Author:
Dott.ssa Sabrina Iannuzzi
Pomara Scibetta & Partners
E: [email protected]
Edited by:
Integra International
Grant Gilmour, B.Sc., MBA, CA, CPA Canada, BC, CPA USA, Az, GDipICL.Sc.
INTEGRA TAX WORLD NEWSLETTER EDITOR
E: [email protected]
E-invoicing Overview and current developments: ITALY 2026
Italy as a model for ViDA: a consolidated experience
Italy’s comprehensive e-invoicing system serves as a preview of what the ViDA project will bring to the rest of the EU. Since 2019, Italy has implemented mandatory digital invoicing for B2B, B2C, and public administration transactions through the Sistema di Interscambio/Exchange system (SdI). Italy has also the One-Stop Shop (OSS) mechanism, which is already in place to simplify VAT obligations for businesses operating across multiple EU countries. This article explores Italy’s pioneering approach to electronic invoicing, from legal requirements to practical implementation, offering insights for the future of European tax compliance.
Introduction to E‑Invoicing: Definition – Legal Requirements – Key Standards – Impact and Purpose
Electronic invoicing in Italy consists of invoices issued, transmitted and stored exclusively in digital form through a standardized XML format.
Since 2019, the system has been a legal requirement for all VAT-registered businesses, which must exchange invoices via the government-managed platform Sistema di Interscambio (SdI).
Invoices must comply with the FatturaPA XML standard, be transmitted through the SdI infrastructure and be digitally archived for a mandatory retention period of ten years.
The introduction of this framework required businesses to adapt their invoicing software, accounting workflows and internal procedures to comply with the technical and legal standards imposed by the regulations. The SdI acts as a central exchange hub managed by the Italian Tax Authorities. Its purpose is to ensure transparency of transactions, significantly reduce VAT fraud and simplify tax compliance obligations for businesses operating nationwide.
Evolution Timeline: From EU Directive to Mandatory Implementation
Italy’s journey to mandatory e-invoicing spanned nearly two decades, beginning with EU-level authorization and progressing through carefully phased implementation. The initial focus on public administration transactions allowed the government to test and refine the SdI platform before extending requirements to the private sector. This measured approach helped identify technical challenges and develop solutions before full-scale deployment.
The transition from voluntary to mandatory e-invoicing in 2019 marked a watershed moment for Italian businesses. Companies that had participated in pilot programs were better prepared, while others faced a steep learning curve in adapting their systems and processes. The government provided support through free tools, extensive documentation, and grace periods for penalties, recognizing that successful implementation required both technological readiness and cultural change. (See here under detailed Timeline)
| Year / Period | Legislative Step | Description |
| 2001 | EU Directive 2001/115/EC | Introduced the possibility of electronic invoicing within the European Union. |
| 2004 | Legislative Decree 52/2004 | Italy implemented the EU directive, formally recognizing the legal validity of electronic invoices. |
| 2007 | Public Administration Introduction | First steps toward e-invoicing for transactions with public entities. |
| 2013 | Ministerial Decree 55/2013 | Established deadlines and technical rules for mandatory e-invoicing to Public Administrations. |
| June 2014 | Mandatory for Central PAs | Obligation introduced for invoices to central government bodies. |
| March 2015 | Mandatory for all PAs | Obligation extended to all local and peripheral Public Administrations. |
| 2017 | Voluntary B2B & Pilot | E-invoicing introduced for private sector transactions with incentives and pilot projects (Budget Law 2018). |
| January 2019 | Mandatory B2B/B2C | Nationwide mandatory e-invoicing via the SdI platform for all transactions. |
| July 2022 | Cross-Border E-Invoicing | Foreign transactions integrated into the system, replacing the Esterometro reporting. |
| January 2024 | Flat-Rate Taxpayers | Obligation extended to all taxpayers under the flat-rate regime, regardless of turnover. |
Key Milestones – January 2019: The Game Changer!
This bold move positioned Italy as the EU pioneer, anticipating the ViDA directive by nearly a decade. The decision to abandon the voluntary approach for a comprehensive digital system demonstrated Italy’s commitment to modernizing tax administration and combating VAT fraud through technology.
The mandatory implementation affected approximately 3.2 million businesses across all sectors and sizes. From multinational corporations to small family-owned shops, every VAT-registered entity needed to adapt to the new system. This universal requirement ensured comprehensive coverage of economic transactions and eliminated competitive disadvantages that might have arisen from selective adoption.
