Italy Is the first Clearance E-Invoicing Model in the EU for all VAT transactions

Italy: A European Pioneer in CTC e-invoicing

Seeking to close one of the most significant VAT gaps in Europe, Italy was the first country in the region to introduce a clearance e-invoicing model, in 2014. Since then, the government has steadily improved its Continuous Transaction Controls (CTC) system to increase revenue and further close the VAT gap.

Have questions? Get in touch with a Sovos Italy e-invoicing expert.

Reform

The Italian authorities set out on this course by taking a first step into B2G e-invoicing in 2014, this derogation from the EU VAT Directive was possible as result of special approval from the European Commission. It then extended the mandatory CTC system to cover B2B invoices and in some situations also B2C transactions in 2019 and has continued to evolve its framework since then. Through this set of gradual reform, Italy became the first EU country to make e-invoicing mandatory through a clearance process in 2019.

When the Italian government introduced its central e-invoicing platform Sistema di Interscambio (Sdl) this was considered an innovative step for the European Union. The SdI originated as an invoice exchange platform, with data gathering playing an integral role.

As the e-invoicing system has evolved, businesses have had to adapt to remain compliant. With further changes on the horizon, its essential businesses remain abreast of government expectations as some changes only provide a limited time to comply. Understanding these requirements will ensure your business remains compliant and avoids unnecessary mistakes.

Quick Facts

  • Issuing an e-invoice is contingent upon the invoice being created in a structured format and transmitted through a state-controlled platform called Sistema di Interscambio (SdI).

  • Invoices must be issued in the tax authorities XML schema format – the FatturaPA.

  • In the B2B e-invoicing flow, businesses may choose how to ensure the integrity and authenticity of invoices, but there is a strong market preference for Qualified Electronic Signatures. However, B2G e-invoices must be electronically signed.

  • Purchase orders from the National Health Service must be exchanged through the NSO platform and referenced accordingly in the e-invoice.
  • There are several specific requirements for archiving of e-invoices, notably the obligation to execute a signing and time stamping process for invoices upon being deposited in an archive, the obligation to maintain a documented description of the archive and the archiving process (Manuale della Conservazione), as well as the obligation to put in place a clear delegation plan setting up the responsibilities around the archiving process.
  • From 1 July 2022, taxpayers may continue to exchange cross-border invoices in any agreed way, but all cross-border transactions must be reported through the SdI in the FatturaPA format.

Mandate Rollout Dates

  • 6 June 2014: Phased roll-out of mandatory B2G e-invoicing starts in Italy
  • 1 July 2018: Clearance mandate goes into effect for manufacturers and distributors of petrol and diesel intended for use as a motor fuel in cars and road vehicles
  • 1 September 2018: Mandate starts for tax-free sales to non-EU individuals acting as final customers
  • 1 January 2019: Mandate becomes a requirement for domestic B2B and B2C transactions, with minor sector-specific exceptions
  • 1 February 2020: Purchase orders for the supply of goods to entities associated with the National Health Service must be exchanged through the NSO platform and referenced in the e-invoice
  • 1 January 2021: A new schema of the FatturaPA is enforced, and pre-populated VAT returns introduced
  • 1 June 2021: Enforcement of the new requirements for the creation and archiving of electronic documents
  • October 2021: Voluntary transition phase for e-invoicing between Italy and San Marino began
  • 1 July 2022: Italian businesses must report information on cross-border transactions to the SDI in the FatturaPA format. As a result, Esterometro is being abolished from 30 June 2022
  • 1 July 2022: E-invoicing becomes mandatory between Italy and San Marino using the FatturaPA format, with the Italian SdI as the access point for Italian taxpayers and the HUB-SM platform as the SdI counterpart on San Marino’s side
  • 1 July 2022: Scope of the B2B e-invoicing mandate has been broadened to include:
    • Taxpayers who adopt the flat-rate regime (regime forfettario)
    • Amateur sports associations and third sector entities with revenue up to EUR 65,000
  • January 2024: Microenterprises with revenues or fees up to EUR 25,000 to be included in the e-invoicing scope

Penalties

  • Failure to issue an invoice or issuing an invoice that doesn’t meet the XML format will result in a penalty between 90-180% of the associated VAT amount.
  • Issuing a purchase invoice to a client without adhering to mandate requirements will result in a penalty of 100% of the associated VAT amount.
  • After a grace period (expired for the supply of goods and services), invoices issued to entities associated with the National Health Service won’t be paid if no prior purchase order has been transmitted through the NSO platform and referenced in the e-invoice.
  • A grace period from 1 July 2022 to 30 September 2022has been established for taxpayers added to the scope of the e-invoicing mandate on 1 July 2022. During this period, taxpayers may issue e-invoices within the following month from when they carried out the transaction without applying penalties. Once this grace period ends, penalties for non-compliance may be issued.

How can Sovos help?

Need help to ensure compliance with all SdI e-invoicing and other VAT requirements in Italy?

Our experts continually monitor, interpret and codify these changes into our software, reducing the compliance burden on your tax and IT teams.

Discover how the Sovos solution takes care of all the evolving CTC e-invoicing, reporting, and compliant e-archiving obligations in Italy.