This blog and regulations information were correct as of the publishing date. To view the most up to date regulations and blogs, view the tax compliance regulations page.
Italy was one of the first countries in the world, and the first in Europe, to lead the way on mandatory electronic invoicing (e-invoicing). Starting back in 2014, Italy revolutionised mandatory e-invoicing, showing Europe how quickly regulations can be put in place. Starting as an initiative to help close the country’s VAT gap, and soon becoming a necessity and opportunity for many Italian businesses.
We talked to Gerri Cipollini, Managing Director of Unifiedpost Italy. A pioneer on e-invoicing processes, a person whose expertise on Italy’s mandates and e-invoicing legislation is second to none. Read on to discover Italy’s leading initiative and the impact it had on local businesses.
Taking a look at the history
In June 2014 Italy began implementing mandatory e-invoicing. Starting slowly, the mandates were first put in place for business-to-government (B2G) invoices for central government entities.
E-invoicing was a new concept for many businesses at the time. Traditionally, invoicing was carried out on paper, using manual, time-consuming processes. The new mandates meant that a new way of working had to be adopted.
This is where Gerri came in. Gerri at the time was working as a Director of Innovation for a sourcing and procurement software provider. Gerri saw an opportunity in the market to simplify e-invoicing and create a solution that would work for many businesses. Gerri, along with a few others, created their own company, Digithera srl - becoming one of the first companies offering e-invoicing services in Italy.
Digithera’s concept was simple, "keep on billing as you’ve always done, we will take care of the rest”.
It was that simple. Gerri knew that many businesses didn’t have the time or expertise to be worrying about e-invoicing mandates, formats and channels. His solution needed to do all the work for them. From receiving the invoice, converting the invoice into the right format for Italy’s e-invoicing system SdI (Sistema di Interscambio), and providing SdI’s feedback in a way that worked for each business.
What happened after 2014?
- April 2015 - E-invoicing became mandatory for all B2G entities.
- January 2019 - The mandate was rolled out for business-to-business (B2B) invoices, excluding businesses with a turnover below €65,000 and doctors due to GDPR protected information.
- July 2022 - Mandatory e-invoicing covers cross-border transactions and businesses who earn below €65,000.
How did the mandates impact Italian businesses?
Businesses firstly had to understand the procedures and what SdI meant for them. When asking Gerri how he would explain SdI to a non-Italian business:
SdI is essentially an invoice validation portal. Accounts receivable (AR) invoices go in, they are validated and accounts payable (AP) invoices come out.
Italy was one of the first countries to create their own system. A system which was cooperative and linked businesses’ AR and AP systems. By connecting the two, the use of fraud diminishes. Businesses are no longer able to create a fake invoice as they have to prove an AR system is meeting their invoice at the other end and vice versa.
But SdI does more than just validate and deliver invoices. SdI talks to the user. SdI provides feedback, letting businesses know when their invoice has been received, delivered or if any issues have taken place.
What does this mean for the average business professional?
Even before the 2019 B2B mandates came into play, many businesses had already started using e-invoicing providers. The reason why? Streamlined processes without the extra work. E-invoicing providers convert a business' invoices into SdI’s chosen format (FatturaPA), distribute the files to SdI and often provide feedback to the business as well.
This transforms how businesses work. No more manual processes, just an automatic, seamless process in place, with immediate invoice feedback and quicker invoice reconciliation.
What is next for Italy?
So, where will Italy go next?
Gerri predicts that e-invoicing solutions will become more competitive. Businesses will seek to change providers. They will look out for the best service, with additional auxiliary services that allow them to benefit from e-invoicing even further.
This provides a great opportunity for businesses. From utilising payment functionality on invoices for faster payments, to taking advantage of automatic invoice matching and reconciliation. All functionalities that reduce a business’ manual, admin tasks.
Overall, has e-invoicing closed Italy’s VAT gap?
So far, the government has recovered roughly €4 billion p.a. But can the gap ever be closed? Gerri doesn’t see why not. And he hopes that other European countries will follow suit. Italy has shown how introducing mandatory e-invoicing can be a seamless process, benefiting both businesses and the government.
But picking the right provider is key. Businesses need to easily remain compliant while experiencing e-invoicing benefits and opportunities.
Unifiedpost Group’s invoicing offering, and skills from team members such as Gerri, show businesses how they can benefit from e-invoicing, without any extra work. Invoice as you would do, but benefit from quicker payments, more seamless processes and less manual, admin tasks.
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Details correct as of the publishing date. For the most up to date regulations, view Italy's e-invoicing regulations information.