International observers watched Italy’s implementation closely, recognizing it as a potential model for other countries. The Italian experience has since informed policy discussions across Europe, contributing to the development of the ViDA directive and influencing e-invoicing initiatives in countries like Poland, France, and Germany. Italy’s willingness to pioneer this approach has accelerated the digital transformation of European tax systems.
Technical Requirements for E‑Invoicing
The technical requirements for Italian e-invoicing are comprehensive and designed to ensure data integrity, security, and accessibility. The XML format follows strict specifications that define mandatory fields, data types, and structural rules. This standardization enables automated processing and reduces errors that commonly occur with unstructured data.
1. Format & Transmission
Standardized XML format sent via Sistema di Interscambio (SdI). SdI checks and validates XML structure and rejects incorrect submissions.
2. Digital Signature
Mandatory for B2G (public administrations), optional for B2B & B2C transactions.
3. Mandatory Data Fields
Supplier & client tax codes, invoice details, invoices number and date, VAT information, payment method, and client’s electronic address (Recipient Code [alphanumeric code] or PEC/certified email). The Recipient Code may also consist of 7 zeros. It is important the companies register their code on the “Fatture e Corrispettivi” portal; otherwise, the invoice will not be delivered.
4. Storage & Archiving
Digital storage for minimum 10 years. The Italian government also requires all companies to maintain a Digital Invoice Register (DRF), which serves as an electronic archive for all electronic invoices sent and received by the company. This digital register aims to simplify the entire e-invoicing process by allowing companies to quickly access their financial transaction data at any time.
Invoice Types and Critical Deadlines
Understanding the distinction between immediate and deferred invoices is crucial for compliance and business operations
Immediate Invoice
Issued same day or within 12 days of transaction. Most common for single transactions requiring prompt processing.
Deferred Invoice
This type of invoice can be issued by the 15th day of the month following the month in which the transaction took place. A deferred invoice groups together multiple transactions carried out within the same month.
The validation timeline creates pressure for businesses to monitor their invoice submissions actively
Issue Date vs Transaction Date
The issue date is the date on which the invoice is sent to the Exchange System (SdI); the transaction date is the date on which the sale of goods or the provision of services is considered to have occurred.
Timeline for validation
The SdI takes from a few minutes up to 5 days to check and deliver the e-invoice. If rejected, the invoice is considered not issued, and the sender must correct and resend it within 5 days to avoid penalties
Penalties for E‑Invoicing Violations
Italy enforces e-invoicing compliance through a graduated penalty system that balances deterrence with proportionality. The penalties consider both the timing of violations and whether they affect VAT obligations, recognizing that some errors are more serious than others from a tax perspective.
| Type of Violation | Applicable Penalty | Conditions / Notes |
| Failure to issue the invoice, late submission, or errors affecting VAT reporting | 70% of the VAT due (minimum €300) | Applies to substantial violations impacting VAT calculation |
| Errors not affecting VAT settlement (formal errors) | €250 – €2,000 | Applies only to formal mistakes |
| Exempt / out-of-scope / reverse-charge transactions not properly documented | 5% of undocumented turnover (minimum €300) | If no impact on taxable income: €250 – €2,000 |
| Purely formal violations | No penalty | No impact on VAT or taxable income |
| Failure to digitally store e-invoices | €1,000 – €8,000 | Non-compliant digital archiving |
IT Solutions Implemented
The Italian e-invoicing ecosystem comprises multiple technology layers that work together to enable compliance. At the base sits the SdI platform, which handles over 2.5 billion invoices annually. This government-operated infrastructure provides guaranteed availability and security, though businesses cannot directly modify or extend its functionality. Instead, they integrate through standardized protocols and message formats.
For small businesses and individual practitioners, the Agenzia delle Entrate offers a free web-based portal that covers all essential functions. Users can create invoices using templates, submit them to SdI, receive delivery confirmations, and access their complete invoice archive. While this solution lacks advanced features like batch processing or ERP integration, it provides a zero-cost compliance path that has been crucial for widespread adoption.
Larger organizations typically choose specialized SaaS platforms that provide comprehensive e-invoicing management. These solutions handle XML generation from existing business data, apply digital signatures when required, submit invoices to SdI, monitor delivery status, manage incoming invoices, and maintain compliant long-term archives. Leading providers include Fonoa, Pagero, Sovos, TrustWeaver, DocuWare, Aruba, TeamSystem, Zucchetti, and Sistemi, each offering different feature sets, integration capabilities, and pricing models.
