Service contract or staff leasing: the difference that matters to the buyer
If the contract is reclassified, the main financial consequence falls on the client: non-deductible VAT and a non-deductible cost. It is worth knowing what separates the two.
12 August 2026 · 3 min read
When a company brings in external consultants, the contract it signs can be one of two things, and the difference is not a formality.
Service contract ("appalto di servizi"): the company buys a service. The supplier organises the resources, directs its own people and bears the business risk. No authorisation is required.
Staff leasing ("somministrazione di lavoro", agency work): the company buys people's time, and those people work under the client's direction. Only firms listed in the Italian register of employment agencies (albo delle agenzie per il lavoro) can provide it, and the capital requirements are substantial.
The test is set out in Art. 29 of Legislative Decree 276/2003 (D.Lgs. 276/2003), and it applies to the facts, not to the labels: the name written on the contract is not binding, and neither is what the parties intended.
Why the buyer should care
Because if the contract is reclassified, the heaviest financial consequence does not fall on the supplier.
If the service contract is found not to be genuine ("appalto non genuino"), the invoices received do not cover the supply of a service but of labour: the VAT becomes non-deductible and the cost non-deductible for tax purposes. This is a tax assessment aimed at the client. On the employment side, there is also the possibility that the worker asks for the employment relationship to be recognised with the company that used their work.
In short: the supplier risks a penalty, the client risks the deductibility of what it has spent.
What separates the two in practice
No single element decides. They count together, and they are judged by day-to-day behaviour.
| Consistent with a service contract | Warning sign | |
|---|---|---|
| Subject matter | A defined scope with verifiable outcomes | "One person for N days" |
| Assignment of work | Activities are agreed | A manager at the client assigns tasks |
| Hours | Agreed coordination windows | Working hours, mandatory attendance |
| Absences | Notice of unavailability | Holidays that need approval |
| Feedback | To the supplier's contact person | Appraisal of individual performance |
| Tools | The supplier's or the professional's own | Provided by the client with no security reason |
| Identity | Separate | Badge, organisation chart, internal directory |
Coordination, it should be said, is not direction. Attending meetings, using the client's work management tools, aligning with the team: all of this is expected and necessary. Since 2017 the Italian Code of Civil Procedure (codice di procedura civile) has defined a collaboration as coordinated when, within arrangements agreed between the parties, the person doing the work organises their own activity independently.
The line does not run between taking part and not taking part. It runs between agreeing and taking orders.
What a careful client can ask
Three questions, before signing.
- What exactly am I buying? If the answer is a number of days rather than a scope, the contract is describing time.
- Who directs the people? If the answer is "our project manager", something is missing.
- What happens if the service does not work? If there is no consequence for the supplier, there is no transfer of risk — and without risk a service contract is hard to defend.
This page is for general information and does not constitute legal advice.