Beginning January 1, 2019, electronic invoicing is mandatory in Italy for private companies that issue and receive invoices locally.
The origin of this obligation is in the “VAT Directive” of the EU (2006/112 / EC), as amended by Directive 2010/45 / EU “Billing Directive,” in which the conditions and billing rules are established. Although this Directive allows companies to issue their invoices either on paper or in electronic format, Italy specifically requested an exception to apply a generalized system of electronic invoicing, which would help combat fraud and tax evasion, thanks to the traceability of all transactions for all taxpayers.
The EU Council granted the authorization to the Italian government to require electronic invoicing for a limited period of time: from July 1, 2018 to December 31, 2021. In this timeframe, efficiency will be evaluated in the fight against fraud and tax evasion.
Before electronic invoicing was mandatory for private companies, since March 2015 it has been mandatory for public administration providers and their different agencies in Italy. Its implementation was established in order to comply with the requirements of Directive 2014/55 / EU on electronic invoicing in public procurement, which was to be adopted by all EU members before the end of November 2018. Companies have had the option to use electronic invoicing for private commercial transactions since January 2017.
Residents and non-residents in Italy
Electronic invoicing is mandatory for all suppliers of goods and services made by entities resident or established in Italy towards entities resident or established in Italy, irrespective of whether the customer is a taxable subject (B2B) or a private consumer (B2C).
The obligation does not affect, on the other hand, transactions that involve subjects that are not resident or not established in Italy, or those that are registered only for VAT purposes, or do not issue invoices, such as in the case of retail or online, unless the client requests it.
Thanks to this provision, the Tax Agency acquires data and information in real time on all transactions made by each taxpayer; information that can be used for cross-verification and audit purposes.
Once the Exchange System (Sistema de Intercambio – SDI) receives an invoice, and before sending it to the recipient, an initial formal verification is carried out to check the validity of the format and the content of the invoice, as well as its compatibility with the data already owned by the tax administration.
If the invoice contains errors, invalid data or its delivery to the recipient is impossible, the SDI rejects the document. From there, the supplier has five calendar days to correct the errors and forward the invoice; otherwise the invoice will be considered omitted and sanctioned.
This model represents a first step to reduce the VAT gap based on the experience in Latin America where the system is already successfully in place in several countries.