Following to the approval of the Financial Law 2018, starting from 1 January 2019, a mandatory electronic invoicing obligation will be in place for the supplies of goods or services carried out between subjects that are resident, established or VAT registered in Italy.

The e-invoicing obligation is aimed, on one hand, to spread the digital culture among the companies and, on the other hand, to prevent the tax evasion and VAT fraud.

Therefore, taxpayers will be required to set their informatics systems in order to send and receive .XML e-invoices through the Interchange System (so-called “SDI”). The level of intervention on the informatics system will depend on different variables and could be limited if one or more intermediaries are used in the process.

Please find hereinafter the main changes introduced by the Financial Law 2018 regarding electronic invoicing.

Format of the electronic invoice and deadlines

Starting from January 1, 2019 electronic invoices should be:

• converted into .XML format, in accordance with technical specifications referred to in Decree no. 55 dated April 3, 2013 (i.e. format currently used to send electronic invoices towards the public administration);
• signed with a qualified or digital signature; and
• sent to the counterpart through the SDI referred to in art. 1, paragraphs 211 and 212 of Law 244/2007.
• For the transmission of electronic invoices, the taxpayers, upon agreements between the parties, can rely on qualified intermediaries. However the supplier will still be responsible for the issuance of the invoice in front of the Tax Authorities.
• The Law specifies that additional electronic invoices formats can be identified based on standards or rules recognized in the European Union.
• Moreover, certain taxpayers, operating in particular business sectors, will be affected by the compulsory electronic invoicing regime before 1 January 2019. Indeed, the supply of petrol or diesel fuel as motor fuels and the provision of services rendered by subcontractors, of the business chain, in the framework of a procurement contract for works or services concluded with a public administration, will be subjected to the electronic invoicing obligation from 1 July 2018.
• In this regard, please refer to our subsequent Newsalert for more detailed information regarding new VAT obligations related to the motor fuel distribution sector (i.e. repeal of the “fuel card” and obligation to request an electronic invoice).

Taxpayers involved in the e-invoice

• .XML electronic invoices must be submitted for all the supplies of goods or services rendered between taxable persons that are resident, established or identified for VAT purposes in Italy (so-called “Business to Business” transactions).
• Exceptions to the above rule are the invoices issued or received by non-resident taxpayers who are neither VAT established nor VAT identified in the territory of the State (these invoices, in any case, will be subject to a specific communication, please see below).
• By way of example, the obligation of electronic invoicing does not apply to invoices issued for a consulting service rendered to a person established in France by a taxable person established in Italy (transaction not subjected to VAT pursuant to article 7-ter , Presidential Decree 633/72).
• Other exemptions are taxable persons included in the so-called «regime di vantaggio» referred to in article 27, paragraphs 1 and 2, of the law decree n. 98 dated 6th July 2011, and those subjected to
• the so-called «regime forfettario» referred to in Article 1, paragraphs 54 to 89 of Law no. 190 of 2014.
• Finally, electronic invoicing is mandatory also for “B2C” transactions (i.e. “business to consumer”), in case the supplier has the obligation to issue an invoice.
• In this case, electronic invoices issued to private consumers are expected to be made available to them by the Italian tax authorities’ electronic services. Furthermore, a copy of the electronic invoice or paper invoice should be made available directly by the supplier to the consumer. In this respect, the consumer can decide to waive its copy of the electronic or paper invoice.

Cross-border communication

• Starting from January 1, 2019, subjects resident or established in the territory of the State will be required to submit to the Italian tax authorities the data related to the supply of goods and services provided/received to/from parties not VAT established or VAT registered in Italy. In other words, the Italian tax authorities will also acquire the data of the invoices that will not be sent through the SDI as they relate to “Cross-border“ operations.
• The electronic submission to Italian tax authorities will be due through a specific communication to be sent within the last day of the month subsequent to the date of issuance or to date of receipt of the invoice.

Penalty regime

• In case of issuance of the invoice, between Italian VAT resident or VAT established subjects, in a different way in respect to the above mentioned specifications (i.e. submission of the e-invoice compliant with XML “FatturaPA” standard and via SDI system), the invoice is consider as omitted and penalties according to article 6(1), Legislative Decree no. 471/97, will be applicable (i.e. penalties ranging between 90% to 180% of the VAT not correctly documented).
• It remains to be clarified if the above penalty applies also to non-resident subjects (but only VAT registered in Italy).
• In addition, the client that will not receive the purchase invoice according to the requirements mentioned above, in order to avoid the penalties provided for by article 6(8), Legislative Decree no. 471/97 (i.e. equal to 100% of the VAT not documented), should comply with the documental obligations provided by that law (so-called “autofattura denuncia”) through the use of SDI.
• With reference to the new “cross-border communication” in case it will be omitted or submitted with erroneous or incomplete data, the new penalty provided for by article 11, (2-quater), Legislative Decree 471/97 will be applicable (i.e. 2€ for each invoice, considering an upper limit of 1.000 € for each quarter, even if the obligation is on a monthly basis). It is envisaged the possibility to reduce to half the penalty in case the communication will be correctly submitted within 15 days from the ordinary deadline.

Simplifications and tax benefits

• As already foreseen by the previous version of the Legislative Decree no. 127/2015 (before the amendment provided for by the 2018 Budget Law), it is provided the reduction of two years of the tax assessment period (both for VAT and CIT purposes) for the taxpayer resident, established and registered in Italy for VAT purposes. In this respect, to benefit of such a reduction, the taxpayer must guarantee the traceability of all the payments for an amount higher than 500 € (threshold recently increased by Budget Law 2018) received and carried out from/to its counterparts (the procedures will be defined by a subsequent Ministry of Finance’s Decree).
• In addition, the law clarifies that the reduction of tax assessment period will not be applicable for the taxpayers that are carrying out transactions falling under article 22, Presidential Decree no. 633/72, expect for those taxpayers that have exercised the option according to the article 2, Legislative Decree no. 127/2015 (i.e. option to e-submit the daily amount of considerations).
• On the other hand, the Budget Law repealed the provision for which a taxpayer was granted to access in a priority way the refund of VAT credit, without satisfying the requirements provided for by article 30, Presidential Decree no. 633/72.
• Finally, the 2018 Budget Law foresees some simplification measures for the taxpayers, in particular:
• the e-archiving obligation for tax purposes will be automatically satisfied for all the e-invoices, as well as for the other e-documents submitted through the interchange system (timescales and procedures will be defined by a specific act);
• article 21, Decree Law no. 78/2010, which oblige taxpayers to submit the “Spesometro” is abolished;
• Italian tax authorities, once acquired those tax data, will provide assistance to the taxpayers carrying out arts, professional activity or business activity adopting “simplify accounting” for the calculation of their taxes and for the draft of the tax return. For those subjects, VAT ledgers kept pursuant article 23 and 25, Presidential Decree no. 633/72, are no longer required;
• the introduction of the mandatory tax free shopping e-invoicing regime, related to the supply of goods to private customers resident outside European Union (reference is made to article 38-quarter, Presidential Decree no. 633/72) has been postponed to September 1, 2018.

For more information concerning the law and informatics solutions that could be applied, please feel free to contact digital.tls@it.pwc.com