Wondering what the invoice requirements are in Italy? Here is what you need to know.
Italian invoice requirements come in these key areas:
- When to issue the invoice
- The format of the invoice
- New invoice requirements
- The information one needs to provide on the invoices
- How long to keep the invoice
- Frequently Asked Questions – Invoice Requirements in Italy
Note that these requirements are in place to align with invoicing in the EU as well as to reflect Italy’s VAT invoice requirements.
When to issue the invoice
Italy invoicing requirements demand that the invoice be issued on the date when you supplied goods or services. That period then extends 15 days after the month ends. So, if you were to issue an invoice on January 31 but failed, then you have till February 15 to issue the invoice.
Italy’s invoice requirements
As well as taking note of the above details, you need to be aware of exactly what should be in the invoice. Here are the details that must be included or appear on the invoice:
- Date of issue
- An invoice number (must be unique)
- Supplier’s registered VAT number
- Full address- both that of the supplier and the customer
- A description detailing what goods were supplied or which services were offered
- Quantity of goods (where applicable)
- Date goods were supplied ( included if it differs from invoice date)
- The net value of goods supplied (this is the net taxable amount)
- An applicable VAT rate(s) with specified amounts indicated (If VAT not charged, indicate reference law stipulating the same)
- Gross total
New e-invoice requirements
In Italy, new invoice requirements have been in place since January 1, 2019. The country’s tax authorities introduced the mandatory e-invoicing requirements for invoicing businesses (B2B), customers (B2C), and public agencies.
The e-invoice requirements also state that all invoices must adhere to the format set by the Italian Revenue Agency. All invoices must now be converted into an XML format. You then need to send the invoice through the governments’ Sistema di Intercambio (SDI) exchange.
The technical specifications for e-invoicing in Italy
The Italian Revenue Agency in February 2020 approved new rules dictating the technical specifications for e-invoicing applicable to businesses.
Among the specifications are the requirement that all invoices be in the new XML format and the introduction of new e-invoicing codes.
In v 1.5 of the e-invoicing specifications, taxpayers have to choose the correct type document from 7 codes and the correct nature of the transaction from another 7 different codes.
The modifications increase the codes indicating the “Type of document” and the “Nature of transaction” which taxpayers have to correctly capture in the XML files. Under the new specifications, businesses will have to choose one of 18 codes for the type of document and 24 codes for the nature of the transaction.
“Type of document” codes refer to such types as the standard invoice, deferred invoice, and pre-payment on the invoice. Others are debit notes and credit notes, whereas drawing an invoice will also have to identify it on basis of reverse-charge, or self-assessed invoice for VAT purposes.
The details relating to the nature of transaction codes have been modified to highlight certain specifics.
In particular, codes N2 (not the subject), N3 (not taxable), and N6 (reverse-charge) were replaced with sub-codes for specific VAT treatment. Businesses will have to be more detailed when indicating the type and nature of the transaction in relation to VAT.
For instance, the modification removed N6 and replaced it with sub-codes N6.1 to N6.9. A taxpayer detailing a reverse charge thus has to choose the correct nature among several options.
Implementation of new e-invoice rules in Italy
The new rules came into effect on 4 May 2020.
The tax authority has allowed a phased-out switch between May 4 2020 and September 30, 2020. Under the phased program, the SDI system will accept e-invoices submitted under both current (v 1.5) and new (v1.6) technical specifications until September 30, 2020.
Beginning October 1, 2020, all electronic invoices deemed non-compliant will be rejected.
The new e-invoicing rules have other modifications taxpayers should note. These include:
- Amount –digits to the amount under discount have increased.
- Stamp – this has been modified so that the indication of what stamp amount is due now optional.
- Withholding taxes and social contribution – the modification has added to the type of withholding taxes and social contributions taxpayers can indicate.
- Type of payment – the addition of PagoPA to show that the indicated means of payment is part of those provided.
E-invoices are issued in three stages specified by the Italian Revenue Agency standard:
- Invoice receipt and submission through the SDL interchange system: submissions can be done through a PEC certified email, the Agency’s web or app service procedures, SdICoop, or through the SdIFtp data transmission service.
- Storage of invoices digitally.
Invoice formats not allowed after 2019
- Invoice images
- Unstructured invoices in HTML
- Paper invoices (scanned or sent via fax)
The use of these formats attracts penalties of between 90 and180 percent, applied to the VAT amount in an invoice not formated as required.
