Universal eInvoicing in Italy
Italy has embraced eInvoicing with a characteristic passion, and since January 2019, all business invoices are sent via the Italian tax authority’s official invoice exchange platform. The ruling covers all invoices issued by businesses: B2B, B2C and B2G. The platform first validates invoices, and those that have been verified are transmitted onwards to the buyer.
SDI – The Platform
Sdl stands for Sistema di Interscambio. It is operated by the Italian revenue agency Agenzia Delle Entrate. They have set out the validation rules for invoices and that contact the sender when an invoice fails validation and cannot be forwarded to the recipient.
The SdI acts as the hub for all invoices and thus records what both ends expect to pay. From which, taxes due by both parties can be calculated.
Esterometro – The Tax Scheme
Cross-border transactions were originally not in the SdI scope, so a new tax scheme was set up – the Esterometro. All invoices to or from a VAT registered businesses in Italy must be reported to the Agenzia della Entrate.
This scheme acts as a bridge to January 2022, when it will be possible and mandatory for cross border invoices to be processed via the SdI as for all other invoices within Italy.
Square Peg into a Round Hole
As the SdI was designed for domestic invoices, some compromises are needed for invoices to overseas recipients. Postcodes, should they not fit the five-digit format used in Italy, are replaced with 00000, and as the recipients are not Italian, they will not have a recipient code, so this field is filled with XXXXXXX.
International Invoicing Switching on in January 2022
For inbound invoices, the requirement is on that of the receiving party to send a copy of the invoice to the SdI by the 15th of the month following the transaction date on the invoice. To do this, the recipient must register two invoices with the SDI for every one invoice it receives.
The system has a copy of the invoice at both ends of the buyer-supplier relationship – the difference being that the buyer is registering the supplier’s inbound invoice for them.
This same system will apply in the case of credit notes received from suppliers outside Italy to rectify overcharging or undercharging issues on previous invoices.
Fines for Non-Compliance
Any invoice that is not handled through the system correctly within the timeframes will be subject to a penalty fee of €2. A company can be charged up to €400 in a single month in fees – and both sides of the invoice, so a single invoice received from abroad could cause the buyer €4 in late fees.
If your business is not VAT registered in Italy, this will not affect you. However, if you have an operating entity in Italy and transact cross border or within Italy, interaction with SDI is inevitable. To simplify the process, we recommend you talk to our eInvoicing experts about the solutions we have in place already for numerous customers selling in, into and out of Italy.
Some eInvoice solutions are available that hive off all Italian invoices and run them through a separate process with a dedicated team using different technology to the rest of the enterprise.
This, for many organisations, is a backward step away from centralisation, economies of scale and standardisation, and adds to the resource overhead of doing business in Italy.
Our solutions do not take this approach and allow our clients to continue using one platform for all invoices, regardless of the origin, destination or the VAT compliance and invoice format requirements at either end.
Talk to us today to plan ahead for January 2022.