Mandatory VAT reporting in Italy

August 23, 2023

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

In Italy, a “centralized exchange model” is used. This model stipulates that all transactions are validated and exchanged through a centralised platform. The scenario in which invoices need to be sent to a public authority for approval is referred to as “Continuous Transaction Controls” (CTC).

In Italy, the SDI portal is the central platform. Since January 2019, it has been mandatory to exchange electronic invoices through this platform. Invoices exchanged within Italy’s borders need to be registered in the SDI portal, where the invoices are approved. Subsequently, you can choose whether to have your invoice forwarded from the SDI portal to your customer or if the customer logs into the portal and retrieves the invoice themselves.

After the introduction of the SDI portal businesses and local authorities recognised its benefits.

Electronic invoice formats in Italy

The electronic invoice format used in Italy is “FatturaPA.” This is a country-specific electronic invoice format used exclusively in Italy. This format covers B2B (Business-to-Business), B2G (Business-to-Government), and B2C (Business-to-Consumer) transactions. However, B2C invoices do not need to be sent through the SDI portal. In this case, it is only necessary to submit the invoice in the portal, and the end customer will not receive the invoice through the portal.

New requirement for VAT reporting in Italy – Is your company compliant?

It is important to note that the requirements for electronic invoicing and VAT reporting in Italy have been changed multiple times and may continue to change over time. These changes can occur as part of the government’s efforts to enhance VAT control, combat VAT fraud or modernise tax administration processes.

One new requirement is that companies in Italy receiving invoices from businesses not registered in Italy must register these invoices in the SDI portal. Therefore, it is important for companies with subsidiaries in Italy to stay abreast of any upcoming developments.

What has Italy gained from the VAT reporting requirements?

VAT revenue has increased significantly, and Italy gained around 3 trillion euros more in VAT revenue in the first year after the introduction of the SDI portal. Due to the success in Italy, many other countries in Europe have also recognised the benefits of implementing requirements for electronic invoicing and VAT reporting. As a result, many countries have introduced or are planning to introduce requirements for electronic invoicing and VAT reporting.

VAT reporting and electronic invoicing in Europe is undergoing rapid changes, making it difficult for companies with subsidiaries in different countries to keep up with the many different and often country-specific requirements.

To find out how you can stay ahead of the changing regulations, click here to speak to one of our advisors.

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