Italy will soon join Hungary in requiring real-time, transaction-level reporting. With the launch of the first phase imminent (1 July 2018), Italy’s tax authority recently released new information on its eInvoicing requirement.
In February, the European Commission backed Italy’s request to implement mandatory eInvoicing. This clearance is a game-changer for businesses operating in the European Union, as Italy is set to go one step further than Hungary in eInvoicing. With a broader scope of transactions and companies covered, it is likely to pave the way for rapid adoption by other countries.
Recently Agenzia delle Entrate released new updates. Here is the summary of the mandate based on this new information:
All B2B and B2C Taxpayers with Electronic Invoices Are Affected Starting 1 January, 2019.
Italy has progressed towards this full eInvoicing requirement since 2014, when it announced mandatory eInvoicing for certain business-to-government transactions. It then began testing an optional eInvoicing program in 2017, incentivising businesses that sent electronic invoices with reduced tax reporting burdens and faster reimbursements. With these trials underway to ensure a smoother transition, Italy is now rolling out eInvoicing to all taxpayers:
- 1 July, 2018 – B2B eInvoicing becomes mandatory for petrol or diesel fuel for engines suppliers and subcontractors, under public service contracts.
1 January, 2019 – B2B eInvoicing becomes mandatory for all private companies.
The requirement also applies to B2C transactions when the buyer requests an electronic invoice. That is, if an invoice is provided electronically, it must be in the government-mandated format and follow the approval and submission process as outlined by the tax authority.
All Transactions Must Be Submitted to the Government.
Businesses must plan now to ensure the following processes are in place for compliance.
- Creating transactions - Supplier invoices (TD01), deposit/down payment on invoice (TD02), deposit/down payment for fee (TD03), credit notes (TD04) and debit notes (TD05) must be created in the XML format defined by the Italian tax authority (FatturaPA XML).
- Signings – Each transaction must contain a certified digital signature.
- Sending – Transactions must be submitted when issued via the government exchange system (SDI - Sistema di Interscambio).
- Receiving – Buyers have the responsibility of ensuring that transactions are received in the right format, or risk fines and penalties.
- Accepting/rejecting – Business-to-government buyers must explicitly approve or reject transactions. If they have not done so within 15 days, the invoice is automatically approved.
- Archiving – Companies must maintain transactions archived for 10 years.
eInvoicing implementation is not a simple on/off switch. It requires integration with your POS, billing, ERP, AP, P2P and/or EDI systems, technical updates and changes to standard business processes, so companies must start now to ensure compliance in Italy.
Learn more about the Italian mandate requirements and what you need to do to ensure compliance; watch our 30-minute on-demand webinar: Italy eInvoicing Q&A.
About the Author
Brendan Magauran is a Junior Regulatory Counsel at Sovos Compliance specializing in international taxation, with a focus on Value Added Tax Systems in the European Union. Brendan received his B.A. and J.D. from Washington University in St. Louis and is licensed to practice in New Hampshire and Massachusetts.More Content by Brendan Magauran