Electronic invoicing, also known as e-invoicing, has become an essential part of business transactions in Italy. As a freelancer operating in Italy, understanding electronic invoicing is crucial for compliance with the country's tax laws. In this guide, we will provide you with everything you need to know about electronic invoicing as a freelancer in Italy.
What is electronic invoicing in Italy?
An electronic invoice is a document in xml format produced via your computer, smartphone or tablet and sent to a Sistema di Interscambio (SdI) of the Agenzia delle Entrate, which takes care of verifying that the document is formally correct and that the VAT numbers indicated really exist, and then forwards the invoice to the recipient.
The concept of electronic invoicing was introduced with the 2008 Financial Law, after a request from the European Union, with the aim of managing the complex billing system more efficiently and making the related tax controls more effective.
In fact, electronic invoicing offers several advantages in this regard, in addition to avoiding the typical errors of paper invoicing.
Benefits of electronic invoicing in Italy
Electronic invoicing offers several benefits to freelancers in Italy, including:
- Cost savings - Electronic invoicing eliminates the cost of printing, mailing, and storing paper invoices with the consequent reduction of environmental and economic impact. It also reduces the risk of errors, which can lead to costly disputes.
- Time savings - Electronic invoicing saves time by automating the invoicing process. It also reduces the time spent on administrative tasks, allowing freelancers to focus on their core business activities.
- Compliance with tax laws - Electronic invoicing is mandatory in Italy for businesses that sell goods or services to other businesses or public entities. Using electronic invoicing ensures compliance with the country's tax laws. The greater ease of control and transparency during transactions results in reduced tax evasion.
- Improved cash flow - Electronic invoicing speeds up the payment process, reducing the time it takes to receive payment. This can improve cash flow and help freelancers manage their finances more effectively.
- Environmental benefits - Electronic invoicing is a more environmentally friendly option than paper-based invoicing. It reduces paper consumption and carbon emissions associated with printing and mailing paper invoices.
- Reduction of the tax assessment period - from 5 years to 4 or even 2 years in some cases.
Regulations on electronic invoicing for freelancers in Italy
Almost all self-employed professionals have been obliged to issue electronic invoices since July 1st, 2022, in order to receive payment for a service performed for a customer. Electronic invoicing is not an immediate practice, especially for beginners: in this comprehensive guide we see in detail what is and how the electronic invoice works, how to read it correctly and what is the unique code for electronic invoicing. Understanding the requirements of electronic invoicing is essential to be compliant with the country’s tax laws, to avoid penalties and ensure smooth business operations. In this article, we will explore the requirements of electronic invoicing for freelancers in Italy.
Which freelancers are obliged to issue e-invoicing in Italy?
Until the first half of 2022, not all self-employed professionals who had a VAT number were obliged to issue electronic invoicing: some were exempt from this practice and could issue a simple paper invoice.
As we said above, however, things have changed since July 1st, 2022, and even some of the previously exempted categories of self-employed are obliged to issue electronic invoices, as we will see in a later paragraph.
Who is excluded from electronic invoicing?
Doctors, psychologists, physiotherapists and all other healthcare professionals are not only exempt but, since 2019, have an express ban on issuing electronic invoices to private customers (B2C). In the case of NON-private customers, the obligation to issue electronic invoices will remain.
Who is not excluded from electronic invoicing?
For all other professional categories in possession of VAT, even in a flat-rate system, there is the obligation of electronic invoicing according to the established timing and modalities, on pain of incurring severe penalties.
What are the consequences of non-compliance with electronic invoicing requirements in Italy?
Non-compliance with electronic invoicing requirements in Italy can result in penalties and fines. The Italian Revenue Agency can impose penalties of up to €2,000 for each invoice issued or received incorrectly. Additionally, non-compliance can lead to delays in payment processing and damage to business relationships.
In conclusion, complying with electronic invoicing requirements is a crucial aspect of doing business as a freelancer in Italy. By understanding the legal and technical requirements and using a certified electronic invoicing system, freelancers can avoid penalties, ensure compliance with tax laws, and streamline their invoicing processes.
