Electronic Invoicing in Italy

Italy stands out as one of the European countries most committed to innovation and digital transformation. It was among the first to promote electronic invoicing with public administrations and, furthermore, the first EU state to extend this requirement to the private sector. This was an unprecedented move in the European legal context, as EU regulations initially only mandated electronic invoicing in the B2G realm. The approval of the European Parliament was necessary to pioneer extending this requirement to the private sector.

As a result of the consolidation of electronic invoicing, the system is constantly evolving, with ongoing improvements and changes leading to a greater scope of government digitization.

Key updates in version 1.9:

• Reporting of irregular invoicing (TD29): The TD29 code has been introduced, and it is now mandatory to notify the non-receipt or irregular receipt of an invoice through the Sistema di Interscambio, in compliance with Article 6, paragraph 8, of Legislative Decree 471/97.
• New cross-border VAT exemption regime (RF20): The RF20 regime has been introduced in accordance with EU Directive 2020/285, facilitating the invoicing of transactions under the VAT exemption regime for cross-border businesses.
• Update of the TD20 document type description: As of April 1, TD20 will be described as "Self-invoice for regularization and integration of invoices", applicable under Article 6, paragraph 9-bis, of Legislative Decree 471/97 or Article 46, paragraph 5, of Legislative Decree 331/93.
• Modification of energy product codes (TA13): The invoicing value codes for the sale of diesel and fuel will be updated in accordance with the new coding issued by the Agenzia delle Dogane e dei Monopoli (ADM).
• New criteria for error codes: Codes 00471, 00473, and 00475 will now include validation checks for the new TD29 code. Additionally, the verification criteria for errors 00404 and 00409 will be adjusted to align with this update.
• Removal of the €400 limit for simplified invoices: Code 00460 will be updated to eliminate the €400 limit for simplified invoices when the seller/supplier operates under the forfait regime (Article 1, paragraphs 54-89, Law 190/2014) or under the cross-border VAT exemption regime (EU Directive 2020/285).

How does it affect companies?
While most companies will not be affected, we recommend checking whether the changes to TD29, RF20 and TD20 impact your billing processes. If so, it is essential to adapt your billing systems to ensure compliance. Please contact our Help Desk for further assistance.

B2G Electronic Invoicing

With the aim of promoting cross-border trade, B2G electronic invoicing has been regulated by the European Union since 2014 through Directive 2014/55/EU "On electronic invoicing in public procurement." It establishes that all public administrations must be capable of managing electronic invoices. In order to comply with the Directive, member states have made the corresponding transpositions into their legislation.

The Italian Republic carried out its transposition through Decree No. 148/2018. However, the use of electronic invoices in the region predates the EU legislation by a significant margin. The first law regarding its use dates back to 2007 (article 1, paragraphs 209 to 213, of Law 24 December 2007, no. 244), making Italy one of the pioneer states in electronic fiscalization.

e-Procurement in the public healthcare system

The Sistema Sanitario Nacional/National Health System (SSN) began the process of purchasing goods electronically from suppliers on February 1, 2020, through the NSO platform. This move marked a strategic step towards dematerializing the procurement processes within the Italian public healthcare network. NSO is a platform designed to facilitate the electronic exchange of orders between public entities in the healthcare sector and suppliers of the National Health System (SSN).

Electronic Invoicing B2B / B2C

Just like in the public sector, e-invoicing between private companies is also subject to European legislation. In this case, it's Directive 2010/45/EU "On the common system of value added tax" amending Directive 2006/112/EC, created to improve the functioning of the internal market and promote interoperability among member states.

This Directive establishes that the use of electronic invoicing is subject to the acceptance of the recipient. Therefore, Italy needed the approval of an exception from the European Council to require its use without the need for recipient approval.

The exception became effective in 2018 through Implementing Decision (EU) 2018/593, through which the Italian Government was able to make electronic invoicing mandatory in the B2B sector.

In the B2C ("Business to Consumer") realm, companies are required to issue electronic invoices in all cases where the private consumer requests it.

Foreign Electronic Invoices

When the mandate first took place, foreign invoices received and sent by Italian companies had to be declared to the Agenzia delle Entrate through the Trasmissione Dati Fatture – TDF document. This system for the tax declaration of foreign invoices was called "Esterometro"; however, this system was replaced in 2022.

Since July 2022, electronic invoices must be declared electronically through the Sistema di Interscambio (SdI).This measure is regulated in Law LEGGE 30 dicembre 2020, n. 178. It establishes that:

• The electronic transmission of transactions carried out by entities not established in the territory of the State must be carried out within the terms of issuing the invoices or documents certifying the transaction.
• The electronic transmission must be carried out before the fifteenth day of the month following the date of issuance of the document or the date of receipt of the document certifying the transaction.

