Italy stands as one of the leading European countries dedicated to fostering innovation and driving the digital transformation of public administration. In fact, as a trailblazer in the field, Italy was among the first nations to embrace and implement e-invoicing. Read on to learn more about the evolution of e-invoicing in Italy and gain insights into the latest requirements and regulations.
Development of E-Invoicing in Italy
The implementation of e-invoicing took place slowly: in the early days, only payments to the public administration were able to be made in electronic form. But later, the ability to send XML invoices to the public administration and to companies as well as private individuals was gradually introduced. From July 2022, all transactions – including those with foreign partners – were required to be transmitted to the “Sistema di Interscambio” (SDI) system for invoice transmission.
The central system for invoice transmission: Sistema di interscambio (SDI)
For electronic invoice transmission, a company utilizes the SDI system (Sistema di interscambio), a reliable platform that has been operated by the Italian tax authorities for several years. All incoming and outgoing invoices are efficiently managed through this system. The SDI conducts thorough formal checks to verify the correct issuance of invoices and the inclusion of all legally required data. If any issues arise, such as missing or incorrect XML tags, the SDI system promptly notifies the invoicing party and cancels the transmission.
In order to reach the intended recipient, a code must be provided – an address unique throughout Italy that identifies the recipient. The code differs depending on the type of recipient:
- The codice destinatario (in English: recipient code) is used in electronic invoices for companies that are B2B or B2C. , i.e. between private parties, and consists of seven characters.
- The codice univoco d’ufficio CUU (roughly: unique official code) is only used for electronic invoices to government authorities and consists of six characters.
E-invoice in Italy for public clients (B2G)
According to EU Directive 2014/55/EU, all contracting authorities wanting to promote cross-border trade must be able to accept and process e-invoices. Italy was very quick to transpose this EU directive into national law and, as a result, the use of e-invoices has been mandatory in Italy since 2014 when they were issued to a public sector entity.
E-bill for all companies based in Italy (B2G, B2B, B2C)
As of 01.01.2019, the use of electronic invoices became mandatory for all companies in Italy, regardless of whether the invoice was addressed to a public entity, to a company based in Italy or to a private individual (B2G, B2B and B2C). The regulation only applied to invoices within Italy. If a foreign company did not have a branch in Italy, it was not affected by the obligation to issue e-invoices.
E-bill in XML format
Each electronic invoice must be created in the specified XML format “FatturaPA” and sent to the central SDI system operated by the Italian State. After automated technical checks are performed by the SDI system, the XML file is forwarded to the invoice recipient and the sender receives a confirmation of deliverability or non-deliverability back in XML format.
FatturaPA
The Italian invoice format is FatturaPA, an XML invoice format for electronic invoices. The XML format is the mandatory data format for electronic invoicing, both for invoices to the public administration and in the B2B sector.
E-bills also for foreign transactions
The new Italian Budget Law No. 178/2020 stipulates that, as of January 1, 2022 (or, due to a postponement, as of July 1, 2022), the use of electronic invoices in the XML format “FatturaPA”, including transmission via the central SDI platform, is also mandatory for cross-border invoices.
Dealing with outgoing invoices from Italian companies
In practical terms, this means that outgoing invoices from Italian companies to their customers outside Italy are created in the special XML format “FatturaPA” and transmitted to the SDI system – regardless of the format and the way in which the invoices are sent to the recipient (this is typically done in paper form by mail oas a PDF attachment via email).
Dealing with incoming invoices from Italian companies
For incoming invoices from Italian companies received from suppliers outside Italy (again, typically received in paper form or as PDF attachments via email), the Italian recipients of the invoices must create an XML version of that incoming invoice and submit it to the SDI system as well. This sounds paradoxical, but it is effectively a legal requirement. The transmission must take place within the 15th day of the following month after receipt of the incoming invoice. In this way, the Italian government wants to receive the transaction information of foreign incoming invoices electronically and reduce tax evasion in cross-border transactions.
In turn, the existing obligation to prepare a trimestral cumulative report of all foreign sales to the tax authority (the so-called “esterometro” report) was abolished.
All corresponding XML incoming and outgoing invoices (B2G, B2B, B2C) must subsequently also be digitally archived in a legally secure manner (“conservazione sostitutiva”); storage of electronic invoices in paper form – for example, by printing them out – is not permitted.
Esterometro (until July 2022)
The Esterometro report was the applicable system for reporting foreign sales until July 2022, in which all cross-border invoices were reported trimestrally. With the introduction of the mandatory electronic XML invoice for foreign transactions, this notification has been abolished.
Special features of digital legally compliant archiving in Italy
Legally compliant digital archiving in Italy has some special aspects that apply accordingly to the archiving of e-invoices. The digitally archived documents must be traceable via metadata such as invoice number, invoice date, supplier or customer, VAT number and any logical combinations of these criteria.
Each digitally created and archived document must be provided with a fully qualified digital signature, and within one year of the end of the fiscal year, all documents must be provided with a so-called digital time stamp (“marca temporale”). In addition, there is an obligation to officially designate a person responsible for the archiving process and to create a manual (“manuale della conservazione”).
These requirements can of course be covered by the document management system d.velop documents.