Mandatory VAT Reporting in Italy


June 19, 2023

In this blog post you can read more about the VAT reporting requirements in Italy. This is particularly relevant for companies that have subsidiaries in Italy, as they are the ones affected by the requirements.

In Italy, a “Centralized Exchange Model” is used. This model includes all transactions being validated and exchanged through one centralized platform. The scenario where invoices must be sent past a government authority for approval is called Continuous Transaction Controls (CTC).

In Italy, the SDI portal is the centralized platform. Since January 2019, it has been mandatory to exchange electronic invoices via this platform. Invoices exchanged within the borders of Italy must be registered in the SDI portal where the invoices are approved. Subsequently, you can choose to have your invoice forwarded from the SDI portal to your customer, or the customer can log on to the portal and collect their invoice themselves.

There was much discussion about whether this model should be introduced as a requirement. After the SDI portal came into force, more people in Italy have been able to see the benefits of introducing it as a requirement. Not only has it become easier for the authorities in Italy, but also the companies that send and receive invoices have noticed the benefits of electronic invoicing.

Electronic Invoice Formats in Italy

The format used in Italy is FatturaPA. It is an electronic invoice format that is country specific and is only used in Italy. This format covers both B2B (Business-to-Business), B2G (Business-to-Government) and B2C (Business-to-Consumer). However, the invoices sent B2C must not be sent through the SDI portal. Here it is only necessary to send the invoice to the portal, and the end customer will not receive the invoice through the portal.

New requirement for VAT reporting in Italy. Does your company meet this?

It is important to be aware that the requirements for electronic invoicing and VAT reporting in Italy have already been changed several times and may continue to change over time. These changes may take place as part of the government’s efforts to increase VAT control, fight VAT fraud or modernize the tax administration process.

A relatively new requirement is that companies in Italy that receive invoices from companies not registered in Italy must register these invoices in the SDI portal. This is just one example of new requirements and changes that may come. It is therefore important that companies with subsidiaries in Italy keep up to date on these.

What has Italy gained from VAT reporting requirements?

Italy’s VAT revenue has increased considerably, and Italy gained around €3 trillion more in VAT revenue in the first year after the introduction of the SDI portal. Due to the great success in Italy, there are also many other countries in Europe that have been able to see the benefits of introducing requirements for electronic invoicing and VAT reporting. Therefore, there are many countries that have followed suit and themselves introduced requirements for electronic invoicing and VAT reporting.

VAT reporting and electronic invoicing in Europe is developing rapidly, and therefore it is difficult for companies with companies in different countries to keep up-to-date on the many different and often country-specific requirements.

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