Declaration of Intent

The Dichiarazione d'Intento is a declaration typically submitted by exporters who wish to purchase or import without being subject to VAT on the invoices they receive. In order to do this, once authorization is received from the Agenzia delle Entrate, they communicate this declaration to their suppliers, who then include the data in the invoice.

Such invoices must include the following information:

• Nature: Exemption code "N3.5" equivalent to "non imponibili - a seguito di dichiarazioni d'intento"
• Data Type: the word "INTENTO" must be reported
• Text Reference: the reception protocol of the Declaration of Intent and its progressive number must be reported separated by "-" or "/" (e.g., 08060120341234567-000001)
• Date Reference: the date of the telematic reception given by the Agenzia delle Entrate containing the protocol of the Declaration of Intent must be reported.

In the instance that the indicated Declaration of Intent (dichiarazione d'intento) is not valid, the invoice will be rejected with error code 00477.

Elements of Electronic Invoicing in Italy

Sistema di Interscambio (SdI)

The Italian invoicing system is known as the Sistema di Interscambio (SdI) and is managed by the Agenzia delle Entrate, the tax authority of Italy.

The SdI follows a centralized e-Invoicing with prior validation model. All electronic invoices, whether B2B, B2C, or B2G, must be sent to the government's central platform for approval and delivery to recipients.

Characteristics of the Italian electronic invoice FatturaPA

The Italian electronic invoice is called FatturaPA and has been regulated by the Provvedimento 30/04/2018, its technical Annex, and its subsequent updates.

Format of the FatturaPA

It is an XML format defined by the Italian Tax Agency.

Archiving

The archiving of electronic documents is regulated according to Italian regulations on Electronic/Substitutive Preservation. Electronic invoices, whether B2B, B2C, or B2G (as well as other relevant tax documents), must be stored for 10 years, guaranteeing integrity, authenticity, and readability over time, for which electronic signatures and seals are required.

Cloud-based Electronic Invoicing

Cloud invoices are electronic invoices. They are electronic documents with the same legal and fiscal characteristics as paper invoices. One of their main advantages is that they are stored in the cloud, and their management is automated through digital solutions. In Italy, their use is mandatory in B2B and B2G transactions.

Cloud invoices must have a specific format and comply with specific requirements to determine their validity. The entire process takes place in the digital space and is archived in the cloud, always according to parameters that guarantee its integrity. This system takes a step forward towards dematerialization and has been a qualitative and quantitative improvement for both companies and public administrations, the driving force behind electronic invoicing.

The adoption of cloud invoicing does not only concern large companies, but also affects SMEs and self-employed/ freelancers. The technological solutions supported by Cloud Invoices are suitable for different types of companies and transaction volumes. From solutions based on Electronic Data Interchange (EDI) technology integrated with the company's ERP, which automate the entire process of cloud invoice preparation according to legal and technical requirements, its sending and issuance of a stream of notifications to oversee its management, to web solutions through forms that are manually entered and suitable for a small volume of electronic invoices.

Advantages of Cloud Invoicing

Cloud invoicing brings a number of advantages thanks to automating the invoice creation process, reception, and management processes, increasing efficiency, reducing human errors, and lowering economic costs. The more advanced the solution, the greater the benefits for the user.

Advantages of cloud invoicing:

• Increased efficiency of administrative processes. The issuance, sending, reception, and registering of documents occur immediately and automatically.
• Reduction of errors through automation.
• Cost reduction due to its digital nature compared to paper.
• Faster response and payment times due to the immediacy of sending and receiving.
• Security in communications through management of sending via private networks or using specific protocols.
• Document integrity through application of verification processes.
• Integration with management systems for issuing and receiving electronic invoices. Storage and archiving in the cloud.

Italy, a Pioneer in B2B Electronic Invoicing Implementation

Italy was one of the first countries in the world (and the first in Europe) to effectively implement a mandatory electronic invoicing model between companies. This commitment to electronic invoicing has brought significant benefits to the Italian government. The first year of the mass adoption of electronic invoicing generated €3.5 billion for the state treasury. The benefits became even more evident over time as the deployment was consolidated and the Italian business fabric began to realize the direct and indirect benefits of digitization derived from electronic invoicing.

The successful outcomes of the digitalization of the tax system through the use of electronic invoicing have served as inspiration for other countries, which have started developing their own electronic invoicing systems by emulating the SdI model. You can check the status of the deployment of electronic invoicing projects in other countries here.