Definition
The term ‘temporary consortium of companies’
refers to a group of entrepreneurs, suppliers or service providers, formed –
including by private agreement – for the purpose of jointly carrying out a
specific activity or a complex project, limited to the period necessary for its
completion.
An ATI is established through a cooperation
agreement between two or more companies and may be classified as a contractual
joint venture.
It is generally used for the construction of
works, both private and public (for example: roads, ports, dams, and the
development of neighbourhoods).
An ATI may participate in tender procedures
under the conditions and in accordance with the rules set out in public
procurement legislation, which was recently reformed with the approval of
Legislative Decree 36/2023 (Public Procurement Code).
RTI and business networks
The term RTI, or temporary grouping of
undertakings, is sometimes used as a synonym for ATI. However, the term should
not be confused with a business network, which represents a more structured
collaboration agreement and is not necessarily linked to a single call for
tenders or tender procedure. In a business network, several entrepreneurs
collaborate on the basis of a common network programme to enhance innovative
capacity and competitiveness. It may involve a common fund, a joint governing
body, registration in the Register of Companies and, in certain cases, even
legal personality.
Difference between Lead Firm (ATI) and General Contractor
The lead firm in an ATI differs from the lead
firm acting as a General Contractor because, in the case of an ATI, there is an
alliance of equals between several companies that join forces to meet the
technical and financial requirements set out, for example, in a call for
tenders. Liability is joint and several amongst all participating firms. In the
case of the General Contractor, the lead firm assumes full overall
responsibility for a project, coordinating subcontractors and suppliers.
Accounting aspects
Each company retains its own autonomy and
separate accounting status and will therefore record its own costs and revenues
relating to the part of the works it carries out.
The lead company manages and coordinates the
project, collecting data from the other companies to prepare the overall
progress report for the project.
The ATI has no financial autonomy nor
independent economic objectives and is therefore not required to maintain
separate accounts.
Invoicing
Invoicing must reflect the actual structure of
the group and the services provided.
A temporary consortium (ATI) is not normally an
independent VAT taxable person; to be considered an independent entity, a
consortium must be established.
Invoicing for VAT purposes operates according
to the principle of the actual allocation of services. Invoicing obligations
towards the contracting authority are fulfilled by the individual member
companies in relation to the works carried out by each within their respective
remit.
Treatment of financial transfers
Tax case law distinguishes between the
consideration for a service subject to VAT and a mere transfer of funds. If the
lead firm collects sums due to the principal firms and merely transfers them in
accordance with the mandate and the shareholdings, the transfer may be a mere
financial transaction not subject to VAT. However, this requires that there be
no independent service provided by the principal firm to the lead firm or by
the lead firm to the principal firm.
Re-charging of costs
Re-charges of costs are taxable if they
represent the consideration for a service, such as, for example, monitoring and
coordination activities.
The prevailing case law holds that the mere
reference to ‘expenses’, ‘pass-throughs’, ‘re-charges’ or ‘cost shares’ is not
sufficient to exclude VAT.
VAT is payable on expenses that the lead
company:
- has incurred on its own behalf,
- incorporates into its own activities
- passes on to other companies as part of the service provided (e.g. technical coordination services, administrative management, liaising with public authorities, SAL monitoring and compliance, and various forms of support). In this case, there is a specific fee, which constitutes a supply of services subject to VAT, distinct from the mere representative function of the mandate.
Legal doctrine specifies that advances incurred
by the lead company may be charged without VAT pursuant to Article 15 of
Presidential Decree 633/1972 only if the advances are made in the name and on
behalf of the other companies.