Italy publishes clarifications on their e-invoicing regulations

August 18, 2014  |  Compliance, Electronic Invoicing, Europe, Legal

On June 24, 2014, Circular 18/E is published. It contains several clarifications of electronic invoicing in Italy. Furthermore, the previous ministerial decree of the January 23, 2004 on the electronic storage of documents (invoices included) has been replaced by a new ministerial decree dated June 17, 2014, effective from June 27, 2014.

Effective business controls

Circular 18/E of June 24, 2014 contains important clarifications and some simplifications to the electronic invoicing procedure. In particular, the Italian Revenue Agency has defined the concept of “business control” for the first time: a system to guarantee the main requirements of the authenticity, integrity and legibility of an electronic invoice.

A “business control” creates a reliable audit trail that documents, step by step, the entire history of a transaction: from the early beginning (for example a purchase order) until the end of it (for example the final registration in the annual books) in order to create a logical link among all the documents of a transaction. This definition faithfully reflects the content of the EU Explanatory notes about electronic invoicing.

According to the Italian Revenue Agency, a correct “business control” can be created by, for example:

  • an ERP system that creates and keeps all the cross-references among the documents produced in the course of the transaction;
  • a control register of the modifications made to the documents created and contained in the ERP system;
  • a control register of the modifications made to the business data contained in the ERP system concerning invoicing;
  • a control register of the activities done by the ERP, such as linking a purchase order to an invoice.

An alternative to the above business controls is the advanced electronic signature or the EDI.

Integrity, authenticity and legibility

The new decree of June 17, 2014 states which features of the electronic invoice are necessary for tax purposes: integrity, authenticity and legibility. If any of these requirements is not met, the invoice cannot be considered “electronic” but has to be printed on paper. In Italy, electronic invoices have to be stored electronically.

Reduction of imprint, timestamp

Furthermore, the new decree has cancelled the obligation to send the “imprint” of the time reference to the Italian Revenue Agency along with the related electronic signature. In other words: the obligation to affix a time reference, or even better, a “timestamp” has not been cancelled but, according to the new rule, the timestamp is required just once per year and it is no longer obligatory to send the “imprint” data of it to the Italian authorities.

Dematerialisation: qualified electronic signature

This one is a bit off: article 4 of the new decree states that the “dematerialization of the paper documents” and their consequent electronic storage is possible but it has to be concluded by adding a qualified electronic signature. So, when digitise your paper document and consequently want to store them, you need a digital signature.

Storage of electronic invoices

The Italian decree provides that the “storage procedure” for the electronic documents has to be done with a time reference that has to be affixed to the set of the documents once a year, within 3 months of the filing deadline for the annual tax return. According to the previous rules, the time reference had to be affixed every 15 days.

Article 5 provides that, in the case of electronic storage of the documents, the operator is obliged to communicate his intention to the Italian Revenue Agency by declaring it in the annual tax returns. In the event of an audit or a control, the electronic documents have to be made “readable” and, if requested by the officials, printed on paper or saved on a storage medium at the registered office of the company or in the place in which the documents have been stored (place that has been previously declared to the authorities).

If a taxpayer chooses to store the documents outside Italian territory, the rules provided by the Italian legislation (and the related requirements) still have in to be applied. Furthermore, the Italian Revenue Agency must be allowed electronic access to the documents.

As a consequence, taxpayers who are resident or established in Italy are obliged to (1) inform the Italian authorities of the place where the documents are stored (by filing the AA7 form) and (2) ensure the automatic access to the electronic archive by any means, at any time and from the premises where the audit is held.

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