Italy: Understanding the New E-Document Legislation Requirements

In September 2020, the Agency for Digital Italy (AGID) introduced new requirements for the creation and preservation of electronic documents, which will be enforced from 7 June 2021.

This blog discusses the requirements and how they affect the issuance and storage of e-invoices.

Electronic Documents in Italy

The AGID is responsible for the Italian digital agenda and for drawing up guidelines and technical rules equivalent to laws to ensure interoperability between IT systems. One of its obligations is to create and establish technical rules for the creation, management, preservation, and storage of electronic documents.

Laws regulating e-documents have existed in Italy at least since 2005 with the publication of the Code for Digital Administration, the CAD (IT: Codice dell’amministrazione digitale). The CAD outlines the main rules for the use of technology by the public administration and, in some cases, between private individuals. It is the CAD that gives normative powers to the AGID to further regulate several aspects of the lifecycle of an e-document, from its creation until it is permanently deleted.

What’s the difference between an electronic invoice and an e-document?

The guidelines for the creation, management and preservation of e-documents introduced by AGID in September 2020 merge several agency and government body regulations into a single document. The new legislation revokes many of the rules in other legal acts. By following the AGID guidelines, businesses benefit from the presumption that their electronic documents provide full evidence in legal proceedings.

Assessing which documents will be used as evidence in court helps determine if an electronic file should be treated as an e-document under the AGID guidelines. The creation, maintenance and storage of an e-document should be compliant with the Italian guidelines to ensure the best possible evidential situation. As a rule of thumb, documents that might need to be presented in a court of law as evidence of a legal act should follow the guidelines.

Italy, like many jurisdictions, regulates the storage of invoices (e.g. by requiring maintenance of integrity and authenticity until the end of the storage period) and establishes specific storage periods for tax documents.

The detailed regulation around invoices indicates e-invoices are relevant as part of tax authority audits that could be presented in court. Under the AGID guidelines, e-invoices should be treated as e-documents to ensure they provide full evidence in court.

Requirements for e-documents

The guidelines regulate many aspects of an electronic document. The most important aspect when it comes to e-invoices are their creation and preservation. 1. Creation of e-documents

The Italian guidelines state that an e-document is created when it can no longer be changed.

Depending on the method of creation of e-documents (through software, acquisition by electronic means, etc.), various technical methods can ensure a document remains unchangeable, such as the application of a qualified electronic signature or seal or the deposit into a preservation system. It’s also necessary to associate a set of metadata (“metadata report”) with each document, according to a list defined by the AGID.

The metadata report is created in an XML format regulated by the AGID. The fields are described in an appendix to the guidelines and can be optional or mandatory, depending on the content of the document and the document management plan in use. However, the metadata report does not contain transactional e-invoice data as its goal is to ensure interoperability between systems, not to collect tax-relevant information.

In Italy there are two authorities relevant to digital tax controls, the AGID (the Italian agency for the digitization of Italy) and the ADE (the Italian tax authority). As a result, the ADE’s rules on the issuance of electronic invoices may sometimes look disconnected from the AGID rules that govern the creation of e-documents.

From the AGID’s perspective, an e-document is created upon assurance of its integrity and authenticity, whereas for the ADE an e-invoice is legally valid only if cleared by the SDI.

Following the AGID rules of including an electronic signature and creating the metadata report will ensure an e-invoice will not be dismissed in a legal proceeding due to lack of either AGID or ADE formalities.

2. Preservation of e-documents

Italian e-documents only retain their validity if they are correctly preserved. While in other countries it is enough to keep files in any sort of hardware with a memory system, Italy heavily regulates the storage of e-documents and requires what they refer to as preservation.

Preservation comprises a series of procedures that are applied before a document is stored. On a high level, e-documents must be mapped to an ‘archiving package’, which corresponds to a specific standard created by the Italian standardization body UNI. The document is then hashed, signed and timestamped before it is stored.

The preservation process of e-documents in Italy is not new, but the standards to which the AGID guidelines refer have been reviewed in 2020 reflecting implementation challenges to anyone storing e-documents, such as e-invoices.

Outside of the AGID guidelines, the ADE enforces ‘search criteria’ for e-invoices stored in a preservation system. This means an auditor must be able to find and retrieve e-invoices using parameters defined by law such as the name of the parties to the transaction, VAT number, and document type.

In many storage systems the search criteria is established by informing data as ‘metadata’ (not to be confused with the ‘metadata report’ generated during the creation of an e-document). The tax-relevant metadata that feeds the search criteria and the metadata report created along with an e-document will coexist as different obligations, enforced by different government bodies.

Impact on taxpayers’ systems

Taxpayers engaging in e-invoicing in Italy are directly affected by the AGID guidelines. While there is some discretion when it comes to the definition of an e-document and when it is considered created, full compliance and evidence is achieved only if an e-invoice complies with AGID and ADE regulations.

The automated creation of the metadata report during the issuance of the invoice may require mapping efforts of taxpayers who extract information from their existing IT systems. The metadata report is not currently sent to the ADE or the SDI clearance platform. Nevertheless, full compliance requires the metadata report to be stored along with the e-invoice in the taxpayer’s preservation system.

The preservation process and adaption of archiving solutions to comply with the new standards requires significant IT resources to translate (the standards are only available in Italian), interpret, and implement changes. Not to mention the cost of acquiring the standards protected by copyright licenses, restricting its use to one person only.

The consolidation and introduction of new rules by AGID means taxpayers creating and storing electronic invoices under Italian law must comply with requirements that are sometimes disconnected from tax law. Consequently, the only way for businesses to provide full evidence in court is to follow both AGID and ADE rules.