What are the legal requirements for electronic invoicing in Italy?
Freelancers must use a certified electronic invoicing system to issue and receive electronic invoices. Certified electronic invoicing systems are required to ensure the authenticity, integrity, and confidentiality of electronic invoices.
There are two types of certified electronic invoicing systems in Italy:
- SdI (Sistema di Interscambio) - This is the national platform for the exchange of electronic invoices between businesses and public entities. To use this system, you must register with the SdI and obtain a digital certificate.
- FatturaPA - This is the electronic invoicing system used by public entities in Italy. To issue invoices to public entities, you must use the FatturaPA system.
What are the technical requirements for electronic invoicing in Italy?
To comply with electronic invoicing in Italy, freelancers must meet the following technical requirements each time they create an electronic invoice:
- XML format - Create electronic invoices in the XML format, which is a standardised format for electronic documents. Freelancers can create electronic invoices manually or use electronic invoicing software that generates invoices in the XML format automatically.
- Digital signature - Sign electronic invoices with a digital signature to ensure their authenticity and integrity.
- Electronic storage - Store electronic invoices electronically for at least 10 years from the date of issuance.
- Data exchange - Exchange electronic invoices through a certified data exchange system, such as the SdI or FatturaPA.
Freelancers: how to read an e-invoice
For a novice freelancer, reading an electronic invoice may seem complicated, but it is, in fact, a very simple procedure. Just log in to the Italian Revenue Agency (Agenzia delle Entrate) website and, after logging in, enter the "Invoices and Fees" tab, by clicking on the Consultation icon. Here, the freelancer with VAT can find all invoices and receipts issued easily and quickly.
One can find two links in this section:
• Relevant data for VAT purposes - clicking there one will access a summary page, in which all invoices issued and received during the last quarter, are listed. It is also easy to read the previous electronic invoices: the system, in fact, allows you to set a range of dates, so as to display all the invoices related to the selected period. Not only that: it is also possible to carry out an advanced search, entering data such as the customer’s VAT number or the identification number that, the Interchange System, has assigned to the invoice. Moreover, all the details are visible for each invoice and, clicking on the magnifying glass icon, you can open the document and view it in full. An important thing to note concerns the status of the invoices: those marked with the green check mark symbol are the documents regularly delivered, while those marked with the red alert symbol are the invoices not delivered and to be viewed.
• monitoring the transmitted files - which allows you to access a dedicated page for searching documents in the archive. By selecting the item "Invoice file" you can set a range of dates and view all receipts relating to invoices, such as waste, delivery, and impossibility to deliver, issued during the selected range time.
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How to open xml and xml.p7m files to read e-invoices?
One of the reasons why it is difficult to read e-invoices is because of their formats, xml and xml.p7m, which are apparently difficult to open. In addition to considering the option of online consultation via the website of the Revenue Agency, you can use free tools to open xml and xml.p7m files. The two formats differ mainly in that, while the first allows you to read the actual electronic invoice, the second concerns digitally signed documents.
In both cases, ad hoc programs must be installed to view e-invoices.
You can also view invoices directly online, through some websites that allow you to convert electronic invoices to PDF format. Their operation is really very simple and intuitive: just enter the xml or xml.p7m file inside the interface and click on the "Convert" button, in order to have immediately available the PDF version of the electronic invoice.
How to read an electronic invoice via smartphone?
With the ever-increasing spread of mobile devices, it was necessary to provide a way to understand how to read electronic invoices via smartphone. In this regard, the Revenue Agency has created a specific application, called "FatturAE", that allows freelancers to consult all invoices conveniently via their mobile phone.
How to create an electronic invoice in Italy
To generate an electronic invoice, you must firstly create an XML file containing all the invoice details. You can create this XML file manually, or you can use an electronic invoicing software that generates the XML file automatically.
How to fill in the electronic invoice?
