Reverse Charge, Split Payment & Retention VAT in Construction: How to Automate Site VAT (2026)

Automating Reverse Charge, Split Payment & Retention VAT in Construction

In Italian construction, VAT doesn't work as elsewhere: reverse charge (inversione contabile) on subcontracts, split payment on invoices to public bodies, and the 0.5% retention on progress reports (SAL) each require deciding which regime applies to every invoice, and getting it wrong means a wrong invoice, a credit note, or an exposure at audit.

This is Italian-jurisdiction content. Read the full guide in Italian at /it/blog/reverse-charge-split-payment-edilizia-automatica/.

Key points

• Three special VAT mechanisms coexist: reverse charge (subcontracts, art. 17 DPR 633/72), split payment (PA invoices), and the 0.5% retention on SAL.
• The regime depends on who the client is and the type of service, a repetitive, error-prone choice made invoice by invoice.
• Automated: the regime is proposed from client and project data, fills the correct e-invoice fields (SDI), and the 0.5% retention is calculated and accumulated per SAL.
• Bridges the construction and tax/accounting flows, keeping VAT settlement correct without after-the-fact adjustments.