Electronic invoicing in Italy
Effective per January 1st 2019, Italy introduces mandatory electronic invoicing (e-invoicing) for private businesses. This obligation applies to all transactions performed between subjects resident or established in Italy, with the sole exceptions of those eligible for a special scheme for small enterprises. This requirement comes from the EU’s ‘VAT Directive’, which lays down conditions and rules on invoicing in Member States.
Combat fraud and tax evasion
The articles state that invoices can be issued in paper or electronic format and, subject to acceptance of the recipient, can be sent or made available by electronic means. Regarding this last condition, Italy specifically asked for a derogation to apply a generalized e-invoicing system, on the grounds it would help combat fraud and tax evasion, thanks to the traceability of all transactions for all taxpayers.
When will it apply?
Mandatory e-invoicing will apply to all suppliers of goods and services made by subjects resident or established in Italy towards subjects resident or established in Italy. It doesn’t matter whether the customer is a taxable subject (B2B) or a private consumer (B2C). The obligation does not affect transactions involving subjects not resident or established in Italy, even if these subjects are registered for solely for VAT purposes, and when an invoice is not issued, as in the retail or online trade, unless the customer requests it. In such cases, e-invoicing becomes mandatory. The obligation also applies to invoices to private individuals who are entitled to receive paper invoices, unless they specifically renounce this right.
Mandatory e-invoicing affects the way in which the invoice is formed, delivered to the recipient and stored. It does not introduce a new VAT regime, retaining rules established by VAT laws applicable for its issuance requirement and timing.
- E-invoices must be issued in a prescribed format xml (eXtensive Markup Language), digitally signed to guarantee authenticity of origin and the integrity of the content and be sent to the Exchange System (SDI) by the taxpayer directly or through designated intermediaries.
- All taxpayers must be in possession of a registered e-mail box to which invoices can be sent by SDI, or alternatively, a code attributed when registering on the Italian Tax Agency website (recipient code). This reference must be shared with suppliers for use on their e-invoices for that company.
- Once an invoice is received by SDI, and before it is sent to the recipient, an initial formal check is made, to monitor the validity of the invoice format and content, as well as its compatibility with data already in the hands of tax administration. Should the invoice contain any errors or invalid data, or if delivery to the recipient proves to be impossible, SDI refuses the document. The supplier then has five calendar days to correct mistakes and resend the invoice, which otherwise is considered omitted and sanctioned.
Implications for Italian businesses
The introduction of mandatory and generalized e-invoicing, which will simplify business transactions and reduce compliance when settled, will have a significant impact on the day-to-day running and organization of companies. Beyond having the necessary technological tools and navigating other constraints to using existing information and management systems, companies should be aware of the need to review their incumbent administrative and controlling activities connected to invoicing..