Cross-border invoicing and reporting in Italy

August 11, 2021

Italy has introduced mandatory e-invoicing between Italian taxpayers in 2019, but cross-border transactions weren’t in the system’s scope. At the moment, Italy is using a clearance model for transactions in Italy, and is looking to introduce an expanded CTC (continuous transaction control) model for cross-border transactions. 

The Esterometro report

Transactions with foreign entities aren’t logged into the SdI (Sistema di Interscambio) platform, but they need to be logged separately in the Esterometro report. The Esterometro report is used for both input and output invoices with foreign companies. 

The data logged into the Esterometro report is similar to the data necessary to issue an invoice with the FatturaPA system, which is a part of the SdI, however it isn’t the strictly same. The description of goods or services in the FatturaPA scheme is more precise, and more document types are available. 

In 2022, the Esterometro report will be replaced; instead, cross-border invoicing information will be logged in FatturaPA and transmitted to the SdI. The goal of this change is for the Italian tax office to have better visibility into transactions with foreign entities, and receive more detailed information about money flows in and out of the country. This means that the Italian government is introducing CTCs through mandated reporting, instead of through mandated e-invoice clearance procedures. This approach is similar to the approach of Spain and Hungary, and has so far not received objections from the European Council. 

Reporting and invoicing obligations for cross-border transactions

The new reporting obligations mean that instead of submitting it through Esterometro, businesses will need to report data in FatturaPA. In this instance, the FatturaPA is not actually an invoice, but rather a reporting document. 

The buyer and the seller can, therefore, either use an e-invoice or a standard invoice, and electronic invoices for cross-border transactions are not mandatory. Both parties need to agree on the invoicing format that will be used, and they might decide to use FatturaPA, but aren’t obliged to do so. Reporting data, however, will only be possible through the FatturaPA system.

At the moment, no additional information is available in regards to the technical details of the FatturaPA reporting, which means that the current FatturaPA will likely be used as it is. The introduction of the 1.2.1 version of the FatturaPA came with new document types and additional classifications for integration documents. Italian businesses need to issue those integration documents when receiving foreign invoices. The Italian tax office provided a more detailed classification of all cross-border transactions that are not taxable, or for which the EU reverse charge mechanism applies. 

Replacing Esterometro with the FatturaPA system makes the SdI the central system for invoicing and reporting in Italy, for both domestic and cross-border transactions. Additionally, VAT returns will likely be pre-filled with data collected through the FatturaPA system. 

Fonoa Will Help You to Operate Compliantly in Italy

Thanks to our direct integration with Sistema di Interscambio (SdI), the Italian Revenue Agency, we can help you automate your invoicing processes in Italy. Our solution in Italy supports the issuance of both electronic invoices (Fattura Elettronica) and electronic receipts (Scontrino Elettronico). In that way, it will help you ensure that your business is safe from the high fines for invoicing non-compliance.

Our solution is 'plug&play', and doesn't require weeks of integration. Reach out to us and we will help you to stay compliant in Italy.