As of 1 January, only one ‘fiscal’ road leads to Rome
Many organizations will remember 2018 as the ‘Year of Compliance’. After all, the implementation of GDPR regulations didn’t exactly go by unnoticed. Organizations that are either established or have branches in Italy are now facing the obligation to start e-invoicing as of 1 January 2019. The new requirements go way beyond simply sending invoices as a PDF file. They include checks by Italian tax authorities, regulations with regard to classification and numbering as well as very strict deadlines!
B2B and B2G
Formally speaking, the obligations are introduced by the Italian Budget Law for 2018 (205/2017) that modifies the legislative Decree no. 127/2015. While already in effect for the public subcontract sector and supplies of petrol or diesel fuel since 1 July 2018, the regulations will also apply to general B2B transactions as of 1 January 2019. From that day on, all accounts receivable invoices must be transmitted to the Italian tax authorities through an Interchange System called SDI (Sistema di Interscambio). To do so, e-invoices also have to meet specific format requirements: FatturaPA. Classifying AR invoices as either B2B or B2G (Business to Government) seems relatively easy. However, is your EBS, or any other ERP system, really capable of making the distinction? In other words: are your customer master data up-to-date? In most organizations it is not a priority as the necessity was not evident.
Moreover, tax authorities will use the e-invoicing information as the only source of truth for revenue and output tax in VAT declarations. You have to make sure that every AR invoice submitted to the SDI platform is included in your VAT declaration and the other way around. In daily practice this is no mean feat either. And how do you make sure that all revenue from your GL trial balance is used as the basis for your VAT declaration? So far, a lot of rejections in Spain, where similar regulations have already been in effect for some time, are related to incorrect customer tax registration numbers. To prevent such rejections, which take precious time to correct, VIES validation (VAT Information Exchange System) becomes more critical in the process. However, when using VIES, tax registration numbers can only be validated per customer or in small batches. Automating this process saves time and nuisance.
The reasons for taking action now are plentiful, for instance by mapping your current situation to establish what is still missing. Although compliance is mandatory as per 1 January 2019, sanctions will only become applicable from 1 July, leaving you with some additional time to organize a smoothly working process. At 4apps we have both the necessary EBS and VAT process expertise (we‘ve been there…). If you have any questions about your current situation and/or necessary measures, please mail to Henk Tiesma at firstname.lastname@example.org any time!