Italy: Invoicing In Italy - New Rules From 2013

1. INTRODUCTION

Starting from January 1st 2013 new rules have been enforced for the invoicing procedure. With this monograph we'd like to analyse the main news (comparing them with former rules) and we grab the occasion to make a summary of the entire invoicing process. Probably some additional details will be provided when official clarifications will be issued by relevant authorities.

We'd like to remind that some information (such as the essential elements to be included in the invoice) are relevant for all businesses, while others will be relevant just for some of them (i.e. for what concerns exchanges with foreign clients).

2. INVOICE'S NEW CONTENTS AND ITEMS

The new rules affect article 21 of the Italian Republic Presidential Decree nr. 633/1972 (know also as VAT General Law) and in particular the essential items that have to be included in every invoice. Exchanges made in a single day toward the same customer, can be summarised in a single invoice. The invoice, on paper or electronic, is considered as issued at the time of its delivery, posting, transmission to the customer or in any case when it becomes available for the customer.

Here below you can find the essential/mandatory items that have to be included in every invoice.

a) Date of issuing

b) Identification number (please note that this hasn't now necessarily to restart every year)

c Information that identify the issuer/supplier

  • Exact name of the supplier
  • Name and surname in case of individual business
  • Residence or domicile address of the supplier, of the Fiscal Representative (if any) and the exact address of the Italian office in case of permanent establishments of foreign legal entities

d) VAT identification number (released by the Italian VAT Authority) of the supplier

e) Information that identify the customer

  • Exact name of the customer
  • Name and surname in case of individual business
  • Residence or domicile address of the customer, of the Fiscal Representative (if any) and the exact address of the Italian office in case of permanent establishments of foreign legal entities

f) VAT identification number (released by the Italian VAT Authority) of the customer or of its Fiscal Representative in Italy (if any).

or,

a. In case the customer is a VAT subject in another member state of the European Union, VAT identification number as obtained from the domestic authority

b. In case the customer is an individual (not a business), its tax code as obtained from the domestic tax authority

g) nature, quality and quantity of goods and/or services sold (in case of more that one VAT rate applicable, goods and services have to divided according the applicable rate)

h) amounts and other information useful to determine the VAT taxable amount, including discounts, allowances or rebates under article 15, first sentence, paragraph 2 of the Republic Presidential Decree 633/1972

(in case of more that one VAT rate applicable, goods and services have to divided according the applicable rate)

i) amounts related to discounts, allowances or rebates

l) VAT rate, taxable amount and VAT amount rounded at Euro's cents

(in case of more that one VAT rate applicable, goods and services have to divided according the applicable rate)

m) only for vehicles' sales date of the first matriculation or registration in public registers and number of kilometres, sailing or flying hours in case of exchanges of new vehicles' within the European Union.

3. WHEN THE INVOICE IS MANDATORY

Invoice has to be issued with relation to some particular exchanges even when the amount is not subject to VAT; those invoices must include some specific indications, while the reference law is discretionary although suggested.

Starting from 2013 there are additional cases when the invoice becomes mandatory and a specific description on the exemption from VAT must be included.

To this extent management softwares have to be updated according the following schedule.

Case

COMPULSORY description

Discretionary law reference

Sales of goods in transit or stored in places under customs' surveillance

Exchange not subject to VAT (out of the scope of VAT)

art. 7-bis, paragraph 1, DPR 633/1972

Sales for export

Exchange not taxable for VAT

art. 8, DPR 633/1972

Exchanges equivalent to sales for export

Exchange not taxable for

VAT

art. 8-bis, DPR 633/1972

International services or connected to international exchanges

Exchange not taxable for VAT

art. 9, DPR 633/1972

Sales to extra-EU travellers in transit

Exchange not taxable for VAT

art. 38-quater, DPR 633/1972

Exempted exchanges

Exempted from VAT

art. 10 points from 1) to 27-sexies) (with exclusion of point 6), DPR 633/1972

Regimen of margin

Regimen of margin – used Goods

Regimen of margin – Artworks

Regimen of margin – antiquities or collection goods

DL 41 dated 23.02.1995

Exchanges of travel agencies

Regimen of margin – travel agencies

Art. 74-ter DPR 633/1972

Sales of goods and services not subject to VAT under articles from 7 to 7-septies of DPR 633/1972 (different from the ones under article 10, points from 1 to 4 and 9) toward a VAT subject of another member state

Reverse charge

Several cases

Sales of goods and services considered EXTRA EU

Exchange not subject to VAT (out of the scope of VAT)

Several cases

In case of self-invoicing (see below), the document must include the statement "self-invoice".

