The Italy FatturaPA regulation and obligations for VAT compliance are in effect, regarding the provision of products or services delivered by entities that are resident, established or VAT registered in Italy.
Italy FatturaPA Regulation and Obligations for VAT Compliance
Italy FatturaPA regulation and obligations for VAT compliance are in effect, regarding the provision of products or services delivered by entities that are resident, established or VAT registered in Italy. The objective of the e-invoicing practice in question is both to promote the more effective use of digital means by companies and also to bring fraudulent acts, e.g. tax evasion and VAT fraud, under control. To comply with such a requirement, taxpayers will need to update their informatics systems to transfer e-invoices (in XML format) through the Interchange System (so-called “SDI”) in both directions.
Numerous factors will affect the extent of modification that will be required for the currently used infrastructure. The use of one or more intermediaries in the process may facilitate things and allow the limitations of modifications to be made. Highlights of new practice outlined in the Financial Law 2018 for e-invoicing are briefly listed as follows:
E-invoice format and due dates
As of January 1, 2019 e-invoices should comply with the following requirements:
Invoices should be converted into XML format, as per technical requirements outlined in Decree no. 55 dated April 3, 2013; They must be digitally signed; They must be transferred to the addressee via SDI.
If a mutual agreement on the transmission of e-invoices is established by the relevant parties, then authorized intermediaries may be of use to the taxpayers. In any case, the supplier will be kept responsible for the issuance of invoices by Tax Authorities. It is indicated in the Law that other e-invoice formats may also be used as well provided that these formats follow standards or rules accepted in the European Union. It should be noted that some taxpayers in specific sectors will be affected by e-invoicing regulation well before January 1, 2019. For example, the supply of petrol or diesel fuel, the services offered by subcontractors, or of a business chain, within the scope of a procurement contract for works or services delivered to public administration, will require the use of e-invoices as of 1 July 2018. Taxpayers subject to the use of e-invoices formatted in XML are required for the provision of goods or services rendered offered by taxable real or legal entities that are resident, established or identified for VAT purposes in Italy. An exception for the above-mentioned regulation is for the invoices issued or collected by non-resident taxpayers since they are not VAT established or VAT identified in the State. Just to give an example, an e-invoice will not be required for consulting services provided to an entity in France by a taxable entity in Italy. E-invoicing is a compulsory practice also for B2C transactions (i.e. “business to consumer”) if the supplier must issue an invoice. In such cases, electronic invoices issued to private consumers are requested to be delivered to them by the Italian tax authorities’ electronic services. Moreover, a copy of the electronic invoice or paper invoice should be sent to the customer by the supplier. Accordingly, the consumer will decide to waive its copy of the e-invoice or paper invoice.
Entering into force as of January 1st, 2019, the entities residing or established in the State will be asked to submit to the Italian tax authorities the data on the provision of goods and services provided/received to/from parties, not VAT established or VAT registered in Italy. Said differently, the Italian tax authorities will also get the data of the invoices that will not be sent through the SDI since they fall in the category of “International“ operations. The submissions to Italian tax authorities will be through a specific communication in a digital platform and they will be sent on the last day of the month following the date of issuance or the date of receipt of the invoice.
The invoices between Italian VAT resident or VAT established entities will be treated differently compared to the aforementioned descriptions (i.e. the submission of the e-invoice in XML “FatturaPA” standard and via SDI system), the invoice shall be considered as omitted and penalties according to article 6(1), Legislative Decree no. 471/97, will be applicable (i.e. penalties ranging between 90% to 180% of the VAT not correctly documented). It is to be clarified whether the said penalty applies also to non-resident entities (but only VAT registered in Italy). Moreover, the customers that shall not get the purchase invoice in line with the requirements specified in the former paragraph, just to avoid the penalties provided for by article 6(8), Legislative Decree no. 471/97 (i.e. equal to 100% of the VAT not documented), should, in any case, comply with the documental enforcement set forth by that law (called “autofattura denuncia”) by using SDI. Regarding the new “international communication” and if it is omitted or submitted with falsified or incomplete data, the new penalty provided for by article 11, (2-quater), Legislative Decree 471/97 will be applicable (i.e. 2€ for each invoice, considering an upper limit of 1.000 € for each quarter, even if the obligation is on a monthly basis). It is indicated that the penalty can be reduced to half if the relevant correction is done within 15 days starting from the ordinary deadline.
Simplifications and Tax Exemptions
Similar to the previous version of the Legislative Decree no. 127/2015 (before the amendment provided for by the 2018 Budget Law), it provided the reduction of two years of the tax assessment period (both for VAT and CIT purposes) for the taxpayer resident, established and registered in Italy for VAT purposes. Accordingly, to take advantage of it, the taxpayer is supposed to guarantee the traceability of each and every payment worth higher than 500 € (this limit was recently increased by Budget Law 2018) received and carried out from/to its addressees (the procedures will be outlined in detail by another Decree by Ministry of Finance). Furthermore, the law in question clarifies that the reduction of the tax assessment period will not be applicable for the taxpayers that make transactions in the category set forth by article 22, Presidential Decree no. 633/72, the taxpayers that have benefited from the option as per the article 2, Legislative Decree no. 127/2015 (i.e. option to e- submit the daily amount of considerations) are excluded. The Budget Law annuls the provision that the taxpayer was prioritized for the refund of VAT credit. 2018 Budget Law anticipates some simplification measures for the taxpayers as follows:
The e-archiving obligation for taxation affairs will be satisfied by the e-invoices, plus by the other e-documents submitted through the interchange system (timescales and procedures will be defined by a specific act); Article 21, Decree-Law no. 78/2010, which oblige taxpayers to submit the “Spesometro” is cancelled; As soon as this tax data is obtained, Italian tax authorities will assist to the taxpayers perform arts, professional activity or business activity following “simplified accounting” for the calculation of their taxes and the draft of the tax return.
If you need further information or assistance, you may request a FatturaPA Italy SAP Add-on Demo Session from S4FN.