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Italy SdI e-invoicing helps ensure EU fraud targets hit early

Meeting anti-fraud tax gap targets helps unlock EU COVID funding ahead of schedule

Italy’s Treasury has released Istat data for 2016 to 2021 revealing major improvements in closing down tax fraud and the tax gap – the difference between forecast and received fiscal revenues. The tax compliance success was a requirement to unlock the next round of EU COVID recovery funding. Italy had committed to the European Commission to reduce its incidence of tax evasion to 15.8%.

Per the EU VAT Gap estimate, Italy accounts for 24% of all EU’s missing €66 billion VAT.

Tackling VAT fraud – e-invoicing & fiscal registers

The report reveals estimated tax fraud droping from 18.6% to 15.2% by 2021. It estimates the Italian ‘shadow’ economic market at €174 billion per annum. The report puts VAT evasion at 53% of this. The report estimates it has raise an additional €3.9 billion from anti-VAT fraud measures.

The report shows the lower tax evasion is mainly due to VAT sales tax, driven by the various measures taken to strengthen the traceability of transactions. This includes the SdI e-invoicing regime introduced in 2019 and the fiscal cash registers the rollout for which was completed in 2022.

Italy has so far received around €102 billion under the Recovery and Resilience Facility (RRF), the main component of the European Recovery Fund, out of a total national allocation of around €194.4 billion through 2026. This amounts to an extra €108 billion in extra revenues.

See more in our Italian VAT country guide.

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