You will need to enter the necessary and mandatory data to all invoices, as following:
- date of issue
- data about the person issuing the invoice
- customer data
- sequential number of the document
- data of the goods and services to be invoiced: (type, unit, price)
- total amount
- payment data
- recipient code
Essential elements for a VAT ID operating under the flat-rate scheme
- it is necessary to indicate the fact that one operates under the flat-rate scheme with the wordings: "Transaction without application of VAT, carried out pursuant to Article 1, paragraphs 54 to 89, l. n. 190 of 2014 as amended by l. n. 208 of 2015 and l. n. 145 of 2018", The wording is applied automatically when you select the Flat-rate scheme as your the RF19 tax scheme -.
- it should be indicated that the products, services and the amount of the social security fund, included in the invoice, are not subject to VAT, using the VAT Code N2.2 - Not subject to other cases.
- a 2 euro duty stamp must be applied where the invoice has a total value over than EUR 77.47.
What is the unique code in freelance e-invoicing?
One of the most important information that a freelancer must insert in electronic invoice is the unique code, also known as CUU or as IPA Code: to eliminate any doubt and clarify the various aspects related to this code, let’s see together in detail what is the unique code for electronic invoicing, what it is for, where you can find it and how to request it.
The unique code is a fundamental data for the electronic invoicing system, because it has the function of identifying in a unique way the recipient of the document and allows the Interchange System (SDI) to process and send the invoice correctly.
However, one must be careful not to confuse the unique code with the recipient code: although they have the same purpose, the two codes are not interchangeable, since the unique code has 6 characters and is used exclusively in invoices to the Public Administration (B2G), while the recipient code has 7 characters and is used for invoices between private parties, B2B or B2C.
What the unique code for electronic invoicing used for
The full name of the unique code is "unique office code", abbreviated with the abbreviation CUU and can also be called "IPA code" - the two terms are therefore synonymous, are equivalent and identify the same tool. It is an alphanumeric code consisting of six digits indicating a specific public body, an institution or an office of the Public Administration. By inserting it in the electronic invoice for the Public Administration (FatturaPA), the Exchange System can deliver the tax document to the correct recipient.
Where to retrieve the unique code for electronic invoicing
The unique code, or IPA code, must be derived from the IPA list, an acronym that indicates the index of digital domiciles of Public Administrations and public service operators: it is located in a special section of the site of the Revenue Agency, and consists of a long list of codes, each corresponding to a public office, and is also equipped with the search engine "Consultation" to facilitate the search based on the information you have. In addition to the unique code, this list also includes the digital address, the certified e-mail address (PEC) and the electronic invoicing tax number of the office or public body, useful information for filling in the various fields of the electronic invoice for the Public Administration.
It is also worth mentioning the fact that a single entity can have correspondence with different unique codes: this is because each of the CUU is associated with a different office belonging to the same Public Administration.
How is the unique code for electronic invoicing generated?
The unique code is automatically created by the system when public service providers, national social security bodies and all public administrations (from municipalities to provinces to regions, from schools to chambers of commerce, etc.) terminate the accreditation procedure on the Revenue Agency website.
How to properly issue an electronic invoice in the flat rate scheme: key steps
Once you have created the XML file, you must upload it to the certified electronic invoicing system. The system will then validate the invoice and send it to the buyer's electronic invoicing system. The buyer will receive the invoice in their electronic invoicing system, and they can choose whether to pay the invoice electronically or manually.
To summarize, we can identify seven basic steps for the correct issuance of electronic invoices, as follows:
1. File in the various fields of the document through a specific software
2. Save the document as an XML file
3. Affix a digital signature
4. Send the document via the Interchange System and the PEC
5. Add the recipient, identifiable by the relative code
6. Get the delivery receipt or rejection of the electronic invoice
7. Store each invoice for tax purposes
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When should freelancers issue electronic invoices?
Both within the ordinary tax system and in the flat-rate tax system, therefore, it is necessary to properly issue and manage electronic invoicing: but when should the invoice be issued in order to be valid at accounting level? By when? There are in fact rules to be respected in order not to incur heavy penalties due to a delayed sending of the invoice.
