers that in each previous month suffered a decrease in their turnover or revenues exceeding (i) 33% of that registered respectively in March and in April 2019 if they had revenues lower than €50 million in 2019 or exceeding (ii) 50% if they had revenues higher than €50 million in 2019 (art. 18 Decree Law 23/2020).

Otherwise, the companies that (i) do not fall within the cases above, and thus do not benefit from the suspension of payments, and (ii) have not yet obtained the DURF, will be required to comply with the obligations set out in Article 4 of Decree Law 124/2019, in order to avoid penalties or the suspension of the payments due under the contracts by their clients.

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