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The advantages of electronic invoicing

Simonetta La Grutta Simonetta La Grutta

Published on Milano Finanza newspaper on 3 April 2018.


Starting from 1st January 2019, all VAT taxable persons will have to issue electronic invoices for the supply of goods and services to other VAT taxable persons and to individual consumers.

The obligation was introduced by Budget Law 2018 and is aimed, among other things, at innovating the laws that regulate the application of VAT and follows the wake of the instructions provided by top EU institutions to update the regulations on taxation on consumptions. In fact, the economic landscape is constantly evolving and led to the creation and development of new markets over the last years, also by leveraging the large-scale spreading of entrepreneurial initiatives, taking advantage of new technologies.

Issuing exclusively electronic invoices, that already happens for transactions with Public administrations, will also have positive effects on the effectiveness and efficiency of Tax Authorities assessments. In fact, it will be a further instrument to prevent tax avoidance (also related to direct taxes) and to reduce the VAT gap (i.e. the gap between VAT that should be collected and VAT that is actually paid to the Inland Revenue) which is currently over 30% in Italy and is among the highest in EU.

Firstly, bodies in charge of assessments, inspections and audits can proceed more quickly thanks to new technologies. Secondly, data necessary to ascertain promptness and correctness of tax payments by VAT taxable persons will be available in real time. This should lead to a significant reduction (or even cancellation) of the so-called unintentional non-compliance, i.e. the non-compliance with tax fulfilments generating the non-payment of taxes, which derives from a mere mistake and not from an intention to avoid taxes.

Also from the perspective of economic operators, the implementation of electronic invoicing and of the automatic registration of documents attesting purchases and supplies of goods and services will reduce mistakes (e.g. transcription errors), speed up administrative procedures and reduce costs associated to the filing of paper invoices and registers.

Initial considerable investment in technology will certainly be necessary, but it should be counterbalanced in the middle term by the abovementioned advantages.

Tax Authorities are defining operating rules on electronic invoices, adopting the simplest and most practical approach as possible, in order not to burden economic operators with further costs.