Possible Postponement in Sight for Italy e-Invoicing Mandate

The entrance into force of the mandatory e-invoicing regime in Italy as of 1 January 2019 has been widely debated this year. Many applaud the potential of the reform when it comes to closing or lowering the Italian VAT gap, but smaller companies have voiced concerns about the complexity of the new framework and are requesting a delay.

So far, the Government has been very clear: The reform will not be postponed. However, Senator Andrea de Bertoldi and Senators Gilberto Pichetto Fratin and Maurizio Gasparri have introduced two legislative amendments to the Budget Law for 2018 and Decree Law 119/2018, aiming to postpone the deadline with just over a month before the mandate is set to go into effect.

The newly published decree provides a grace period for those who will not be able to comply by 1 January 2019, and determines that for the first half of 2019, the tax authority will not apply penalties if the e-invoice is issued within the VAT liquidation period. If the e-invoice is issued by the end of the following VAT liquidation period, then the tax authority will reduce the penalty by 80%.

Despite this recent cushion-effect on penalties, Senators are proposing an extension of the deadline for the entry into force of the e-invoicing mandate to 2020 and beyond. Currently, the proposed amendments are under consideration by the Senate Finance Committee and are expected to be voted on by the end of the week.

Italy e-invoicing mandate postponement proposals

The first proposal presented by Senators Pichetto Fratinsimply intends to push the obligation to 1 January 2020 in order to allow more time for taxpayers to adapt to the new system. The second proposal presented by Senator de Bertoldi provides for a gradual implementation of the mandate combined with a bonus schema to incentivize businesses to adopt to the new e-invoicing process as soon as possible.

Senator de Bertoldi’s proposal comprises the following deadlines for the implementation of the mandatory e-invoicing system:

• 1 January 2019 for taxpayers listed on the stockmarket or with more than 250 employees;
• 1 January 2020 for taxpayers with more than 50 employees;
• 1 January 2021 for taxpayers with more than 10 employees;
• 1 January 2022 for all other taxpayers not exempt from electronic invoicing.

Together with the gradual application of the mandate, de Bertoldi’s proposal introduces a reward system for taxpayers who do not make use of the extension and implement the new e-invoicing system voluntarily before the deadline. The benefits of adapting the e-invoicing mandate would be:

• Exclusion from the obligation to maintain the registers of the invoices issued, as well as register of fees;- Exclusion from the reporting obligations connected to the data of the invoices issued;
• Exclusion from the reporting obligations related to intra-community purchases of goods and services, even if only for statistical purposes;
• Exclusion from the reporting obligations connected to the economic, accounting and structural data relevant for the application of the summary index of fiscal reliability;
• Priority execution of VAT refunds within three months from the deadline for submitting the annual VAT return;- Anticipation of three years of the tax authority assessment activities;
• Exclusion of the summarized determination of income, provided that the ascertainable income does not exceed two-thirds of the declared income and in any case €15,000;
• Increase of 150% of the deductible cost for acquiring the hardware, software and services required for sending the electronic invoice and for the eventual electronic transmission of the data of the fees;
• Tax credit equal to 100% of the expenditures related to compliance certification required to make use of the reward system.

If this amendment is approved, the e-invoicing system would be applicable only to the taxpayers listed on the stockmarket or with more than 250 employees as of 1 January 2019. Bertoldi’s proposal is be aligned with the argument that the implementation on 1 January 2019 would affect mostly small-sized taxpayers, who still encounter difficulties in preparing the e-invoicing platform for transmission using their current internal systems.

The proposals are currently subject to the scrutiny of the Senates Commission and the final vote is expected by November 22.

UPDATE: 29 November 2018 The two amendments proposed to Decree Law n. 119/2018 were rejected by the Italian Senate, therefore, the deadline for the entrance into force of the e-invoicing mandate for all domestic transactions remains 1 January 2019.