eInvoicing – How electronic invoicing works in Italy
For several years now, Italy has been a pioneer in the adoption of eInvoicing within the EU. The requirement to issue electronic invoices took effect in 2015 for invoices to the public sector (B2G) and was expanded on January 1, 2019, to include both domestic B2B and B2C invoices. This change has far-reaching implications for German small and medium-sized enterprises (SMEs) that engage in import and export activities with Italian partners.
A hard-fought victory: How Italy got started with electronic invoicing
Italy has not been idle in its efforts to implement e-invoicing in the country. On the contrary: through Council Implementing Decision (EU) 2018/593, Italy secured an exemption allowing it 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 requirement for electronic invoicing applies not only to invoices issued to businesses (B2B) and consumers (B2C), but also to the public sector (B2G).
Here’s what you need to know about electronic invoicing in Italy
In Italy, the electronic invoicing process follows clearly defined standards that enable 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 that all regulations are ultimately complied with, the competent authority, the Agency for Digital Italy (AGID), strictly monitors everything. If the checks fail—for example, if mandatory XML tags are missing or incorrect content has been created—the SDI system generates an error report for the invoicer and halts the document transmission process.
While sending electronic invoices is mandatory for all domestic suppliers in the B2B, B2G, and B2C sectors, the mandatory receipt of electronic invoices applies only to businesses and public administration. Private individuals are not required to receive e-invoices.
The e-invoice or CTC (Continuous Transaction Controls) model, which requires Italian companies and public authorities to transmit and receive electronic invoices, is centralized. An electronic signature is required only for B2G invoices or credit notes via the SDI.
Another important detail is the archiving requirement: in Italy, e-invoices must be retained for a period of 10 years. Archiving abroad is also permitted under certain conditions.
Requirement to use eInvoicing for international transactions as well
Effective January 1, 2022, the new Italian Budget Law No. 178/2020 requires that even for cross-border invoices (invoices to and from companies based abroad), the use of electronic invoices in the “FatturaPA” XML format and transmission via the central SDI platform are mandatory.
For incoming invoices that Italian companies receive from suppliers outside Italy, Italian invoice recipients are required to create an XML version of these invoices and also transmit them to the SDI system. Transmission must also take place by the 15th day of the month following receipt of the incoming invoice. The aim of this regulation is to provide the Italian government with transaction information from foreign invoices in electronic form, thereby reducing tax evasion in cross-border transactions.
All the facts about electronic invoicing in Italy at a glance:
- Mandatory transmission for B2G, B2B, and B2C
- Mandatory receipt for all customers in B2B and B2G
- Centralized e-invoicing/CTC model
- Mandatory infrastructure for invoices/credit notes: SDI (Sistema di Interscambio)
- Mandatory format for invoices/credit notes: FatturaPA (XML format)
- Electronic signature required via SDI for B2G invoices/credit notes
- Archiving requirement: 10 years (archiving abroad permitted under certain conditions)
- Competent tax authority: Agency for Digital Italy (AGID)
Secure your consultation now!
Want to learn more? Schedule your free consultation with our expert Lars Becher, Key Account Manager and Subject Matter Expert for e-invoicing and CTC within the TRAFFIQX® network.
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Give him a call: +49 (0)6359 – 9 37 90
or drop him a line at: lars.becher@b4value.net