Regulatory electronic invoicing: what has changed?

In recent years, the Italian state has begun a long process of digitisation with the aim of dematerialising all administrative and bureaucratic processes. These include the transition from paper invoices to electronic invoices. But what are the regulations currently in place for e-invoicing and what are the current rules?

In our article, we will explain what has changed compared to the past and above all we will analyse the process behind the issuing and delivery of an electronic invoice.

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E-invoicing: the law of reference

Article 1(3) of Decree-Law No 127 of 5 August 2015, as amended by Article 1(909) of Law No 205 of 2017, states that:

the electronic invoicing obligation only concerns supplies of goods and services performed between persons resident, established or identified in the territory of the state.

Excluded from the electronic invoicing obligation are minimum/forfeit taxpayers and exempt farmers.

The tax legislation therefore requires the conversion from paper invoices to the XML version, i.e. the digital version, with a further change to the methods of issuing and delivering electronic invoices.

What changes?

The method of issue, as we have just seen, changes from paper or pdf to the .xml format.

The traditional method of delivery, i.e. by mail, by hand or by post, is replaced by the interchange system (SdI), a kind of virtual postman who takes care of forwarding the invoice to the customer and managing the notifications relating to the invoice in question.

Invoices that do not meet these criteria cannot be considered validly issued for tax purposes.

XML layout example

The invoice is managed in fields, the so-called targets, which collect all information relating to the header and the body of the invoice.

The digital signature

How is the digital signature handled?

There are two different cases

• in electronic invoicing to the public administration or PA invoice, the digital signature is mandatory
• in electronic invoices between private individuals and b2b invoices, the digital signature is not mandatory but is strongly recommended, as the signature guarantees the identity of the document and is indispensable for evidentiary purposes in case of legal disputes.

Who is responsible for the digital signature?

The signature on the electronic invoice identifies the issuer. In the case where the issuer of the invoice is a private individual, there is no doubt as to who the signatory should be. In the case, on the other hand, of a large company, which uses an accounting firm or accountants, the signatory may indistinctly be one of the two. There is no regulation that requires one of the two entities in particular to provide a digital signature.

Electronic storage

With the entry into force of the electronic invoice obligation, the obligation to store electronic invoices in xml format also comes into play. In some cases, it is also required to keep the invoice sending notifications.

To whom is this obligation imposed?

• all those who are obliged to issue electronic invoices are obliged to store them electronically
• all those who receive e-invoices from parties obliged to issue them are obliged to store them electronically

How is an electronic invoice stored?

An electronic invoice stored in the interchange system must be kept in digital format only in accordance with the provisions of DMEF 23 January 2004 (digital storage of tax documents) and DPCM 3 December 2013 (technical rules on storage systems).

From 1 January 2019, the legislation also stipulates that all electronic invoices that meet the following deadline must be retained: within 3 months of the deadline for submitting the tax return for the tax period. This means that companies will have to equip themselves with an in-house or outsourced storage facility for the electronic invoice xml files by December 2020, if we consider a calendar accounting year in which the tax return and accounting statement are filed at the end of the year. If the accounting year is not a calendar year, it will simply have to be re-calculated, always respecting the 3-month difference from the tax period declaration.

E-invoicing obligation in relation to territoriality

For the time being, electronic invoicing is mandatory for domestic transactions between Italian suppliers and customers. For intra-EU or non-EU sales and purchases, there is no obligation to issue an e-invoice, as the final rules have not yet been communicated. The European Union has not yet reached unanimous legislation on the subject. However, the possibility of sending xml files to intra-EU or non-EU customers as an alternative to the spesometer is being considered.

At present, electronic invoicing is only mandatory for commercial transactions within Italian borders.

Sending and handling an electronic invoice

To deliver an electronic invoice to the customer, there are three transmission channels

• the PEC or certified electronic mail
• the HUB, a technology that requires the use of a recipient code. It does not rely on an electronic mail service but on so-called web services. The advantage of the HUB is its ability to handle large volumes of document flows. Compared to PEC, no user management is required. The HUB works with the recipient code, PEC, on the other hand, with the PEC address.
• The third telematic channel is the reserved area of the Inland Revenue. Once the invoice in .xml format has been generated, the file can be uploaded in the dedicated space of one's personal area and the interchange system will take care of delivering it to the final recipient. This transmission channel is preferable if you produce a small number of invoices. If the invoices of a large company are involved, the use of the addressee code and HUB technology is preferable.

Through these three telematic channels, the electronic invoice reaches the interchange system.

How does the SdI complete the delivery of the invoice?

First of all, the interchange system will read the VAT number and the tax code of the customer to whom the invoice is addressed.