Enterprise resource planning (ERP) systems from SAP, Oracle, and Microsoft Dynamics have incorporated e-invoicing modules that integrate seamlessly with existing financial processes. These modules extract relevant data from sales orders, purchase orders, and accounting systems, format it according to Italian specifications, and handle transmission and archiving. This tight integration reduces manual data entry and ensures consistency between operational systems and tax reporting, though it requires careful configuration and ongoing maintenance to remain compliant as regulations evolve.
Reporting Standards Locally
In Italy, e-invoicing goes beyond digital invoices — it’s a full real-time tax reporting system. All invoices pass through SdI, giving the Tax Authority instant access to data.
The transformation of Italian VAT reporting demonstrates how e-invoicing can fundamentally change the relationship between taxpayers and tax authorities. Instead of businesses compiling their own VAT returns from internal records and submitting them to the government, the government now has the underlying transaction data and can prepare draft returns for businesses to review and confirm. This reversal reduces compliance burden while improving data quality and reducing errors.
The pre-filled VAT returns leverage artificial intelligence and data analytics to process millions of transactions and identify potential issues or inconsistencies. The system flags unusual patterns, missing information, or data that doesn’t align with previous periods, prompting businesses to review these items before submission. This proactive approach catches errors early and reduces the need for subsequent corrections or audits.
For businesses, the pre-filled return system offers significant time savings and improved accuracy. Accountants and tax professionals can focus on reviewing and validating data rather than manual data entry and calculation. The system handles complex VAT rules, applies correct rates, and ensures mathematical accuracy. Businesses retain full control and responsibility for their returns but benefit from the government’s data processing capabilities and quality checks. This collaborative approach represents a new paradigm in tax administration that balances automation with human oversight and professional judgment.
Cross‑Border Reporting
The integration of cross-border transactions into the SdI platform represents a significant expansion of Italy’s e-invoicing scope. Previously, businesses reported international transactions through the Esterometro (until 2022), a separate quarterly or monthly filing that listed foreign suppliers and customers along with transaction values. This dual system created complexity and opportunities for errors or omissions. The unified approach eliminates this duplication and ensures consistent treatment of all transactions.
For Italian businesses selling to foreign customers, the new system requires issuing e-invoices through SdI even when the customer is located outside Italy. These invoices use a special recipient code (XXXXXXX – seven X’s) to indicate foreign recipients. The system captures essential information about export sales, enabling the Tax Authority to verify VAT treatment, monitor trade flows, and cross-reference data with customs declarations and Intrastat reports.
On the purchase side, Italian businesses receiving invoices from foreign suppliers must create self-invoices (autofatture) and submit them through SdI. This requirement ensures that import transactions are captured in the same system as domestic purchases, providing complete visibility into input VAT claims. The system includes an exception for purchases below €5,000 that are not relevant for Italian VAT purposes, reducing administrative burden for small transactions while maintaining comprehensive coverage of material flows.
The consolidated reporting system provides the Italian Tax Authority with powerful analytical capabilities. Officials can track trade patterns, identify unusual flows, compare invoice data with customs and statistical reports, and detect potential VAT fraud schemes involving cross-border transactions. This visibility strengthens enforcement and helps Italy protect its VAT base in an increasingly globalized economy. The experience also positions Italy to integrate smoothly with the planned ViDA directive, which will create similar reporting requirements across the EU.
E‑Invoicing and Tax Audits: A New Paradigm
The transformation of tax audits represents one of the most profound impacts of Italy’s e-invoicing system. Traditional audits involved extensive document reviews, manual sampling, and significant time spent verifying the authenticity and completeness of records. Auditors would visit business premises, examine paper documents, and attempt to reconstruct transaction flows from various sources. This process was time-consuming, expensive, and often limited in scope.
E-invoicing enables a fundamentally different approach.