Multiple measures have been implemented to avoid tax evasion, increase VAT collection and cost savings, and Public Expenditure monitoring, due to the country’s VAT gap which as of 2018 was at EUR 35 billion. Italy, therefore, became the first EU country to implement mandatory e-invoicing for B2B and B2C transactions — Art. 1, Par. 909 et seq. Law no. 205/2017 (Budget Law 2018)
B2B (Business-to-Business) transactions are simply between-business transactions involving either manufacturer and wholesaler or wholesaler and retailer. Whereas B2C (Business-to-Consumer) is simply the sale of products and services directly between business and consumer. B2G (Business-to-Government) refers to the sale of products and services to the government.
The mandate was rolled in various phases:
- Phase 1– Use of e-invoicing for transactions between businesses and public bodies.
- Phase 2 — use of e-invoicing in businesses operating in the public sub-contracting sector and duty-free shops
- Phase 3 (final phase) — use of e-invoicing in all B2B and B2C transactions
These were all implemented in July 2018, September 2018, and January 2019 respectively.
Can you use a simplified invoice in Italy?
You are allowed to use simplified invoices for invoice amounts of up to €400. Initially, simplified invoices were allowed for up to €100.
A simplified invoice allows you to give minimal details that include:
- Invoice date
- Invoice number
- Supplier/Customer’s full name, including their address
- Supplier’s VAT number
- Client´s VAT or tax number (Codice fiscal)
- Gross amount
The new mandatory invoicing requirements are exclusive to only residents and established Italian parties only. Transactions between non-resident, non-established or unidentified parties (termed ‘cross-border transactions’) need not be certified by said e-invoices. Instead, these transactions have to be communicated through the Italian Revenue Agency with specific electronic communication similar to the current communication of all data of purchases and sale invoices (‘Esterometro’).
Cross-border transactions are to report the following:
- Supplier/purchase data
- Date of Invoice/credit note
- Entry date of invoice/credit note
- Number of invoice/credit note
- Taxable amount, VAT rate, VAT amount, or, if no VAT is charged on the invoice, the type of the transaction performed.
Frequently Asked Questions – Invoice Requirements in Italy
Do I need to send tax-free shopping e-invoice via the SDI?
No, you don’t need to send tax-free shopping e-invoices through the Sistema di Intercambio (SDI) platform. You also don’t need to include them in the cross-border transaction report. However, it is mandatory to issue them through the Otello platform.
What services are available on the Fatture e corrispettivi (Invoices and considerations) portal?
The Fatture e Corrispettivi portal stores your tax information, and documents such as e-invoices, for a maximum period of 15 years. The portal also provides consultation services in order to check for compliance, validity, and compatibility, to streamline the delivery of e-invoices.
The other services include view, search, and download of e-invoices, Registration, and QRcode for entering of data. You do not pay for those services.
What if I don’t comply with the e-invoice regulations?
Non-adherence to the e-invoice regulations would attract a penalty of between 90% and 180% if the tax not correctly declared or omitted.
For a document not meeting the e-invoice requirements and you have not amended within four months, you will be liable to penalties amounting to 100% of the tax omitted.
A penalty of €2 per invoice and a maximum of €1,000 per quarter will be charged in case you omit or erroneously declare cross-border transactions.
What are the advantages of using e-invoices?
These are the advantages of issuing and accepting electronic invoices.
- Reduced over-reliance on paper documents
- Reduction in human and financial resources
- Effectiveness of doing business
- Makes tracking of taxes easier
Do I need to sign my e-invoices?
To make sure your e-invoices pass the integrity check test, you must electronically sign them. The e-signatures can also be used for tracking invoices.
Is e-invoicing Mandatory for all Italian residents?
E-invoicing is mandatory for all Italian businesses. However, small businesses, small agricultural producers, low-income self-employed individuals, and healthcare professionals do not have to issue electronic invoices.
What are the steps involved in e-invoice reporting?
- Send an invoice in the form of an XML file about a transaction to the SDI.
- SDI Responds with a confirmation receipt.
- Send a copy of the e-invoice to the customer.
- The customer receives an email notification from SDI about the transaction.
What is the difference between B2C and B2B e-invoices?
B2C and B2B e-invoices differ in their format of delivery. In the B2B invoices, the other business is able to receive an e-invoice routed via the SDI.
In B2C, customers do not have a certified email address, connected to the SDI portal. Therefore, the supplier must send the customer a copy of the invoice via email.
The new invoicing rules are targeted at ensuring tax authorities get the whole picture in relation to the treatment of VAT in invoiced transactions. Their implementation gives taxpayers the opportunity to capture transactions associated with VAT treatment correctly. It also makes automation easier for the taxpayers and for the Italian Revenue Agency; it allows enforcement of VAT compliance measures.