Once these two pieces of information have been identified, the interchange system will proceed to analyse the VAT number to see if it finds a match in its databases.

In fact, in one's own private area of the Inland Revenue, one can communicate one's preference for PEC or recipient code as the method of reception. If the customer has carried out this census process, the interchange system will recognise his addressee code or PEC and send the invoice in question via the chosen telematic service. If the customer is not censored, the Sdl will proceed to read the file in xml format or the "addressee code" field in which it will find either a recipient code or a PEC to which the invoice should be sent.

If in the xml file, the SdI does not find any addressee code or PEC or any other indication, the invoice is, nevertheless, delivered. The customer will find the invoice in the tax drawer. He will then have to log into his private area and download the invoice file.

In other words, if the customer is among those listed in the Sdl, he will not have to report anything, as the VAT number alone will be sufficient. If, on the other hand, he has not yet carried out this procedure, it would be advisable for him to indicate either a recipient code or a PEC address so that the SdI can deliver the invoice correctly, avoiding sending it to the tax drawer.

Processing times

As soon as the interchange system receives the electronic invoice, it starts analysing it for technical problems, i.e:

• check whether the fields have been filled in correctly,
• whether the amounts are correct,
• whether the VAT number exists,
• whether the digital signature certificate is valid.

If the invoice passes all these technical checks, the SdI proceeds to delivery. If it fails the technical checks, the SdI will send a rejection receipt to the person who issued the invoice.

SdI's maximum processing time is five days. Therefore, within five days of sending the invoice to SdI, you must receive either

• a delivery receipt, i.e. the invoice has been delivered to the addressee
• a non-delivery receipt, i.e. the invoice has been placed in the customer's tax drawer because the customer has not left his contact details. In this case, you will have to notify the customer, by a simple e-mail, that the invoice in xml format is available in his private area
• a rejection receipt, if the file has a serious technical problem

The role of dates

In the electronic invoicing process, dates are important because they

• they indicate the stages the e-Invoice may take
• they introduce greater rigidity in the management of the e-invoice
• they acquire a civil and fiscal significance from which it is not possible to escape.

Here, then, is the list of dates for electronic invoicing in consecutive order of evolution:

1. the date of issue of the document, i.e. the date shown on the document, which is the date on which the tax becomes due
2. the date/time of transmission to SdI, i.e. the date on which the HUB or PEC manager transmits the electronic invoice to the interchange system
3. the date/time of receipt by SdI, i.e. the date on which SdI has received the invoice, but has not yet carried out checks. At this stage, the invoice is marked with an SdI identifier and the document's HASH (sequence of binary codes that uniquely identifies the invoice) is generated. However, the e-invoice is not yet considered as issued
4. the delivery date/time, i.e. the date contained in the delivery receipt. is the date on which the electronic invoice is delivered to the recipient.This is the date that
   1. makes the invoice taxable
   2. is valid for tax deductibility
5. the date/time it is made available in the reserved area, i.e. the date contained in the non-delivery receipt. is the date on which the SdI makes the invoice available in the recipient's private area, having been unable to deliver it to another address.
6. the date/time of viewing the e-invoice in the private area, i.e. the date on which the recipient views the e-invoice in the private area. This date appears as a notification in the private area of both the receiver and the issuer.

By when must an e-invoice be issued?

According to the legislation, it is permissible to transmit the invoice at a later date (not within 24 hours), provided that the delay in transmission does not jeopardise the settlement of tax in the relevant period. In other words, the delayed invoice must be issued by the 15th of the following month in order for it to fall within the settlement period.

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All statuses of electronic invoices

Electronic invoices can take on various statuses to which regulatory obligations may or may not correspond. Here are all the configurations under analysis:

1. Invoice sent awaiting response. Both transferor and receiver have no obligations at this time
2. The invoice delivered to the receiver. For the transferor, there is an obligation to:
   1. VAT registration within 15 days from the date of issue
   2. VAT collectability
   3. electronic storage, i.e. storage of the xml file and the delivery receipt.
   4. For the recipient there are the same obligations
3. The rejected invoice. Only in the case of the discarded invoice do all obligations lapse, as the invoice is not considered to have been issued for tax purposes. However, two different scenarios can arise in this case:
   1. If the invoice is discarded not because of a content error, the transferor is obliged to retain it.
   2. If the invoice is rejected due to a technical error, the transferor may:
      1. correct the invoice, keeping the same number and date
      2. cancel the invoice, keeping a new document with a different date

Electronic invoicing is a subject that evolves very rapidly in terms of tax and administrative regulations. Therefore, we advise you to regularly watch all new changes in the field of e-Invoicing. And if you still have questions about e-Invoicing legislation, please do not hesitate to write to us in the feedback space.