Greater Traceability
Every invoice digitally tracked from issuance to payment, enabling precise transaction reconstruction. Auditors can reconstruct transactions precisely and quickly, reducing ambiguity and grey areas in controls
Reduced risk of Errors and Fraud Risk
E-invoicing are generated automatically and validated by government platform; this prevent irregularities and manipulations. Benefits include less human intervention and real time validated data. Auditors shift the focus from document checks to risk and process analysis
Real‑Time Access
Tax authorities receive data immediately, enabling proactive audits and use of data analytics to identify anomalies (VAT fraud)
Automated Audits
Algorithms and AI process large data volumes to identify suspicious transactions and patterns
Audit Transformation
The shift from document verification to risk and process analysis has fundamentally changed how tax audits operate in Italy.
Auditors can now reconstruct transactions precisely and quickly, reducing ambiguity and grey areas in controls while focusing on strategic risk assessment rather than manual document checking.
Impact on the Accounting Profession
The Italian accounting profession has undergone a dramatic transformation in response to mandatory e-invoicing. Traditional roles centered on manual data entry, document processing, and basic compliance services have evolved toward higher-value activities requiring technical expertise, business insight, and strategic thinking. This shift has been challenging for some practitioners but has elevated the profession’s importance and value to clients.
Accountants now serve as technology advisors, helping clients select appropriate e-invoicing solutions, integrate them with existing systems, and optimize digital workflows. This requires understanding various software platforms, APIs, data formats, and integration architectures – skills that were previously optional but are now essential. Many accounting firms have invested heavily in training and have hired IT specialists to support their transformation advisory practices.
The compliance guardian role has become more sophisticated and analytical. Rather than simply preparing VAT returns from client-provided data, accountants now monitor real-time invoice flows, validate data quality, reconcile e-invoicing systems with financial records, and proactively identify potential issues before they result in penalties or audit findings. This continuous, data-driven compliance approach provides better client protection and reduces last-minute surprises during filing deadlines.
Perhaps most importantly, the reduction in manual data processing has freed accountants to provide more strategic value. With transaction data flowing automatically through e-invoicing systems, accountants can focus on analysis and interpretation rather than data collection. They can identify trends in client business performance, benchmark against industry standards, model tax planning scenarios, and provide forward-looking advice on business decisions. This evolution from compliance clerk to strategic advisor has improved job satisfaction, increased client value, and strengthened the accounting profession’s relevance in an increasingly digital economy.
Cross‑Border E‑Invoicing Requirements
Italy’s extension of e-invoicing to international transactions creates comprehensive transparency for global operations. This system ensures that cross-border trade receives the same level of scrutiny and validation as domestic transactions, strengthening VAT enforcement while maintaining compliance pathways for businesses.
The treatment of cross-border transactions under Italian e-invoicing rules reflects the complex reality of international trade within the EU single market and global supply chains. The system must balance comprehensive reporting requirements with practical considerations of foreign suppliers who may be unfamiliar with Italian systems and language requirements.
For active transactions (exports and EU supplies), Italian businesses issue e-invoices through SdI exactly as they would for domestic sales, but with the special XXXXXXX recipient code indicating a foreign party. The invoice must still comply with all technical requirements including XML format, mandatory data fields, and proper VAT treatment codes. The system captures these export transactions, enabling reconciliation with Intrastat statistical reports and customs declarations for extra-EU shipments.
Passive transactions (imports and EU acquisitions) require more complex handling because foreign suppliers typically do not issue invoices through the Italian SdI system. Instead, Italian businesses must create self-invoices (autofatture) that document the transaction for Italian VAT purposes. These self-invoices must include all required information about the foreign supplier, the goods or services acquired, and the applicable VAT treatment. The self-invoicing requirement ensures complete capture of input VAT claims while accommodating the reality that foreign businesses cannot be compelled to use Italian systems.
The €5,000 threshold for small purchases provides practical relief from the self-invoicing requirement for immaterial transactions. This exception recognizes that comprehensive reporting of every minor cross-border purchase would create disproportionate administrative burden relative to tax risk. However, businesses must carefully track these small purchases to ensure they remain below the threshold and properly document why self-invoicing was not required if questioned during an audit.
Currency and Language Requirements
The currency requirements reflect Italy’s position within the Eurozone and the practical needs of tax administration. VAT calculations and reporting must use a common currency to ensure accuracy and comparability. The mandatory use of Euro in e-invoices enables the Tax Authority to process transaction data automatically without currency conversion complications. For international transactions originally negotiated in foreign currencies, businesses must convert amounts to Euro using appropriate exchange rates at the time of transaction.
