The Final Countdown to Mandatory eInvoicing in Italy

September 4, 2018 Filippa Jörnstedt

September 1 marked the second milestone of the entry into force of the Italian eInvoicing mandate – this time targeting certain B2C goods purchased by non-EU citizens over a certain amount. But crucially, it also marked the three month, or 122 day, countdown to the final deadline when eInvoicing will become mandatory for all domestic B2B and B2C transactions in Italy.

After that date, 1 January 2019, all domestic invoices issued by permanently established organisations in Italy must be compliant with the new eInvoicing framework. That means that regardless of what invoice practices you have in place today, be they paper, EDI, email or scanned, you must have migrated to the Italian FatturaPA XML format and have a solution in place that means you are connected to the government’s IT-platform known as the Sistema di Interscambio, or SDI for short. After this time any invoice issued in any other way than through the government IT platform will not be compliant and will for fiscal purposes be considered as simply never having been created. Non-compliance will lead to a disruption or complete shutdown of your global supply or demand chain and leave buyers unable to reclaim the VAT that they are due, as well as risk reputational harm and penalties.

Italy took this bold step of introducing its ambitious eInvoice mandate in a bid to tackle its €35 billion VAT gap, the largest among the EU Member States. Through the introduction of mandatory eInvoicing and with its SDI platform, Italy is successfully disrupting decades of established business practices in the process by reversing the ‘self-assessment’ nature of VAT collection.

Once the mandate comes into force, the Italian tax administration will have full access to your organisation’s invoice data, allowing it to monitor your end-to-end business transactions, as they happen. What this means is that the Italian tax administration can in real-time audit invoice data to ensure that the tax you pay and report is accurate in an entirely new and unprecedented manner.

The road to mandatory eInvoicing in Italy

While the obligation for mandatory eInvoicing was introduced at the end of 2017, the final deadline is the end of a long path to the introduction of mandatory eInvoicing it Italy that began in 2013.

Phase 1: Mandatory regulation of B2G eInvoicing (FatturaPA)

 

May 2013

B2G obligation introduced for contractors to the Italian public administration via the SDI platform.

 

December 2013

E-archiving reform introduced to streamline and reform existing storage requirements.

 

March 2015

B2G deadline: eInvoice mandate in force for all B2G supplies.

 

 

Phase 2: Invitation to the private sector and the beginning of the mandate

(FatturaB2B)

 

July 2016

Voluntary B2B e-invoicing introduced via the SDI platform. While incentives were in place around its usage, including less burdensome reporting and quicker VAT returns, the uptake from the B2B community was, at best, minimal.

August 2017

 

The announcement of formal plans to make B2B eInvoicing mandatory for all Italian businesses.

 

December 2017

 

The B2B mandate formally adopted into Italian law.

 

April – May 2018

 

The technical guidelines for the B2B mandate are published.

 

June 2018

Attempts made by the private sector to postpone the mandate. With the technical specifications being published a month earlier, a power vacuum caused by Italian election and with the short timeframe to adapt existing practices, certain sectors argued that they didn’t have the time to introduce the required reform. In the end, the obligation was only postponed for roadside gas stations until 1 January 2019.

 Phase 3: The mandate takes force

 

July 2018

 

The first mandate deadline enters into force, targeting:

  • Transactions involving the supply of petrol and diesel intended for use as motor fuel in cars and road vehicles, throughout the entire distribution chain, except for fuel sold at roadside gas stations. 
  • Supplies made by sub-contractors to the public sector, under a framework agreement in public procurement, provided that the main contractor has notified the public administration about the sub-contractors involved in the execution of the contract.

September 2018

 

The mandate now also covers:

  • Invoices issued to non-EU consumers under the tax-free scheme for consumable goods (amount exceeding 155 EUR).

January 2019

 

The last and final deadline, the mandate enters into force for all domestic B2B and B2C supplies.

 


Considerations to ensure you choose the right solution for Italy

With the impending final deadline looming, many companies may be considering implementing a solution that is at odds with its global compliance strategy. Instead of looking for a short-term fix to a local problem through a local vendor that cannot offer solutions for other countries, now is the time to look at the global challenge that arises when many countries are implementing similar eInvoicing regimes. To stay compliant globally, you should look for a tax compliance provider that allows you to maintain your central automation processes, while having the flexibility to adapt to the revolution in eInvoicing in countries such as in Italy, and to keep up with the frequent pace of change across the world. To ensure a continuously compliant solution, it’s important to consider the following topics:

  • Agile Response in an Ever-Changing Regulatory Environment: Being compliant on day one of the Italian mandate won’t be enough. You need a solution that will keep your processes compliant as the Agenzia delle Entrate (the Italian tax administration) continues to develop the eInvoicing mandate through interpretation over the months and years to come.
  • Local Knowledge with Global Reach: You need an eInvoicing framework that follows Italy’s FatturaB2B eInvoicing specifications but is also able to ensure that wherever you operate and do business you are compliant.
  • Holistic Compliance: Many local providers will only offer part of the picture. You should seek a solution that covers domestic, intracommunity and global invoicing flows and that ensures compliance for all elements of the mandate: billing, purchasing and reporting.

With more than 10 years of continuous experience in the provision of compliance services for e-archiving and e-signing (eIDAS) in Italy, Sovos is the market leader in the provision of eInvoice compliance in Europe. Sovos is unique in that it brings together that deep European experience with its status as a leading e-invoicing compliance vendor in Latin America and other clearance countries. Every year in post audit countries, we provide compliant signing and archiving services for thousands of companies, covering millions of invoice transactions. In Latin America, Sovos has the largest clearance network in the region with over 2.6 billion eInvoices processed every year. By choosing Sovos you can feel confident that you’re getting the complete solution for Italy, with the global reach to cover Europe and Latin America and that you are achieving global compliance wherever you do business.

Take Action

Learn how Sovos is helping companies in Italy and across the globe stay ahead of disruptive changes in tax.

About the Author

Filippa Jörnstedt

Filippa Jörnstedt is a Regulatory Counsel at Sovos TrustWeaver. Based in Stockholm, Filippa’s background is in international e-invoicing compliance and global regulatory developments. Fluent in English, Italian, French, Romanian and her native tongue Swedish, Filippa earned her degree in Law from Lund University in Sweden.

Follow on Linkedin More Content by Filippa Jörnstedt
Previous Article
VAT & B2G Reporting Newsletter: August 2018
VAT & B2G Reporting Newsletter: August 2018

Subscribe to the Sovos VAT & Business-to-Government Reporting Monthly Newsletter to stay up-to-date with re...

Next Article
Summer Webinar Series: Sovos eInvoicing in LATAM & EU
Summer Webinar Series: Sovos eInvoicing in LATAM & EU

Join our webinar as we dive into Sovos' electronic invoicing solution.

Prepare for Italy's eInvoicing mandate due January 2019

Learn More