Electronic invoicing in Italy

Electronic invoicing in Italy

Jean-Bernard Rolland Jean-Bernard Rolland

Jean-Bernard Rolland

CTO at Covalto Bank - Entrepreneur - Investor - Board member Certified ISO 42001 AI Management Systems Lead Implementer

发布日期: 2021年6月20日
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Electronic invoicing, or eInvoicing (also called eInvoicing or eInvoicing) is a form of electronic billing. eInvoicing methods are used by trading partners, such as customers and their suppliers, to present and monitor transactional documents between one another and ensure the terms of their trading agreements are being met. These documents include invoices, purchase orders, debit notes, credit notes, payment terms, payment instructions and remittance slips.

The perception of the eInvoicing is that it is simply the exchange of what used to be a paper invoice in some sort of electronic format. However, eInvoicing in 2021 is far more than the simple digitalization of an invoice. It has to be apprehended in the context of an extended B2B process that includes multiple data entries, validation of delivery, invoicing per se, then long delays that can create a working capital crunch and a need for financing, and finally various tax payments, before a potential second, third iteration and more.

European directive

Origin of definitions. The original European definition of an eInvoice is that which is included in the VAT Directive 2006/112/EC as amended by Directive 2010/45/EU. The directives make it an invoice whatever document that:

  • contains the information specified in the directive,
  • has been issued and received in any electronic format. It can be a structured format capable of being machine readable and automatically processed, or a non-structured format represented by a humanly readable visual presentation of an eInvoice (such as a simple PDF) or a combination of a structured and non structured format, often referred to as a "hybrid" invoice.

Although the definition has been amended since then, these variations are discussed in further detail in the body of the paper.

Landmark decision. The landmark text mandating eInvoicing in Europe is the Directive 2014/55/EU on electronic invoicing in public procurement In this directive, eInvoicing is defined specifically as an invoice that has been issued, transmitted and received in a structured electronic format which allows for its automatic and electronic processing and respects a specific format.

All European Union member countries must transpose their legislative frameworks to Directive 2014/55 /EU and subsequent rulings on eInvoicing in order to harmonize the procedures for issuance and control of this type of document within the EU. The common legal framework for member states highlights the need to guarantee the origin and authenticity of eInvoicing.

Many of the member states of the European Union have already implemented eInvoicing on a mandatory basis between the Public Sector and its suppliers with the aim of simplifying tax compliance and reducing economic costs. With the new European Union standard for eInvoicing, the EU wants to facilitate public procurement and electronic commerce at the cross-border level.

It is important to note that Directive 2014/55/UE is a standard that explicitly aims to facilitate cross-border commercial relations with the creation of a common standard that is interoperable. Other principles include the following.

Reach and automation. Economic operators should be able to reliably send, or make available, and receive eInvoicing and related documents to and from all types of trading partner, public or private, in Europe and elsewhere. Transmission should support the automation objectives of these economic operators, whilst also supporting the need to employ manual processes when necessary, for example in the event of discrepancies or when automatic matching and processing is not possible for a receiver owing to the relative immaturity of its information systems and procedures (especially relating to smaller organizations).

Choice and interoperability. All economic operators acting as suppliers should be able to choose the transmission tools, mechanisms, or service and solution providers that meet their requirements, provided that these are interoperable and compatible with the transmission mechanisms of buyers, whoever they may be. It is recognized that connections between highly heterogeneous economic operators need to made and sustained.

Solutions. The use of service and solution providers is strictly a matter for economic operators. Providers offering business, information technology and communication services are encouraged to develop and continuously evolve efficient and cost-effective (not exceeding the cost of paper invoicing) products and services, which support business and technical interoperability, and, wherever feasible, remove the need for human intervention. The latter is dependent on the preparedness of economic operators to adapt their processes and deploy the necessary skills. The market for services should be competitive, innovative and offer choice to users of all sizes.

Fiscal compliance. Transmission solutions should enable all economic operators to fully meet their obligations in respect of compliance with applicable fiscal rules, in particular VAT regulations, and requirements for authenticity, integrity and legibility relating to eInvoicing. This may increasingly require reporting and registration facilities to meet the requirements of tax authorities.

Standards. The environment should embrace standard definitions, open and non-proprietary technical standards and well-established business practices to support ease of implementation, continuing use and maintenance. It should support the common models and methods of eInvoicing and electronic data interchange, and include provision for confidentiality and non-repudiation, appropriate levels of security, timely receipt and response messages, and, as required, visualization in human-readable form.

Identification of parties. Addressing, routing and identification mechanisms should be progressively standardized by the industry and should be easily discoverable through a registry or directly in an eInvoicing solution.

Governance. Stakeholders need to take care to create and safeguard boundaries between the competitive space and the areas of cooperation appropriate to networked environments. Appropriate governance should be established for such cooperation models.

Pre-European directive situation in Italy

Several Italian entities had adopted eInvoicing technologies prior to the European directive. For example, the Emilia-Romagna region had already made it mandatory for its healthcare system to issue electronic purchase orders to suppliers using the Pan European Public Procurement On Line (PEPPOL) format. Due to the significant experience gained during the project and continued success in the test-phases that followed, Emilia-Romagna became an early adopter of the PEPPOL standards and developed an articulated strategy to fulfill a complete dematerialization of public purchases. In particular, with the regional law n. 17 of 2013, the Regional Government officially established the regional system for the dematerialization of the procurement cycle (named SiCiPa-ER), with the purpose of simplifying the public purchasing processes, reducing management costs and guaranteeing the transparency and the traceability of public expenses. Although the law was abrogated in 2019 pursuant of the national eInvoicing framework, Emilia-Romagna was way ahead of the eInvoicing wave.

