The final countdown to mandatory e-invoicing in Italy
September 1 marked the second milestone of the entry into force of the Italian e-invoicing mandate – this time targeting certain B2C goods purchased by non-EU citizens over a certain amount. But crucially, it also marked the three month, or 122 day, countdown to the final deadline when e-invoicing will become mandatory for all domestic B2B and B2C transactions in Italy.
After that date, 1 January 2019, all domestic invoices issued by permanently established organisations in Italy must be compliant with the new e-invoicing framework. That means that regardless of what invoice practices you have in place today, be they paper, EDI, email or scanned, you must have migrated to the Italian FatturaPA XML format and have a solution in place that means you are connected to the government’s IT-platform known as the Sistema di Interscambio, or SDI for short. After this time any invoice issued in any other way than through the government IT platform will not be compliant and will for fiscal purposes be considered as simply never having been created. Non-compliance will lead to a disruption or complete shutdown of your global supply or demand chain and leave buyers unable to reclaim the VAT that they are due, as well as risk reputational harm and penalties.
Italy took this bold step of introducing its ambitious e-invoice mandate in a bid to tackle its €35 billion VAT gap, the largest among the EU Member States. Through the introduction of mandatory e-invoicing and with its SDI platform, Italy is successfully disrupting decades of established business practices in the process by reversing the ‘self-assessment’ nature of VAT collection.
Once the mandate comes into force, the Italian tax administration will have full access to your organisation’s invoice data, allowing it to monitor your end-to-end business transactions, as they happen. What this means is that the Italian tax administration can in real-time audit invoice data to ensure that the tax you pay and report is accurate in an entirely new and unprecedented manner.
The road to mandatory e-invoicing in Italy
While the obligation for mandatory e-invoicing was introduced at the end of 2017, the final deadline is the end of a long path to the introduction of mandatory e-invoicing it Italy that began in 2013.
Phase 1: Mandatory regulation of B2G e-invoicing (FatturaPA)
|May 2013||B2G obligation introduced for contractors to the Italian public administration via the SDI platform.
|December 2013||E-archiving reform introduced to streamline and reform existing storage requirements.
|March 2015||B2G deadline: eInvoice mandate in force for all B2G supplies.
Phase 2: Invitation to the private sector and the beginning of the mandate
|July 2016||Voluntary B2B e-invoicing introduced via the SDI platform. While incentives were in place around its usage, including less burdensome reporting and quicker VAT returns, the uptake from the B2B community was, at best, minimal.|
|The announcement of formal plans to make B2B e-invoicing mandatory for all Italian businesses.
|The B2B mandate formally adopted into Italian law.
|April – May 2018
|The technical guidelines for the B2B mandate are published.
|June 2018||Attempts made by the private sector to postpone the mandate. With the technical specifications being published a month earlier, a power vacuum caused by Italian election and with the short timeframe to adapt existing practices, certain sectors argued that they didn’t have the time to introduce the required reform. In the end, the obligation was only postponed for roadside gas stations until 1 January 2019.|
Phase 3: The mandate takes force
|The first mandate deadline enters into force, targeting:
|The mandate now also covers:
|The last and final deadline, the mandate enters into force for all domestic B2B and B2C supplies.|
Considerations to ensure you choose the right solution for Italy
With the impending final deadline looming, many companies may be considering implementing a solution that is at odds with its global compliance strategy. Instead of looking for a short-term fix to a local problem through a local vendor that cannot offer solutions for other countries, now is the time to look at the global challenge that arises when many countries are implementing similar e-invoicing regimes. To stay compliant globally, you should look for a tax compliance provider that allows you to maintain your central automation processes, while having the flexibility to adapt to the revolution in e-invoicing in countries such as in Italy, and to keep up with the frequent pace of change across the world. To ensure a continuously compliant solution, it’s important to consider the following topics:
- Agile Response in an Ever-Changing Regulatory Environment: Being compliant on day one of the Italian mandate won’t be enough. You need a solution that will keep your processes compliant as the Agenzia delle Entrate (the Italian tax administration) continues to develop the e-invoicing mandate through interpretation over the months and years to come.
- Local Knowledge with Global Reach: You need an e-invoicing framework that follows Italy’s FatturaB2B e-invoicing specifications but is also able to ensure that wherever you operate and do business you are compliant.
- Holistic Compliance: Many local providers will only offer part of the picture. You should seek a solution that covers domestic, intracommunity and global invoicing flows and that ensures compliance for all elements of the mandate: billing, purchasing and reporting.
With more than 10 years of continuous experience in the provision of compliance services for e-archiving and e-signing (eIDAS) in Italy, Sovos is the market leader in the provision of e-invoice compliance in Europe. Sovos is unique in that it brings together that deep European experience with its status as a leading e-invoicing compliance vendor in Latin America and other clearance countries. Every year in post audit countries, we provide compliant signing and archiving services for thousands of companies, covering millions of invoice transactions. In Latin America, Sovos has the largest clearance network in the region with over 2.6 billion e-invoices processed every year. By choosing Sovos you can feel confident that you’re getting the complete solution for Italy, with the global reach to cover Europe and Latin America and that you are achieving global compliance wherever you do business.
Filippa Jörnstedt, Legal Counsel, TrustWeaver