Italy VAT, e-invoicing and e-reporting changes from July 1, 2022
With effect July 1, 2022, there will be key several mandatory changes to the Italian VAT e-invoicing regime. The major changes include:
- Cross-border Esterometro reporting replaced by e-reporting through SDI
- Mandatory e-invoicing between Italy and San Marino
- Extension of the mandatory SDI e-invoicing requirement to small businesses
Cross-border Estermoetro reporting replaced by SDI e-reporting
Since 2019, Italian businesses have had to report sales and purchase invoices to or from foreign businesses to the Italian Tax Authority (Agenzia delle Entrate) on a quarterly basis via the Esterometro report. This includes intra-community acquisitions, imports and exports. The Estermetro reporting obligation was designed to cover invoices that did not fall under the scope of SDI e-invoiding mandate. However, from July 1, 2022, the data relating to cross-border transactions must instead be transmitted to the Italian Tax Authority via the national e-invoicing platform, Sistema di Interscambio (SDI) in a mandated XML format (FatturaPA version 1.6.1 that is currently used for e-invoicing in Italy). The reporting deadlines for this new requirement are:
- Sales invoices within 12 days of time of supply
- Purchase invoices by the 15th of the month following the time of supply.
While mandatory e-invoicing will continue to only apply to domestic invoicing and there will be no requirement to physically issue or receive e-invoices to or from non-resident customers and suppliers, there will instead be a requirement to e-report relevant invoice data via the SDI e-invoicing platform.
Some key technical points of the e-reporting via SDI for business to consider include:
- Cross-border invoices will continue to use the standard SDI document types (TipoDocumento) e.g
On the basis that non-resident businesses do not have an SDI receipt code (Codice Destinatario), “XXXXXXX” should instead be used for the field.
Where the relevant country’s postal code/ZIP code (Codice di Avviamento Postale - CAP) does not meet the Italian five digit format, “00000” should instead be used in this field. For example, Switzerland and Liechtenstein use a four digit post code format and the UK postcodes contain alphanumeric characters i.e. a combination of both letters and numbers.
To report invoices received cross-border, businesses should use a self-invoice (autofattura) which is also known as an integration document.
The required tax amount field should be populated using the tax shown on the actual invoice i.e. zero in the majority of cases as exports of goods and services will likely qualify for exemption or will be specifically outside the scope of Italian VAT.
There are specific document type codes (TipoDocumento) relating to the reporting of invoices received, including:
Purchase of services from abroad
Intra-community acquisition of goods
Other purchases of goods from foreign vendors
E-invoicing between Italy and San Marino
San Marino is a county enclaved by Italy which is treated as within the territory of Italy for customs and excise purposes but outside the scope of Italy for VAT purposes. From July1, 2022, e-invoicing via SDI will be mandatory for supplies of goods to and from San Marino (this was optional from October 1, 2021 to June 30, 2022). The main exceptions to this extension of the SDI e-invoicing mandate are:
- B2C transactions
- Purchases of new means of transport
- Distance sales to private individuals.
Extension of the e-invoicing to small business
From July 1, 2022, the obligation to issue e-invoices via SDI will be extended to all businesses, removing the current exemption for small businesses. This will happen in a two-phased approach:
July 1, 2022
Small business with annual turnover above €25,000
January 1, 2024
All small businesses (including below the €25,000 threshold)
There will be an initial soft-landing period with no penalties being applied in Q3/2022 (July-September 2022) where e-invoices are issued within the month following the transaction.
Speak to one of our experts about becoming VAT registered in Italy or to discuss how Avalara can support the Italian SDI e-invoicing mandate including the extension to include cross-border e-reporting.
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