If you do not issue the electronic invoice on time, you may incur fines ranging from 90% to 180% of the taxable income that is not properly documented (from a minimum of 500€) and 250€ to 2,000€, if the breach of the terms did not affect the correct settlement of the tax.
To understand when it is necessary to issue an invoice, it is good to make two premises, one concerning the date of sending and one concerning the distinction between three types of invoices.
1. The electronic invoice shows a date: it corresponds to both the date of issue and the date of dispatch and transmission of the invoice itself; these terms in theory are equivalent.
2. The electronic invoice may be immediate, deferred or anticipated:
- Immediate electronic invoices are generated and sent in real-time, usually at the time of purchase or service delivery. This type of electronic invoice is ideal for businesses that require immediate payment, such as retail stores or service providers. Immediate electronic invoices can be sent via email or an electronic payment platform, and payment can be made immediately by the customer.
- Deferred electronic invoices, on the other hand, are generated and sent after the service or product has been delivered. This type of electronic invoice is ideal for businesses that offer long-term services, such as subscription services or monthly billing. Deferred electronic invoices are typically generated at the end of each billing period and can be sent via email or an electronic payment platform.
- Anticipated electronic invoices are generated and sent before the service or product is delivered. This type of electronic invoice is ideal for businesses that require payment in advance, such as hotels or event planners. Anticipated electronic invoices can be sent via email or an electronic payment platform, and payment can be made in advance by the customer.
What happens if the e-invoice is rejected?
At this point the Interchange System proceeds with the document check and, if it does not find any anomalies, it proceeds with the sending to the recipient at the electronic address indicated on the invoice. The system will send the sender a receipt whether the transaction was successful or, if not, a receipt for the invoice. If the invoice is rejected, the sending has not been successful and it is therefore necessary to send the electronic invoice again: if you do this within 12 days of receiving the rejection, you will not need to change the date or numbering of the invoice. Be careful not to let too much time pass for the new sending, in order to avoid fines and penalties due to the delay.
Also in this case, the supplier has the obligation to pay the stamp duty, which must be paid through the payment with the appropriate telematic model F24 within 120 days from the date of sending the electronic invoice.
In any case, the obligation to keep invoices, both paper (printed, for 10 years) and electronic, through the appropriate digital system, within the section "Invoices and Fees" on the website of the Revenue Agency (replacement storage), remains.
How to correct or cancel an e-invoice?
How to correct an electronic invoice not yet sent
If it has not yet been sent, the procedure for correcting an electronic invoice is very simple: without even changing the number, it is enough to review the wrong data, do a further check to correct it and, finally, send it normally.
How to cancel an electronic invoice rejected by the SDI
In the invoice verification process, the SDI may encounter formal errors and reject it accordingly. In this case, the system changes the status of the invoice, which from "sent" passes, precisely, to "discarded”, within five days after it was sent.
The wrong data may be linked to the content, size or format of the document sent or, again, to the authenticity of the signature; in any case, often, at the moment when the notification of rejection arrives, this is accompanied by both the error number and a summary of the reasons the file was rejected.
At this point, to cancel an electronic invoice rejected by the SdI it is necessary, no later than 5 days after the rejection is notified, one can correct it and proceed to a new sending, leaving the number and date of the previous one, unchanged. However, it is possible to issue an invoice with a new date and number, following the instructions provided by the Revenue Agency.
How to correct a wrong e-invoice already received by the recipient
Often, however, the real problem is to understand if it is possible to cancel an electronic invoice already sent and received by the recipient: it may happen that the invoice is accepted by the SDI, as free of formal errors, but inclusive of incorrect data.
At this point, the invoice cannot be modified, since it is considered regularly issued; consequently, the most common solution is to issue a variation note whose function is precisely to rectify an invoice already duly registered. The most common choice, in these cases, is to issue a credit note referring to the total reported on the wrong invoice and then issue a new invoice with the correct data.
The variation note shall not be issued in the following situations:
- The recipient code or the reference PEC address is incorrect (in these cases it is sufficient to notify the customer and remind him that the invoice is still available within the portal dedicated to Invoices and Fees of the Revenue Agency);
- The IBAN on which receiving the compensation is wrong: even in this situation, it is enough to communicate the correct one to the customer;
- The error is one of the optional fields to be filled in the invoice. Another situation where you can communicate the correct data directly to the customer, without having to complete other formalities.