The language requirements acknowledge that while Italy participates in international trade, its tax system operates in Italian. Mandatory fields such as tax codes, VAT classifications, and payment terms must use Italian terminology to ensure consistent interpretation by the SdI system and Tax Authority. However, descriptive fields like product names and service descriptions can include foreign language text, particularly when dealing with technical or specialized items where Italian translations might not accurately convey meaning.
The courtesy PDF solution provides a practical compromise for international business relationships. Many foreign customers prefer to receive invoices in their own currency and language, both for payment processing and internal accounting. By allowing businesses to attach PDF versions showing original currency and language alongside the official Euro/Italian XML invoice, the system accommodates commercial needs while maintaining compliance with Italian tax law. This dual approach has reduced friction in international transactions and improved customer satisfaction without compromising tax administration effectiveness.
Exchange rate determination follows standard EU rules, using either the European Central Bank reference rate for the date of the transaction or the last available rate published in the month preceding the transaction. Businesses must document their chosen method and apply it consistently. For companies with high volumes of foreign currency transactions, this can create significant accounting complexity, driving adoption of specialized treasury management systems that integrate with e-invoicing platforms to ensure accurate conversion and proper documentation.
Cross‑Border Technical Specifications
For international transactions, Italy maintains strict technical requirements while accommodating global business needs.
EU Counterparties
- VAT number must be included with country code
- Standard XML format via SdI
- Recipient code requirements apply: “XXXXXXX”
Non‑EU Counterparties
- No Vat Number, use code “OO99999999999”
- Standard XML format via SdI
- Recipient code requirements apply: “XXXXXXX”
Courtesy PDF invoices can show foreign currency and may be attached to XML e-invoices for client convenience.
Benefits Realized
Italy’s comprehensive approach has delivered measurable improvements in tax compliance, business efficiency, and data quality across all sectors.
First, VAT Gap Reduction: significant decrease in tax evasion through improved transparency and real-time monitoring
Second, Process Automation: reduction in manual processing time for businesses and tax authorities
Third, Data Reliability: complete traceability and validation of all business transactions through SdI
Italy’s E-Invoicing Impact: Key Figures and Results (2022–2023)
Five years of mandatory e-invoicing have generated impressive quantitative results that demonstrate the system’s effectiveness and widespread adoption across the Italian economy. These figures, provided by the Ministry of Economy and Finance (MEF) and the Italian Tax Authority, offer concrete evidence of the transformation achieved.
Disclaimer
This communication contains general information only based on collective research. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No representations, warranties or undertakings (express or implied) are given as to the accuracy or completeness of the information in this communication, and none of Pomara Scibetta & Partners, Integra International, related entities, employees or agents shall be liable or responsible for any loss or damage whatsoever arising directly or indirectly in connection with any person relying on this communication.
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About the Author:
Dott.ssa Sabrina Iannuzzi
Graduated “cum laude” at L. Bocconi University with degree in Economics and Business Administration (Finance degree). Registered in the Milan Order of Professional Accountants and Tax Advisors and the Auditors’ Register since 2009. She is a Statutory Auditor of important Italian companies.
Her practice includes tax and corporate advice, M&A transactions and international tax planning. She has also acquired experience in tax litigation, business valuation and drafting of expert appraisals in the context of corporate finance transactions.
In 2015, she started collaborating with Italian Chambers of Commerce abroad, developing expertise in foreign markets and supporting clients in international expansion. She later served as Representative for the Italian Chamber of Commerce in the UAE for a few years.
She is also CEPAS Bureau Veritas certified as Chief Value Officer (CVO – CSRD). In this role she supports companies in defining, measuring and communicating the value generated through sustainability, integrating ESG principles into strategy, governance and business processes. Her activity includes supervising the preparation of sustainability reports, assessing internal and external impacts and assisting organizations in transitioning toward business models where sustainability becomes a strategic driver of long-term value creation.
About Pomara Scibetta & Partners:
Established in 1950 as Studio Pomara, in 1975 the firm became Studio Pomara Scibetta as a partnership of professionals; in 2011 the firm became Pomara Scibetta & Partners and opened its new offices in the center of Milan.
Pomara Scibetta & Partners offers a wide area of professional advice on corporate and tax matters. The Firm is currently composed of corporate professionals and tax advisors that, by means of their respective specializations assist clients on several fields, in local contexts as in the international environment. The firm provides its services to small-medium and large-sized companies and also multinational groups.
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