E-invoicing in Italy : a closer look at the SDI

Whom is the obligation for? What is its scope? 

Since July 1, 2018, hydrocarbon suppliers (natural gas and oil) and companies that rely on subcontractors to respond to public tenders have been obligated to issue invoices in electronic format. Starting on January 1, 2019, every company must comply with this requirement, whatever the scope of its activity is: B2B, B2C, or B2G (a relation between companies and public administrations).  

The SDI: a system dedicated to verifying and transmitting electronic invoices

Italy has implemented the SDI (Sistema di Interscambio), a platform on which invoices can be validated and transmitted to their recipients. The system is managed by Agenzia delle Entrate, a public organisation in charge of company tax compliance. 

Once an invoice is received on the SDI, its format is verified and its validity confirmed with the issuing company before it is transmitted to the recipient. If the invoice is not compliant with certain technical requirements relating to digitization, the issuer is notified of the problem.  

Verification is performed only on the invoice format, and not on the data it contains. Without validation by the SDI, the invoice is locked and cannot be added to the payment circuit.

Format and submission of electronic invoices

Electronic invoices transmitted via the SDI must be in XML format (eXtensible Markup Language) and must meet the schemas and rules defined in the technical specifications. They may be signed and include an attachment. File size is however limited: documents must not exceed 5 MB. 

Several possibilities exist for the transmission of invoices on the SDI: 

1. One XML file per invoice;
    
2. One XML file for a batch of invoices;
    
3. One ZIP file that can contain one or several XML files of the two previously mentioned types. In this case, the SDI transfers the decompressed files to the recipient rather than the archive. 

How are electronic invoices transmitted?

Issuer-side transmission channels

Files can be sent to the SDI via several channels: 

1. The PEC service is a message system that allows transmission date and time to be certified, files to be received, and their integrity to be verified. A certified address may be used to send several files up to 30 MB. 
    
2. The SdICoop service is a collaborative web service application operating on the secure hypertext transfer protocol (HTTPS). Only one file may be sent at a time using the system, and its size must not exceed 5 MB. Use of this service is recommended for smaller companies. 
    
3. The SdIFtp service is a data transmission system based on FTP (file transfer protocol). It is designed for larger companies and allows several files of up to 150 MB each to be sent.
    
4. Fatturapa is a web service where files can be transferred from a dedicated website. To access it, users must have an Entratel or Fisconline login or a national services card (CNS) issued by Agenzia delle Entrate.
    

Recipient-side transmission procedures

In order for a file to be received by the invoice recipient, the recipient must be designated when it is sent to the SDI. There are several possible cases:  

1. The recipient is saved in the SDI and has his/her own address;
    
2. If this is not the case, the issuer of the electronic invoice must specify either a PEC code or a recipient code provided by the SDI;
    
3. In a B2C setting, the issuer of the invoice must enter recipient code 0000000. The invoice will be directly transferred to the portal by the SDI. It is up to the issuer to send an electronic or paper copy to the recipient. 
    

What about foreign clients? 

In a cross-border client relation, those subject to VAT used to use Spesometro to submit invoices to the Agenzia delle Entrate. Now, all invoices issued in a B2B setting, including sales relations with clients abroad, must go through the SDI. On the other hand, invoices are not transmitted to foreign clients.

How are invoices kept over time? 

Electronic invoices transmitted via the SDI remain available for viewing by issuers and final recipients until December 30 of the year following their submission. For example, an invoice sent to the SDI on August 7, 2018 may be viewed by its recipient on the Agenzia delle Entrate portal until December 2019. 

It is also possible to sign an agreement with Agenzia delle Entrate to save invoices in the system for free. In this case, the law stipulates that electronic invoices be kept for 10 years. 

What about invoicing intermediaries?

If the electronic invoice can be issued directly by a company via the SDI, it is also possible to call on an outside service provider in charge of shipping and issuing delivery receipts. Generally, these are accounting firms, EDI providers, ERPs, etc. 

If this is the case, the issuing company is only responsible for the data transmitted. It is the service provider that transforms EDI invoices into the XML format before sending them to the SDI. 

What are the differences between B2G and B2B about e-invoicing?

Accepting and rejecting invoices

In a B2G setting, the public administration can reject an invoice. In a B2B setting, an invoice validated by the SDI cannot be rejected by its recipient, so long as VAT verification has been completed and saved. It is, however, possible to request a credit note or credit slip should there be an error. 

Electronic signature

In a B2G setting, every invoice issued must be signed electronically. This obligation does not apply in the case of B2B.

Registration in the SDI

Public administrations must be registered in the SDI to send invoices. This registration obligation does not apply to B2B companies.