From 2019, e-invoicing becomes mandatory for all B2B and B2C supplies of goods and services to parties established or VAT-registered in Italy.
Following the approval of Italian Budget Law 2018, the country has announced that real-time electronic sales invoicing (e-invoicing) will be mandatory from 1 January 2019. The new requirement is designed to tackle tax evasion and VAT fraud.
Not yet using e-invoicing in your Italian operations? Here are some key things you need to know.
Mandatory – but with exceptions
E-invoicing will be mandatory for all B2B and B2C supplies of goods and services between parties established or VAT-registered in Italy (in the case of B2C, where the customer expressly requests an invoice).
However there are these exceptions:
- invoices issued and received to/from non-established taxpayers who are not VAT registered, nor VAT identified in Italy (cross-border operations will be, in any case, subject to a specific reporting which will be submitted to the authorities by the end of the month subsequent to the date of issuance or receipt of the invoice)
- transactions for which a customs bill is issued
- taxpayers included in the VAT schemes regime di vantaggio and regime forfettario.
Process and requirements
All relevant invoices will need to be issued and submitted to the Italian Revenue Agency's e-invoicing platform, Sistema di Interscambio (SDI) which is the platform currently used to transmit e-invoices to public bodies (sales invoices to public bodies have been required in electronic format only since 2014). The platform allows the Italian Revenue Agency to automatically collect invoice details.
From next year, invoices must be:
- converted into .XML format, in accordance with technical specifications (the format is set out in Annex A of Ministerial Decree no. 55 of 3 April 2013)
- signed with digital signature
- sent to the counterparty through the SDI system.
Electronic invoices issued to private companies should be made available to them through the Italian tax authorities web system. A copy of the electronic invoice or hard copy invoice should be made available directly from the issuer to the consumer. Consumers may decide to waive their copy of the electronic invoice or hard copy invoice.
For the transmission of electronic invoices, taxpayers can rely on intermediaries, such as TMF Italy. In order to enable this, or in-house transmission of invoices, taxpayers should take action in the coming months to make the necessary adjustments to their IT systems in order to send and receive XML e-invoices through the SDI System. An implementation decree may expand the list of acceptable formats on the basis of standards or rules recognised by the European Union.
While e-invoicing is mandatory for all from next year, there are some earlier starters.
- Transactions in the public subcontract sector and for supplies of petrol or diesel fuel intended for use as motor fuel: 1 July 2018.
- 'Tax Free Shopping' (eg. invoices issued for supply of goods to private customers with a non-European Union residence/domicile): 1 September 2018.
- General B2B and B2C: 1 January 2019.
Where invoices are issued between subjects resident or established in Italy with modalities other than the aforementioned, the invoice is considered omitted and sanctions will be applied. Penalties range from 90% to 180% of the VAT not correctly documented, with a minimum of €500 (between €250 and €2.000 where the violation does not refer to taxable transactions).
The recipient who receives a document that does not meet the e-invoice requirements (within four months of the transaction taking place) can regularise the transaction by self-issuing an invoice through the SDI system. If the transaction is not regularised, penalties equal to 100% of the undocumented VAT will apply.
Where reporting cross-border operations fail to submit – or submit an incorrect – declaration, a penalty of €2 per invoice, with a maximum of €1.000 per quarter is applied. The quarterly sanction is reduced by 50%, to a maximum of €500 whether corrections or delayed reports are filed within 15 days of the deadline.
The following simplifications will also be made when mandatory e-invoicing begins next year.
- Abrogation of the invoice Listing (so-called Spesometro)
- Two-year reduction to the tax assessment period (does not apply to retailers) on the condition that transactions over €500 are traceable (eg. payments made via bank transfer).
The operational procedures for these new requirements will be defined by a specific provision which will be released by the Italian Tax Office.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.