2014: Mandatory B2G e-invoicing in Italy and FatturaPA
What is FatturaPA?
In 2014, the Italian government introduced mandatory business-to-government (B2G) e-invoicing for suppliers to public administration and government offices. FatturaPA is the name of the electronic invoice in Italy for public administration. It is the only type of invoice that is accepted by government bodies. Authorities only accept e-invoices through the Sistema di Interscambio (SDI), which is the official exchange system.
According to the government, the main purpose of these measures is to reduce VAT fraud, optimize internal accounting processes of businesses, and make communication between the government and taxpayers easier.
The format of FatturaPA
The SDI only accepts the standardized FatturaPA format, which is set by the Italian Revenue Agency (Agenzia delle Entrate). Taxpayers provide the mandatory and voluntary information required by the structured invoice in a digital XML format.
The authenticity of origin and the integrity of the provided content are guaranteed by the person who issues the invoice by affixing a certified electronic signature or digital signature. The transmission relies on the unique identification code of the office to which the invoice is addressed, and which can be found in the Index of Public Administrations.
What is an SDI code?
SDI codes represent the tax status of the transaction.
- N1: excluded
- N2: not subject to tax
- N3: not taxable
- N4: tax exempt
- N5: margin regime
- N6: reverse charge
- N7: VAT paid in other EU countries
2019: Mandatory e-invoice in Italy for all business-to-business (B2B) and business-to-consumer (B2C) transactions
From January 1st 2019, all invoices issued following the sale of goods or provision of services carried out between entities resident or established in Italy must be electronic invoices. The electronic invoice requirement in Italy, introduced by the 2018 Budget Law, applies to both B2B and B2C operations. To fill an electronic invoice, you need software that allows the compilation of the invoice file in XML format, as required by the Revenue Agency provision of 30 April 2018. Electronic invoices must always be sent to their customers through the SDI. Otherwise, they are considered not issued. If the invoices are issued in a different way in accordance with the specifications given by the Italian tax authorities, the invoice is considered omitted, and penalties will be applicable. Penalties for not complying with FatturaPa range from 90% to 180% of the VAT not correctly documented.
How does FatturaPA work?
- Electronic invoices are automatically generated in the supplier’s ERP system before being transmitted to the SDI by web-service.
- The SDl will then return an electronic message that indicates whether the submission been successful or not.
- Finally, the SDI transmits the electronic invoice to the recipient. When the recipient picks up the invoice, the issuer receives another confirmation as proof of acceptance.
SAP e-invoice solution for Italy
After output type, tax code-based customizations are completed, as a first step once the invoice is triggered by the invoice printing programs, SNI add-on solution retrieves the information on the pre-printed version of the invoice, converts this data into the required XML file and drops it to SNI e-Invoice Cockpit. Key users are able to monitor and track the created invoices through the cockpit, which is a simple, user-friendly interface. After generating the e-invoices, end users can monitor the XML and HTML versions of the invoices, envelope them, send them to the SDI, and track their progress from a single screen. In case of a rejection, key users will be able to see the reason for the rejection and formulate their own solutions accordingly.
New update for electronic invoicing in Italy
In early 2020, the Italian tax authorities published the introduction of the new FatturaPA e-invoicing requirements. The timetable for new version was delayed in April.
The new format version can be used voluntarily from October 1st, 2020 and will enter into force on January 1st, 2021.
The new XML versions 1.6.1 for B2B and 1.3.1 for B2G have been introduced. The procedures and schemas are identical for B2B and B2G.
From July 2022 with the Senate decision (Dossier no. 468/1) both resident and non-resident taxpayers must generate and transmit invoices in XML format.Electronic invoices must be reported to SDI which is a data exchange system developed by the Italian Tax Authorities and replaced Esterometro.