4. THE ELECTRONIC INVOICE

The invoice can be issued on paper or electronically.

The only acceptable electronic invoice is only the one issued and received in an electronic format; the use of the electronic invoice is subordinated to the acceptance of the electronic document by the receiver. Therefore, independently from the way the document is generated, we'll have an electronic invoice only when the receiver has accepted this format.

5. INVOICES' STORAGE

For invoices' storage we'd like to remind the followings:

  • Electronic invoices have to be stored with an electronic procedure conformed to the one set by the Ministry of Economy issued under article 21, paragraph 5 of the Legislative Decree nr. 82 dated March 7th 2005;
  • Both electronic and paper invoices can be stored electronically;
  • Period of storage: the tax law foresees that all documents and the general ledger must be available and stored until the related period for a tax audit is expired. In case a tax audit has already started, this term expires together with the last step of trial (Supreme Court). We'd like to remind that terms for ordinary tax audit expire on the 31st of December of the 4° year following submission of the tax return related to the year under consideration (therefore about 5 years), increased of another year if the return has been missed (therefore 6 years). In example tax audits related to the fiscal year 2010 can take place until the 31st of December 2015, or 2016 if the relevant return has not been submitted. In case of criminal relevance, the above mentioned terms are doubled therefore 10 or 11 years. In the above mentioned example 31st December 2020 (or 2021). Therefore we strongly recommend to store documents for at least 10 years, considering that documents related to employees have to be stored forever.

6. WHEN THE INVOICE HAS TO BE ISSUED

The invoice has to be issued (meaning that the invoice has to be sent, posted or notified to the counterpart) when the exchange is considered completed under article 6 of the D.P.R. 633/1972.

This means:

Case

When the invoice has to be issued

Sale of real estate properties (land or building)

Public Notary deed, saved those cases deferring the ownership transfer

At payment (even partial) if preceding

At invoice's issuing if preceding

Sale of goods

Shipment or delivery, saved those cases deferring the ownership transfer, in any case not exceeding one calendar year from shipment or delivery

At payment(even partial) if preceding

At invoice's issuing if preceding

Periodical sales with distribution agreements

At payment if preceding

At invoice's issuing if preceding

Sales under estimation agreements

When the goods are sold to a third part (final customer)

At the end of the period agreed by parties if goods are not returned to the first seller

In any case after one year following the shipment or delivery

Sale of services to Italian customers

At payment

At invoice's issuing if preceding

General services (art. 7-ter), sold to foreign customers §

When the service is completed/performed

At payment (even partially) if preceding

General services (art. 7-ter), sold to foreign customer, periodically or continuatively

When amounts mature

At payment (even partially) if preceding

General services (art. 7-ter), sold to foreign customer, continuatively for period exceeding the calendar year with payments

Closing of the calendar year for the amount matured until that moment

The above-mentioned rules suffer some exceptions summarised in the following table:

Cases

When the invoice has to be issued

Sales of goods made to the same customer within the same calendar month, if supported by the transportation's documentation (letter of transportation or Italian D.D.T.).

Summarizing invoice to be issued within the 15th day following the shipment or delivery

Sales of services supported by adequate documentation made to the same customer within the same calendar month

Summarizing invoice to be issued within the 15th day following the moment when the service is considered concluded or performed (new case).

Domestic triangular sale

Invoice has to be issued within the last day of the month following the shipment or delivery

General services (art. 7-ter) sold customers subject to VAT in another member state of the EU

Invoice has to be issued within the 15th day of the month following the performance of the services

Services sold to Extra EU customers

Invoice has to be issued within the 15th day of the month following the performance of the services

7. VAT ANNUAL TAXABLE AMOUNT AND THE STATUS CUSTOMARY EXPORTER

Starting from January 1st 2013 the annual taxable amount for VAT (in Italian "Volume d'affari IVA") will include all exchanges even if not territorially not relevant (reference is made to all hypothesis under articles from 7 to 7- quinques of the Italian General VAT Law – Republic Presidential Decree nr. 633/1972), being now excluded, as in the past, only the sales of assets.

This increase of the general amount taxable for VAT, does not change the definition or the status "customary exporter" (as explained below), that allows the Italian VAT subject to purchase goods and services from other Italian supplier without VAT, preceded by a letter of intents.

In fact, the status of customary/habitual exporter (a VAT operator that frequently works with foreign customers, and, therefore matures a structural VAT credit), is acquired when sales of goods to foreign customers, processed in the previous year, exceed the 10% of the general VAT taxable amount (Volume d'Affari).

