For several years, Italy has been a pioneer in the introduction of eInvoicing within the EU. The obligation to issue electronic invoices began in 2015 for invoices addressed to public authorities (B2G) and was extended on January 1, 2019, to include domestic B2B and B2C invoices. This step has significant implications for German medium-sized companies engaged in import and export with Italian partners.
Hard-Won: How Italy Started with Electronic Invoices
Italy has not remained idle in enforcing eInvoicing in its country. On the contrary, with the Implementing Decision (EU) 2018/593 of the Council of the European Union, Italy secured an exception to deviate from certain provisions of the VAT Directive (2006/112/EC). More specifically, this decision has since allowed Italy to introduce a mandatory electronic invoicing system to improve VAT collection and combat tax fraud.
This mandatory system, known as the Sistema di Interscambio (SDI), has applied to all domestic invoices since its introduction. The obligation for electronic invoicing includes not only invoices issued to businesses (B2B) and consumers (B2C) but also to public authorities (B2G).
What to Keep in Mind About Electronic Invoicing in Italy
In Italy, the process of electronic invoicing follows clearly defined standards that ensure smooth processing and monitoring.
Accordingly, all invoices must be created in the standardized and structured XML format FatturaPA and transmitted via the aforementioned central exchange system SDI (Sistema di Interscambio). To ensure full compliance with regulations, everything is strictly monitored by the competent authority, the Agency for Digital Italy (AGID). If the controls reveal issues, such as missing mandatory XML tags or incorrect content, the SDI system generates an error report for the invoice issuer and halts the transmission process of the document.
While the transmission is mandatory for all domestic suppliers in the B2B, B2G, and B2C sectors, the mandatory receipt of electronic invoices only applies to companies and public administrations. Private individuals are not obligated to receive eInvoices.
The eInvoicing or CTC model (Continuous Transaction Controls), which requires Italian companies and public authorities to transmit and receive electronic invoices, is centralized. An electronic signature is only required for B2G invoices or credit notes transmitted via the SDI.
Another important detail is the archiving obligation: In Italy, eInvoices must be stored for a period of 10 years. Archiving abroad is also permitted under certain conditions.
Obligation for eInvoicing Also for Cross-Border Transactions
Since January 1, 2022, the new Italian Budget Law No. 178/2020 mandates that electronic invoicing in the XML format "FatturaPA" and transmission via the central SDI platform are also obligatory for cross-border invoices (invoices to and from companies based abroad).
For incoming invoices that Italian companies receive from suppliers outside of Italy, the Italian invoice recipients are required to create an XML version of these invoices and also transmit them to the SDI system. The transmission must take place by the 15th day of the month following the receipt of the incoming invoice. The purpose of this regulation is to provide the Italian government with the transaction information of foreign invoices in electronic form, thereby reducing tax evasion in cross-border transactions.
