Executive summary

The Italian Budget Law for 2018 (Law no. 205/2017), modifying the Legislative Decree no. 127/2015, introduced the obligation of Electronic Invoicing (E-invoicing).

A general business to business (B2B) and business to consumer (B2C) E-invoicing obligation will apply starting from 1 January 2019 with respect to transactions performed between persons established or resident in Italy, permanent establishments in Italy of foreign taxable persons, as well as Italian Value Added Tax (VAT) registrations of non-established taxable persons.

Moreover, for both the public subcontract sector and for supplies of petrol or diesel fuel intended for use as motor fuel, the E-invoicing obligation will be effective as from 1 July 2018.

In addition, starting from 1 September 2018, the E-invoicing will be mandatory with reference to "Tax Free Shopping" (e.g., invoices issued for supply of goods to private customers with a non-EU residence/domicile).

According to Art. 395 of Directive 2006/112/EC, approval has been requested to introduce a mandatory E-invoicing regime, derogating from Articles 218 and 232 of the same VAT Directive. EU Council decision is still pending.

Guidelines on E-invoicing are expected from the Italian Tax Authorities.

Detailed discussion

E-invoicing starting dates

• Transactions in the public subcontract sector and supplies of petrol or diesel intended for use as motor fuel starts 1 July 2018
• "Tax Free Shopping" starts 1 September 2018
• General B2B and B2C E-invoicing starts 1 January 2019

Process

The E-Invoice must only be transmitted using the Interchange System (Sistema di Interscambio – SDI), managed by the Italian Tax Authorities. Moreover:

• The E-Invoice must be issued in a specific format (e.g., XML-PA); the Implementing decree may expand the list of acceptable formats
• An invoice issued in a different format (paper, other formats) or not transmitted via the SDI is considered as "not issued" and consequent penalties may apply
• The communication of invoice data (Spesometro) will no longer be due for E-invoiced transactions
• The statute of limitations period is reduced by two years, provided that payments over €500 are traced and B2C shop sales receipts (if any) are electronically transmitted to the tax authorities

Business considerations

Businesses should start to check whether their ERP is ready for E-invoicing and understand adjustments necessary to be ready. Particularly, main aspects to be considered are:

• ERP configuration
• Interface/integration with SDI
• Accounts receivable and payable procedures
• Automatic registration of E-invoices
• Split of sequential numbering (E-invoices vs other invoices)
• Sectional VAT ledgers
• E-archiving

Moreover, a complete VAT sanity check is advisable, taking advantage also of VAT Analytics tools so to perform in advance the checks, which the Tax Authorities will have the possibility to perform on the data provided them with, through the SDI.

Implications

Taxpayers should consult with their local tax professionals to assess their readiness for E-invoicing. EY has developed a specific design approach for complying with the new E-invoicing legislation. We work with a multidisciplinary team covering tax, advisory and IT skills and can assist businesses with the assessment phase through operating implementation to meet the starting dates for E-invoicing.

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CONTACTS

For additional information with respect to this Alert, please contact the following:

Studio Legale Tributario, Rome

• Nicoletta Mazzitelli
  nicoletta.mazzitelli@it.ey.com
• Valentina Casale
  valentina.casale@it.ey.com
• Emma Greco
  emma.greco@it.ey.com

Studio Legale Tributario, Milan

• Stefano Pavesi
  stefano.pavesi@it.ey.com
• Anselmo Martellotta
  anselmo.martellotta@it.ey.com
• Marco Cantisani
  marco.cantisani@it.ey.com

Studio Legale Tributario, Treviso

• Fabio Babolin
  fabio.babolin@it.ey.com

Studio Legale Tributario, Turin

• Anna Paola Deiana
  anna-paola.deiana@it.ey.com

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ATTACHMENT

PDF version of this Tax Alert