1 July 2022: small businesses mandated in phased launch; cross-border invoices included; and Esterometro withdrawn
A range of changes to the Italian VAT e-invoicing regime, SDI (Sistema Di Interscambio), are being implemented on 1 July 2022 by Agenzia delle Entrate.
- bringing all small taxpayers into the regime over the next 18 months;
- including cross-border invoices for the first time;
- which means the Esterometro reporting can be scraped.
All small taxpayers included in SdI between Jul 2022 and Jan 2024
From 1 July 2022, all small taxpayers (above €25,000 annual turnover) will be required to submit their invoices via SdI for electronic approval by the tax authorities. However, there will be a soft-launch phase in the third quarter of 2022 with no penalties provided that the invoices are submitted within 30 days. Those below the annual sales threshold will join from 1 January 2024.
Delayed live e-invoicing extension to cross border transactions; Esterometro fling withdrawal go ahead 1 July 2022
Italy is extending its Sistema di Interscambio (SdI) live e-invoicing regime to cover cross-border transactions from 1 July 2022 – delayed from 1 January 2022. Italy’s Agenzia Entrate will withdraw the quarterly Esterometro declaration (cross-border sales and purchase invoices) as the listing will now be redundant.
Allocating correct TipoDocumento invoice code
The changes will require affected businesses to be able to allocate the correct TDO1 code to foreign sales invoices. This indicates sales to a foreign customer for an intra-community supply or export. Non-Italian purchase invoices should use one of the following codes:
- TD17 – services
- TD18 – intra-community goods acquisitions
- TD19 – other purchases
SdI reporting deadlines
Whilst billed as live-reporting, the reporting deadline for invoices is as follows:
- Sales invoices within 12 days of time of supply
- Purchase invoices by the 15th of the month following the time of supply
The extension of SdI from domestic-only transactions to sales or purchases from abroad will facilitate the introduction of pre-filled Italian VAT returns from 1 July 2022. Check out the countries that have implemented pre-filled VAT / GST returns around the world. This still only applies to resident businesses – foreign VAT registered businesses are excluded. Check VAT Calc’s global live VAT invoice transaction and e-invoice reporting tracker to see where else real-time submissions of invoices is being implemented.
SdI B2B real time invoices since 1 January 2019
Italy introduced its government pre-clearance VAT invoice transaction reporting on 1 January 2019 initially for B2B and B2C domestic transactions. It was required for B2G invoicing since 2014. It requires taxpayers to electronic transmit their sales invoices to the government portal for live validation and approval – only after this process is it a valid VAT invoice. The government then makes it available to the purchaser – download or automated delivery.
Withdrawal of Esterometro reporting July 2022
With the above extension of the SdI regime, the Esterometro return is now redundant and so is being withdrawn.
In January 2019, Italy introduced the quarterly Esterometro report to capture the cross-border exports and intra-community transactions not covered by SdI. Esterometro was a replacement for the Spesometro, a complete invoicing listing report.
EU approval for mandatory e-invoices
Back in 2018, Italy had to seek approval from the European Commission (EC) for mandating electronic invoices. Under the EU VAT Directive, e-invoicing may only be used where a customer and supplier agree to use the reporting option. The EC therefore had to give Italy permission to derogate from Articles 218 and 232 of the EU VAT Directive for over three years. The extension expires on 31 December 2021, but fully expects to be extended given the success of the regime.
EU harmonisation via VAT in the Digital Age – Continuous Transaction Controls
EU VAT in the Digital Age reforms include a channel for harmonised Digital Reporting Requirements (DRR) and Continuous Transaction Controls (CTC) by EU states. This grew from the 2020 Tax Package proposals for a fairer and more efficient EU tax regime.