Additions pursuant to the 2014 European directive

Business to government

In 2014, Italy began the implementation of the European Directive across the Italian public sector and their suppliers.

The use of eInvoices in public procurement in Italy is mandatory for ministries, tax agencies and national security agencies since June 2014. Since 31 March 2015, it became mandatory for all public entities. The use of eInvoices is based on the following legal instruments:

The mandated format is FatturaPA The Italian government set up a single exchange system (Sistema di Interscambio, or SdI) for eInvoicing processing. with which senders and receivers of eInvoices can be supported by their service provider.

This system is designed to process and validate eInvoices before they can be transmitted to the public entities. It is a strategic choice by the Italian authorities to ensure to ensure that all invoices are controlled by the tax administration.

Companies submit eInvoices following the FatturaPA format through SdI. SdI works as an eDelivery service, transmitting each eInvoice to the addressed administration based on an addressee identifier (Unique Office Code). The system is compatible with the European standard. 

Several formal controls are performed by SdI. Also, all invoices are forwarded from SdI to the State General Accounting Department, responsible for performing audit functions on the financial administration of public institutions through inspection activities, for monitoring of public expenditure.

Each public administration can chose the way they want to receive invoices from SdI:

Each method for submitting eInvoices has its own specific requirements, which relate to the means of connecting to the eInvoicing platform and the eInvoice’s file size. Many companies use the solutions offered by third-party service providers.

The Revenue Agency manages the Sistema di Interscambio with technology and operational support provided by Sogei, an IT provider owned by the Italian Ministry of Economy and Finance.

The invoices are archived digitally in SdI for ten years by the public administrations receiving the eInvoices. The Sistema di Interscambio does not archive invoices.

Landmark decision

As Italy implemented the European directive, it also became the first EU country to make eInvoicing mandatory in the private sector, following the example of Latin American countries such as Mexico.

Italy’s path to full B2B eInvoicing began in 2015 with Legislative Decree 127 of 5 August 2015. This regulation referred to electronic invoicing and the electronic interchange of invoice data. It encourage the, at the time, voluntary eInvoicing between private enterprises.

With effect from 1 January 2017, the Ministry of the Economy and of Finance provides taxpayers with the Exchange System referred to in Article 1 paragraphs 211 and 212, of the law of 24 December 2007, n. 244 (...) for the purposes of emission and receptionof eInvoices, and any changes thereto, following the format of the eInvoice as per Annex A of the present decree.

The aforementioned system remains the Sistema di Interscambio ('SdI'). Thus, with effect from 1 January 2017, thee SdI system may also be used by Italian-resident taxpayers (if they specifically opt for it) to transmit eInvoices to Italian-resident customers not qualifying as government entities. In this case, since the details of the eInvoices will be automatically collected by the Italian tax authorities through SdI, the taxpayers will not have to include this information in the quarterly transmission of VAT details.

To go one step further and and make B2B eInvoicing mandatory, the Italian government sought permission from the European Union. In the 2018, in the Legge de Bilancio, that is the Italian budget law, the government introduced a temporary provision to make B2B invoicing mandatory pending definitive approval by the European Union. This law of January 2018 laid the foundations for mandatory electronic invoicing between private businesses. The law modified Legislative Decree 127 of 5 August 2015 to extend the scope of eInvoicing to all invoices between tax residents of Italy.

The definitive step came in April 2018 when the European Union published Council Implementing Decision (EU) 2018/593 authorizing the Italian government to introduce mandatory eInvoicing all commercial invoices. The exemptions set out:

Article 1: By way of derogation from Article 218 of Directive 2006/112/EC, Italy is authorized only to accept invoices in the form of documents or messages in electronic format if they are issued by taxable persons established in the Italian territory other than those taxable persons who benefit from the exemption for small enterprises referred to in Article 282 of Directive 2006/112/EC. Article 2: By way of derogation from Article 232 of Directive 2006/112/EC, Italy is authorized to provide that the use of eInvoices issued by taxable persons established in the Italian territory shall not be subject to an acceptance by the recipient, except where those invoices are issued by taxable persons who benefit from the exemptions for small enterprises referred to in

With this Decision, the compulsory B2B eInvoicing endeavor for all businesses established in the country got under way. The Agenzia delle Entrate tax authority published Provvedimento 30/04/2018 and its technical appendix on 30 April 2018. The regulations defined the technical rules on issuing and receiving invoices between private firms. Amongst other topics, the Provvedimento defined the format and the information to include in eInvoices, the transmission and reception channels with SdI, eInvoice archiving, data transmissions for foreign transactions, the controls performed to ensure information quality, how to operate via intermediates, and rules on self-invoicing.

Format

The B2B invoice is an XML file that must contain the information defined in Article 21 of Legislative Decree 127 of 5 August 2015. An example is given here. An excel format is available here.

The eInvoice must contain about 400 fields, providing details about the buyer, the supplier, the products, the prices, etc. It represents a completely standardized data model for an invoice, making Italy one of the countries where the government standardizes how B2B invoicing takes place.

Cross borders harmonization

Businesses that perform cross-border transactions involving inbound or outbound invoices need to consider the following specifications to act in accordance with the Italian law regarding VAT reporting. On one hand, foreign companies can voluntarily sign up to SdI and operate as a standard Italian company. On the other hand, when the foreign company will not sign up with SdI, the Italian company will have to emit an invoice data using the TDF (Transmissione Datti Fatture) file. TDF shall only be used for cross-border operations. This file must be sent on a monthly basis, before the end of the following month after the date of the invoice issued or the reception date of the document proving the operation. It’s not mandatory to communicate TDF for transactions where a receipt has been issued at customs, thus creating significant cross-border transaction frictions.

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