EU Council proposal decision might extend the derogation for Italy’s mandatory e-invoicing

In April 2024, Italy requested authorisation from the European Commission to continue applying electronic invoicing obligation. The main reasons for it were combatting tax fraud and evasion, simplifying tax compliance, and reducing business administrative costs.
The proposal decision published on 10 October 2024 specifies that Italy should be granted further derogation either until 31 December 2025 or until the date from which the Member States may apply national decisions following the adoption of the ViDA proposal.
The EU Council has previously amended the initial decision from 2018 by EU 2021/2251, authorising Italy to apply the special measure until 31 December 2024, continue applying mandatory e-invoicing and extend the scope to cover small enterprises.

Summary Proposal

Purpose of Proposal: Extend Italy’s authorization to mandate electronic invoicing, deviating from Articles 218 and 232 of the VAT Directive, to simplify VAT collection and combat tax fraud.
Background: Italy’s system, Sistema di Interscambio (SdI), has effectively reduced VAT fraud and simplified compliance, with significant tax revenue gains since implementation.
Achievements: Since its introduction, e-invoicing has increased VAT revenue by 1.7 to 2.0 billion euros, and fraud detection improved from EUR 1 billion in 2019 to EUR 9 billion in 2022.
Benefits: E-invoicing streamlines processes for businesses, reduces administrative costs, and provides real-time business performance monitoring. It also aids in economic analysis during crises like COVID-19.
Future EU Directive: A proposed directive aims to amend VAT rules for the digital age, allowing mandatory e-invoicing across Member States without derogations, expected to replace the need for special measures.
Extension Period: The proposal extends Italy’s authorization until 31 December 2025 or until the new EU directive is adopted, ensuring continuity of the current system.
Consistency with Policies: Aligns with EU efforts to modernize VAT systems and reduce fraud, similar to authorizations granted to other EU countries.
Impact Assessment: Italy’s e-invoicing system has proven effective in fraud prevention and simplifying tax processes, validating the need for continued authorization.

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