Italy has introduced mandatory real-time electronic sales invoice issuance and reporting from 1 January 2019. All relevant invoices have to be issued and submitted to the Italian Revenue Agency’s e-invoicing platform, Sistema di Interscambio (SdI). The measure has been required of sales to government bodies since June 2014.

SdI effectively acts as an invoice approval portal, ensuring all taxable transactions are verified live by the Italian tax authorities. SdI reporting was already a requirement for B2G (Business to Government bodies) transactions.

• The requirement applies to resident VAT registered businesses
• Non-resident VAT registered businesses are not obliged to submit live invoices;
• B2B transactions between private businesses.
• Domestic B2C transactions is also be included. However, since consumers do not have a certified PEC email, the invoice cannot be forwarded to the consumer. If they do require an invoice, the vendor must produce one outside of the SdI cycle. In the SdI reporting, a B2C invoice should use the ‘0000000’ code field.
• Invoices for a domestic supply of taxable goods or services are included.
• Intercompany transactions are encompassed
• Exports and nil-rated EU intra-community supplies of goods or services are excluded. However, detailed invoice information of foreign sales and purchases will still have to be submitted to the tax authorities through a new ‘cross-border communication’. This is due by the end of the month following the reporting period
• From 1 September 2018, the requirement will also apply to sales of goods for personal use above €155 gross, to be carried out of the EU Customs territory.
• Small tax payers and those using the flat-rate VAT schemes within the ‘regime di vantaggio’ and ‘regime forgettario’ are exclude
• The option to submit electronically the data of B2C sales for the vending machines and the large-scale retail channels (mass distribution stores) has been extended until the end of 2018
• A new, Esterometro, filing will be required from residents to list any supplies from or to non-residents

XML, PDF, JPG, and TXT e-invoices have to be submitted on a similar basis as already used with invoices sent to government bodies (B2G), based on Italian Decree no 55 or similar EU standards. Invoices will include a digital signature. Invoice details within existing ERPs or invoicing platforms will therefore have to be extracted, converted and relayed to SdI. The approved invoice is then transmitted from the SdI to the customer. Any rejected invoice can be within 5 days following the notification of rejection.

Invoices not submitted through SdI system attract penalties of between 90% and 180% of the VAT due. Penalties for the non-declaration of invoices in the ‘cross-border communication’ will be €2 per invoice up to a ceiling of €1,000 per quarter. However, the tax authorities will initially accept a minor delay given the complexity of sending live invoices to SdI.

The new invoice reporting obligation is designed to reduce errors and prevent VAT fraud. Italy’s VAT Gap – the difference between forecast revenues versus actual take – is by far the largest in Europe. It accounts for 23% of the EU estimated €151.5 billion VAT missing in Europe.

To introduce the measure, Italy had to seek a derogation from EU VAT Directive Article 218 and 232 from the European Commission, covering buyers’ consent to e-invoices and formats.

Get help solving your VAT challenges