How to cancel an electronic invoice refused by the Public Administration
Unlike professionals, private individuals and companies, the Public Administration can refuse an invoice, even if approved by the SDI, following two main methods:
- with the notification of rejection, which arrives via the billing software (as well as the rejection notifications of the SDI). In this case, you must change the invoice, keeping the number and date unchanged, and send it to SDI again.
- with a refusal after accepting it or after 15 days from receipt. If you find yourself in this situation, a Public Administration operator will probably contact the professional directly, asking to draw up a new electronic invoice, after issuing a credit note in which the total refund of the previous invoice is reported. In any case, it is important to follow the instructions provided directly by the PA, so that the new invoice is accepted without problems.
How to invoice a foreign customer as a freelancer?
All VAT registered holders, as we all know, have the obligation to issue an invoice to their customers every time they finish a professional activity in order to receive the relevant payment. This, of course, also applies when it comes to activities carried out for customers who do not reside in Italy but abroad, only with some specific differences.
Starting from July 1st, 2022, it has become mandatory to issue electronic invoices also to foreign customers (that is, not resident on Italian territory but foreign, both within the European Union and outside the EU) and it is necessary to use the xml format of the electronic document to be transmitted to the Interchange System (SdI), just as for electronic invoicing to entities established in Italy.
The correct procedure to follow to issue electronic invoices to foreign customers (whether they are companies or private individuals), is not very different from electronic invoicing to customers resident in Italy, but you have to pay attention to some differences.
Here are the 3 basic steps:
1. Filling out the electronic invoice: first of all, fill in all the fields provided by, in the xml format document. In the case of foreign customers, the recipient code field has to have 7 "X" (XXXXXXX), the ZIP code should be 00000, and the VAT number field should be filled with the customer’s VAT.
2. Sending the electronic invoice in xml format through the Interchange System (SDI) of the Revenue Agency
3. Sending a copy of the invoice to the customer in paper or pdf format: this operation, is essential when sending invoices to someone who is resident abroad as they cannot have access to our Exchange System and view invoices in xml format. By sending the analogue copy, he/she can keep track of the invoice in question.
Once all the fields have been filled in, the next step is the communication of the purchase invoice to the customer, to be made no later than the 15th day of the month following the receipt of the document or the completion of the procedure.
How to invoice a foreign customer without VAT as a freelancer?
It is mandatory to send electronic invoices even if the customer is resident abroad and is not in possession of the VAT number.
The procedure to be followed in this case remains identical to that just analysed, with a single peculiarity: between the fields to be filled in the electronic document in xml format, under the heading "Foreign customer VAT number", you will have to enter the appropriate code composed of seven zeros, and that is "0000000".
A specification regarding the indication of VAT in the invoice to a foreign customer:
• the word "reverse charge" must be indicated if the customer is tax resident abroad, within the European Union
• the words "operation not subject to" must be indicated if the customer resides outside the European Union
How can Xolo help freelancers create and issue an invoice?
In conclusion, electronic invoicing is a critical component of doing business as a freelancer in Italy. By understanding the electronic invoicing system and using certified electronic invoicing software, freelancers can ensure compliance with tax laws, improve efficiency, and save time and money.
After seeing in this article how to issue electronic invoice to customers residing abroad, with and without VAT, we have reviewed the main steps to be carried out and also taken into account the non-standard cases.
Do you still have doubts about how to fill out an electronic invoice for a foreign customer? Are your suppliers resident abroad? We know that every change brings with it a good deal of fear, especially when dealing with the bureaucracy. To bill easily, rely on Xolo: we will assist you at every stage of the procedure with professionalism and competence! With Xolo you can not only issue unlimited e-invoices, but also forget the fear of making mistakes: simply because we will take care of everything.
Trusting Xolo and starting to create and issue invoices in electronic format will be a real walk in the park!
