Invoice Requirements in Italy

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
• How to Extract Invoices to Excel

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.

Invoice storage

In Italy, you are required to keep an invoice for four years, with the period coming to an end at the end of the fourth year.

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 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 government’s 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 is 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 of 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.

Other modifications

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 is now optional.
• Withholding taxes and social contributions – 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

• PDFs
• 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 formatted 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:

1. Supplier/purchase data
2. Date of Invoice/credit note
3. Entry date of invoice/credit note
4. Number of invoice/credit note
5. 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 a 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 is not correctly declared or omitted.

For a document not meeting the e-invoice requirements and you have not amended it 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 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?

1. Send an invoice in the form of an XML file about a transaction to the SDI.
2. SDI Responds with a confirmation receipt.
3. Send a copy of the e-invoice to the customer.
4. 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.

How to Extract Invoices to Excel

Do you want to learn the easiest way of converting a PDF invoice into an XLS file? Let us show you in this tutorial how to accomplish the said task with just a few clicks of the mouse by using PDF.co and Zapier.

1. Make a Zap
2. Google Drive App and Event
3. Set the Trigger
4. Test the Trigger
5. PDF.co App and Event
6. Setup Action
7. Test Action
8. Test Result

To demonstrate the process, we will take the sample PDF invoice below and convert it into an XLS file.

This is what it will look like in XLS after the conversion process:

Here’s the converted Excel document.

Step 1: Make a Zap

• Begin the process by logging in to your Zapier account and starting a Zap.

Step 2: Open Google Drive App

• The next thing to do is open the Google Drive app and select the New File in Folder. This will act as your event trigger.

Step 3: Set the Trigger

Here are a couple of simple steps for setting up the trigger:

Select My Google Drive in the Drive field.

Pick the specific folder that stores the file in the Folder field.

Step 4: Test the Trigger

• Once the setup is complete, you can test the trigger by clicking the Test Trigger

After the successful trigger test, you can proceed with adding another app.

Step 5: Use PDF.co App

• Find and open the co app, then select the PDF to Anything Converter from the menu. This API function can transform PDF files into any document and file format.

Step 6: Set the Desired Action

To convert the PDF file into XLS, here are the steps you will do to set the action:

• First, for the Output Format, choose the XLS spreadsheet.
• Next, for the PDF URL, choose Web Content Link.
• Finally, input the desired XLS file name.

Step 7: Test the Action

• Once you’ve configured the complete action setup, click the Test & Review

Step 8: Check the Result

• Splendid! Now that you find everything is in order, copy and paste the URL into your browser so you can download the XLS file.

There you go! You just learned the simple process of converting a PDF invoice into an XLS file using Zapier. You must be delighted to find out that it was made even easier with PDF.co.

You also discovered how easy it is to set up the PDF to Anything Converter that turns PDF files into XLS formats in a jiffy. This is made possible by PDF.co Web API.

Conclusion

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.