On February 5, 2018, the European Commission backed Italy's e-invoicing mandate by recommending the EU Council approve Italy's derogation request from the EU VAT Directive. By way of background, Italy's mandate (which would become effective in two stages starting on July 1, 2018) requires taxpayers to provide, in real time, electronic invoices through the Italian Revenue Agency's tax platform (Sistema de Interscambio). Italy argues that this requirement is worthy of a derogation given the enormous potential to combat VAT fraud and evasion. It’s also worth noting that a number of EU Member States already require e-invoicing as part of their public procurement process.
As written, Italy's e-invoicing mandate violates Articles 218 and 232 of the EU VAT Directive. Article 218 requires that member states accept invoices in both paper and electronic form. Article 232 provides that electronic invoice shall only be used when affirmatively accepted by the customer. Italy remains hopeful of a permitted derogation prior to their July 1 start date. What remains to be seen is how widely and quickly e-invoicing requirements will spread across the rest of the continent should a derogation be granted.
About the Author
Brendan Magauran is a Junior Regulatory Counsel at Sovos Compliance specializing in international taxation, with a focus on Value Added Tax Systems in the European Union. Brendan received his B.A. and J.D. from Washington University in St. Louis and is licensed to practice in New Hampshire and Massachusetts.More Content by Brendan Magauran