The Italian Budget Law for 2018 (Law no. 205/2017) (“the Law”) establishes a mandatory real-time electronic sales invoice issuance and reporting system (“E-invoicing”). E-invoicing will be mandatory in Italy as of January 1, 2019. E-invoicing requirement will be applied to all companies that are tax residents in Italy, but it will not cover the following categories:
(1) non-resident taxpayers that are not subject to VAT. Notwithstanding such exclusion, it is possible for Italian companies to issue invoices to such non-residents subject in electronic mode, while send a paper copy upon request by the non-resident; and
(2) resident taxpayers that are subject to the so-called “regime forfettario” (pursuant art. 1, pars. from 54 to 89 of Law no. 190/2014) or the so-called “regime di vantaggio” (pursuant art. 27 of Legislative Decree no. 98 as of July 6, 2011).
The electronic invoices (“e-invoices”) are transmitted electronically to the end customer through an interexchange system (“Sistema di Interscambio”, hereinafter “SDI”) implemented by the Italian tax authority (“Agenzia delle Entrate”). The e-invoices must be issued in the .xml format, through a provider or a software. SDI will ensure that the e-invoice file contains all mandatory information. The processing timing will range from few minutes to a maximum of 5 days. If the invoice is considered as issued, the taxpayer will receive a confirmation receipt from the SDI. Conversely, the SDI will generate a rejection notice. In the event of rejection, the issuer must enter the system and make any required adjustment for internal accounting purposes only (i.e. without transmission of any variation note to the SDI) and proceed with the transmission of the corrected invoice. If the IT address of the invoiced client does not work, the issuer will be noticed of the impossibility of the delivery, and the invoice will be considered as never issued.
The Law has also established the so-called “esterometro”. It requires a monthly filing by resident taxpayers listing of sales and purchases to or from non-resident customers and suppliers, including domestic supplies, IC acquisitions, exports or imports without customs declarations; and purchases of services from non-residents. Non-residents, however, are not required to file any transaction with the “esterometro”, including for domestic supplies.
As of January 2019, where a supplier issues an invoice on paper or other means will be considered as not issued. Penalties for not issuing a valid e-invoice range from 90% to 180% of the VAT due, as well as VAT on such invoice will not be deductible. If VAT deduction is not voluntarily regularized with e-invoices received, the client will face a penalty of 100% of the VAT deducted with a minimum of € 250. Cross-border transactions will be subject to a separate penalty regime. A penalty of € 2 per invoice will apply on each transaction that has not been documented with an e-invoice. A maximum penalty of € 1,000 applies. It is also possible to reduce the final sanction by 50% if a regularization is done within 15 days from the date the invoice should have been issued.
Compliments of AEM Carnelutti, a member of the EACCNY