The last months of 2018 have seen a turmoil happening in Italy due to the new budget law that will take place form January 1st 2019.
Among the various measures the government is implementing in order to boost the economic growth and to reduce the tax dodging phenomenon, the most notable one is the E-invoicing.
If you are thinking that you already do that because you send all your client a paperless invoice and this measure does not affect you in any case, you have got it wrong.
Let me explain you why this affects you and how deal with it in the best possible way.
E-invoicing in Italy: how does it work?
Before explaining how the E-invoicing works, I have to make it clear that it affects every B2B and B2C transactions; from January 1st 2019 every business must comply with the new regulation and the paper invoice will become an old memory.
But let's see how the system works.
The tax office already put in place a system allowing you to generate, send, and store your invoices.
First of all, you need to have access to your private area in the Agenzia delle Entrate website; you can easily do that if you also have your digital signature or your digital ID and a Certified email address (PEC). If you did not do it yet, I strongly encourage you to do so.
Once you are logged in, you can now proceed to generate your invoice just like any paper invoice; writing down the client, the goods/services sold, the amount payable and the VAT levied on such transaction.
Once the .xml file is ready, you need to send it to your client using the Agenzia delle Entrate network called SdI. Your client (as well as you) is identified through a QR code and a unique username, thus to make a single match possible avoiding possible mismatches and confusion.
If this system sounds confusing, there are many third parties solutions that can help you out in that.
To all my clients I provided an integrated system with my accounting software that will make this process easier (and cheaper).
How do you receive your invoices?
Whenever you make a purchase, the invoice is raised. In the e-invoicing era all you have to do is to provide your supplier with you personal QR code (downloadable in your remote area of the Agenzia delle Entrate website.
You should then be able to download a full .xml file with all the passive invoices and upload it to keep up to date your VAT registrar and books.
All the invoices must be stored for 10 years. Usually the system you choose takes care of that; however, you must be very careful about that since some Software House decide to unbundle the service and charge a premium on the invoice storage.
Who is exempted?
The individuals that opted for the "regime forfettario" are the only ones exempted from e-invoicing.
All the other individuals and companies must adapt to this system, regardless of the industry or the size.
The e-invoicing is a giant step for the Italian economy and requires care to be taken. The invoice process will become more complicated and every invoice amendment made will increase the number of notes of credit raised.
The best thing you can do to yourself and your business is to plan in advance and get acquainted to the system.
Honestly I expect some business to close down and more people wishing to incorporate overseas where the taxes and the bureaucracy are less heavy.
If you are leaning towards the last option, beware that this is a very risky behaviour highly reprimanded by the Italian tax authorities. I will explain this in a future article.
Check also our articles about filing your taxes in Italy, or airbnb taxes in Italy, or retiring in Italy.
After moving back to Italy from the United States in 2013, I realized how much an accounting and tax firm was needed to help expats living in Italy to comply with the local tax regulations.