8. CONVERSION OF AMOUNTS IN FOREIGN EXCHANGES

In order to calculate the VAT taxable amount, prices shown in a foreign exchange have to be converted:

  • According the official exchange rate of the day relevant for taxation (shipment or delivery for goods and performance for services)

Or, in case of no evidence in the invoice

  • According to the official exchange rate of the date of the invoice.

In case both the above mentioned elements are missing, the conversion must be made at the nearest available official exchange rate. The conversion in Euro, for all exchanges made within a calendar year, can be made according to the official exchange rate published by the European Central Bank.

9. PURCHASES MADE ABROAD: SELF-INVOICES AND INTEGRATION

According to general VAT rules, the Value Added Tax is due by seller (goods or services); for this reason VAT is included in the invoice issued by the seller.

However, there's a first exception to this rule, in case of sales of goods or services made within the Italian territory by foreign VAT subject to Italian VAT subjects/customers; in these cases, VAT is applied by the Italian resident customer issuing a self-invoice.

In order to facilitate procedures, if sales of goods or services are made by a VAT supplier established within the EU, the Italian resident customer pays VAT through the integration of the purchase invoice received from the EU supplier.

Therefore we can summarize the following:

Cases

Subject that charges/applies VAT

Procedure

Sales of goods relevant in Italy by an Extra EU supplier to an Italian VAT customer

Italian Operator subject to VAT

Self-invoice

Sales of services relevant in Italy by an Extra EU supplier to an Italian VAT customer

Italian Operator subject to VAT

Self-invoice

Sales of goods relevant in Italy by an EU supplier to an Italian VAT customer

Italian Operator subject to VAT

Integration of the invoice received from the foreign supplier

Sales of services relevant in Italy by an EU supplier to an Italian VAT customer

Italian Operator subject to VAT

Integration of the invoice received from the foreign supplier

Although the final result in terms of VAT to be paid to authorities is the same, we'd like to remind that the self invoice implies the issuing of separate new document in just one copy, while the integration consists in using the document received from the supplier (starting from 2013 only EU suppliers), adding to the same document all relevant information (VAT rate, VAT amount, total amount of the document) according to rules applicable to EU purchases that will be analysed in the following pages.

10. EU EXCHANGES : RELEVANT MOMENT

Sales of goods within the European Union are considered as "made", therefore become relevant for VAT, at the beginning of their transportation or shipment to the customer or to third parties on its behalf, from the Italian territory.

Purchases of goods within the European Union are considered as "made", therefore become relevant for VAT, at the beginning of their transportation or shipment to the customer or to third parties on its behalf from the member state of origin. Until December 31st 2012 the relevant date was the one when goods arrived at their destination.

In case the invoice is issued before the goods' shipment or delivery (according to rules mentioned above) the exchange is considered "made" and becomes relevant for VAT, at that moment (for the amount invoiced). Sales and purchases within the European Union, made uninterruptedly during a period exceeding a calendar month, are considered as "made" at the end of each month.

11. EU EXCHANGES: TERMS FOR INVOICING AND REGISTRATION

The Italian Law regarding EU purchases, sets the term within which invoices received from the European supplier have to be registered in the sales VAT book, so that the tax can concur to form the VAT debt due for the period; the registration on purchases VAT book is under the discretion of the purchaser who intends to exercise its right to recover VAT on purchases (this is not compulsory).

Rules on recoverability of this VAT change according to the followings:

1. The EU invoice is received within the terms;

2. The EU invoice is received out of the terms;

3. The EU invoice is received within the terms, but with an amount lower than the actual one.

In the following table we summarize the different cases:

GRAPH

Cases

What to do

Deadline

Invoice normally received from the EU supplier

the invoice has to be enumerated and integrated;

the invoice has to be completed with the VAT rate according to goods purchased;

in case of exemption from VAT, this has to be specified in the invoice (although no reference to the specific law is needed, this is strongly recommended)

the invoice has to be compulsory registered in the VAT Register of Sales

Before its registration in VAT registers

Within the 15th day following the date of receiving and with reference to the previous month

The invoice is not received (or is missed)

if the purchase invoice is nor received within the second month following the exchange, the purchaser has to issue the same invoice in one copy

this invoice has to be compulsory registered in the VAT Register of Sales

Within the 15th day of the month following the exchange

Within the issuing term and with reference to the previous month

The invoiced is received on time but with a lower amount

the purchaser has to issue an integrative invoice

this invoice has to be compulsory registered in the VAT Register of Sales

Within the 15th day of the month following the registration of the original invoice

Registered with the month of issuing and with reference to the previous month

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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