Italy: The Beginning of the End of the EU Approach on E-Invoicing?

Filippa Jörnstedt
June 22, 2017

We have previously discussed how the Italian government is leveraging tax incentives to help boost e-invoicing adoption between private companies. After all, B2G e-invoicing has been mandatory in Italy for a couple of years now, but that has not led to a particularly impressive increase in the total amount of B2B e-invoices. Tax incentives that the government put on the table were mostly related to the simplification of administrative burdens related to VAT reporting. In hindsight, these incentives may have seemed attractive but have been insufficient in increasing the level of B2B e-invoicing in Italy.

Closing the VAT gap through related B2B e-invoicing

We often reiterate that the most fundamental driver for governments to regulate the e-invoicing process is the need to close the VAT gap – and Italy is by no means an exception. So when paper invoicing is still the predominant process in the country and when increasing the tax rates even more is not really on the table for politicians, what else is there to do? In an extreme measure to help close the country’s remarkably large VAT gap, the Italian government has recently announced that it aims to make also B2B e-invoicing mandatory.

Seen from a global perspective, this makes complete sense – just take a look at the success story that is Mexico. However, seen from a European Union perspective, the idea is problematic to say the least. The EU VAT Directive (2010/45) clearly states that a buyer must agree to exchanging e-invoices and for Italy to by law force buyers to agree is in violation of that principle. The Italian government has acknowledged this, but at the same time has declared its intent to negotiate with Brussels, thereby hoping to become the first EU Member State to get an exception from this principle. We’ve already seen how this legal inhibitor in France has driven a similar well-intended legal change into the wall – although the fact that the proposed law was called ‘loi Macron’ may give it a second chance after the recent elections.

Mandatory B2B e-invoicing – a shift in EU policy

A successful outcome of the negotiation for the Italian government would constitute a significant shift in EU policy. It’s not going to be an easy negotiation, but an Italian victory could have some significant side benefits. Allowing mandatory B2B e-invoicing could be the start of a solution to some of the worrying trends we’re seeing right now. Bit by bit, countries such as Portugal, Spain and Hungary are regulating the VAT reporting process in a very fragmented way simply because they can get away with it without EU approval. If B2B e-invoicing started becoming mandatory throughout the EU, it would be hard for Brussels to continue its ostrich politics on the cacophony created by this uncoordinated introduction of automated reporting.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Filippa Jörnstedt

Filippa Jörnstedt is Director of Regulatory Analysis & Design at Sovos and leads Sovos regulatory research across VAT and other indirect taxes globally. Based in Stockholm, Filippa’s background is in international trust and tax regulations, focusing on global developments in tax controls such as e-invoicing, e-reporting and e-signing requirements. Fluent in English, Italian, French, Romanian and her native tongue Swedish, Filippa earned her degree in Law from Lund University in Sweden.
Share this post

North America ShipCompliant
September 26, 2023
How Can Women-Led Beverage Alcohol Companies Change the Industry?

The beverage alcohol industry might no longer be strictly viewed as a “boys’ club,” but there are a minority of women leading organizations in the space. However, the number of women-led wineries, breweries and distilleries is on the rise, which – as we’ll explain – is likely a very positive thing for the industry. Let’s […]

North America ShipCompliant
September 25, 2023
Potential Government Shutdown Will Affect Beverage Alcohol Industry

Unless Congress is able to pass an appropriations bill in the next few days, the U.S. government is set to shut down all nonessential services effective October 1, 2023. This will include (among many other agencies) the Alcohol and Tobacco Tax and Trade Bureau (TTB), which will impact the beverage alcohol industry. If the shutdown […]

EMEA VAT & Fiscal Reporting
September 25, 2023
VAT in the Digital Age – Union One Stop Shop (OSS) Expansion

Entering into force on 1 January 2025, the EU Commission’s VAT in the Digital Age (ViDA) proposals have been introduced in an effort to modernize VAT across the EU.  One pillar of ViDA is the “single VAT registration,” which would reduce compliance costs for businesses. The Commission proposes to achieve this by expanding the Union […]

North America Tax Information Reporting
September 25, 2023
Why Conduct a Pilot Season for Tax Information Reporting?

Another tax information reporting season is just around the corner and now is the time to start preparing your teams handling forms such as Series 1099, 1098, 1042-S, 3921, 5498, W-2, W-2G and more. Getting your teams ready and testing your reporting process ahead of January ensures you are set up for a successful season. […]

North America Tax Information Reporting
September 21, 2023
Sovos Education Returns to Orlando with Statutory Accounting CPE

If you didn’t join us in D.C. or San Francisco earlier this year, you won’t want to miss one last opportunity in 2023 to take part in live continuing education. Sovos Education is returning to the Orlando area for a full week of statutory accounting CPE opportunities and we’re hoping to see you there. Sun […]