Italy is one of the pioneers in e-invoicing. Long before the deadline was set by the EU directive, Italy made electronic invoicing mandatory for invoices submitted to government organizations. In the public sector, paper invoices became a thing of the past back on March 31, 2015. Now, the requirement to submit invoices electronically is being extended to include business relationships between private companies.
Since January 1, 2017, private companies in Italy have had the option to submit invoices electronically via the official exchange system, known as Sistema di Interscambio (SdI). However, this system was voluntary, and adoption remained low despite the tax incentives on offer. The Italian government has now decided to make electronic invoicing mandatory in the private sector too.
When do the new regulations start and who is affected?
Starting on January 1, 2019, all invoices in the B2B sector must be sent electronically via SdI.
For the oil and gas sector, the regulations will go into effect starting July 1, 2018.
All suppliers and service providers registered in Italy which send invoices to Italian customers will be required to comply with this regulation.
What are the specifications for the submission of electronic invoices to Italian companies?
In terms of the format and submission process, the specifications are broadly in line with those that have already been developed for e-invoicing in the B2G sector:
Invoices are issued in an XML format defined by the Italian tax authority. This standard is called FatturaPA. Official EU syntaxes will also be permitted. A qualified signature is attached to the invoice, which is then sent via the SdI exchange system. The Sistema di Interscambio also provides the sender with invoice status notifications, as required by the legislation.
Small businesses with low invoice volumes can enter and retrieve their data and documents free of charge via a web interface. Larger companies have the option to connect their ERP systems directly to SdI in order to process invoices and notifications automatically.
In Italy, electronic invoices must also be archived digitally. The requirements for this are quite complex. The retention period for invoices is ten years, during which time it must be ensured that the invoices cannot be altered. To achieve this, the archived invoices are grouped (pacchetti di archiviazione) and given a qualified electronic signature and a time stamp. This process must be completed no later than three months after the submission deadline for the annual tax return.
To certify the conformity of archiving solutions with the Italian legislation, AgID certification is available. This is issued to providers that fulfill all of the technical, organizational, financial and formal requirements for legally compliant electronic archiving in Italy. For invoice archiving, Basware is already working successfully with local partners in Italy that have the necessary AgID certification.
What does this e-invoicing mandate in Italy mean for global and local companies?
For global suppliers conducting business with customers in Italy, this means you must now ensure compliance with this regulation. But it also means faster payment cycles from digital processing and reduced risk from moving to an automated environment. It also means a likely increase in e-invoicing rates for global companies, as often e-invoicing requirements from customers are the tipping point for moving away from manual invoice sending and going electronic – just ask Toshiba.
In addition to time and cost savings, the major advantage of business-to-business e-invoicing in Italy is the elimination of the Spesometro, a report of all tax-relevant business cases sent electronically to the Agency of Revenue. The Spesometro was intended to curb tax evasion and is something of a bureaucratic monster but is now unnecessary due to the transparency achieved with e-invoicing.
By requiring the use of the Sistema di Interscambio and the Italian tax authority's default format for submitting invoices, all invoice recipients will be reachable via a single system and using a single format. Many Italian companies are already using this system and format due to the e-invoicing requirement in the B2G sector. This means major efficiency gains for Italian companies.
How can Basware help?
Basware's solutions have been able to submit invoices to government agencies via SdI since 2014, and this functionality was extended to B2B invoices in 2017. We also work closely with our Italian and global partners to keep up-to-date with the developments surrounding the Italian government's regulations and therefore ensure that our customers remain compliant with e-invoicing processes in Italy.
If you’re doing business in Italy and want to learn more, contact us – we’re here to help. Also check out PayStream Advisors’ Global AP Automation report to learn more about ensuring global compliance with e-invoicing.