Ever since the Legge di Bilancio, the law introducing the Italian e-invoicing obligation for all domestic supplies was passed on 27 December 2017, discontented voices have raised an objection to its ambitious timeline.
The original plan phases in the clearance-style mandatory e-invoicing process across the following key dates:
1st July 2018:
- For supplies of petrol or diesel sold for the purpose of being used as motor fuel*
- Supplies made by sub-contractors to the public sector, under a framework agreement in public procurement, provided that the main contractor has notified the public administration about the sub-contractor involved in the execution of the contract.
1st September 2018:
- For invoices issued to non-EU consumers under the tax-free scheme for consumable goods (amount exceeding 155 EUR).
1st January 2019:
- All other domestic invoices.
But, the private sector has since the beginning raised serious concerns about the 1 July 2018 deadline that relates to the provision of motor fuels, as this obligation will also combine with a requirement to only pay with traceable electronic payments, and effectively abolish the so-called petrol card, which companies today use to be able to deduct VAT from their fuel purchases. Combining traceable payments with real-time e-invoice clearance would provide the state with a complete view into the transaction, allowing it to gain control of this sector, which traditionally has been seen to have a significant VAT gap. However, gas stations and their corporate customers across the country have been struggling to implement the technology and business processes required to comply with the new rules in the short 6-month timeframe.
The problem here is, there has been nobody to object to. The Italian elections held in March this year have not resulted in the forming of a government, and therefore it has been difficult to envisage how any delay to the first deadline would be implemented. The relevant authorities and National e-Invoicing Forum have continued to do their job and progress the supporting rules and guidance notes during the spring. This resulted in the Provvedimento (Prot. n. 89757/2018) and a Circolare (N. 8/E) being published by the Italian tax authority on 30 April 2018, however short of providing guidance on how to comply, these bodies cannot address or delay the obligation itself – they simply do not have the authority to do so.
Rumour has it
During the past couple of weeks, news has been circulating about a creative workaround for this problem. A proposal was submitted to the Italian Senate to add an extension to the first deadline as an amendment to an unrelated decree: the Alitalia Decree, which was designed to put in place rescue measures for the Italian airline. It’s interesting to note that this extension was not designed to delay the entry into force for all supplies covered by the first deadline: supplies by public sector subcontractors were not included in the proposal and always intended to kick-off as of July.
Hopes were high that this would be included at the very last minute, allowing gas stations and other suppliers of motor fuels and their customers two parallel methods for the deduction of VAT on the supply of motor fuels during a transition period. The idea was to consider both the existing and new processes for e-invoice issuance to be compliant, and for those relying on the old method, the petrol card scheme would continue to be deemed as sufficient for deduction purposes up until 1 January 2019. On 23 May 2018 however, the relevant Senate Commission finally rejected the proposal, considering it materially unrelated to the Alitalia Decree, and as such not admissible.
That means that the process is back to square one. Currently, nothing has changed and the original timeline remains in place. For those who are finding the defeat in the Senate hard to accept, there is one possibility remaining: a new government seems set to form before the end of May. If the coalition, led by Giuseppe Conte, manages to get up and running and decides to prioritize this issue, there is still a window open to allow taxpayers some breathing room.
What should enterprises be doing to address the legal limbo? The only responsible approach is to prepare for the 1 July 2018 deadline and treat any last-minute extension as a luxury.