Starting January 1, 2024, the tax authority will require electronic invoicing for most value-added tax (VAT) number holders in Italy. Many businesses have had to adjust to this requirement by implementing systems to manage electronic invoices and ensure compliance with the new rules.

Below, we explain how electronic invoicing works for businesses, the challenges and solutions for small businesses and professionals, and potential future developments.

What’s in this article?

• Mandatory electronic invoicing in Italy
  
• How electronic invoicing works for businesses
  
• Recipient code in electronic invoicing for businesses
  
• Electronic invoicing for small businesses: Challenges and solutions
  
• Trends and future developments in electronic invoicing
  

Mandatory electronic invoicing in Italy

Law no. 205 of December 27, 2017 introduced mandatory electronic invoicing in Italy on January 1, 2019. However, until 2023, some taxpayer categories were exempt, such as those under the flat-rate scheme or the minimum-rate scheme.

Decree-Law no. 36/2022 removed these exemptions and extended mandatory electronic invoicing to all VAT number holders, as of January 1, 2024, regardless of their tax regime or generated revenue.

The following groups remain exempt from mandatory electronic invoicing in Italy in 2024:

• Those issuing invoices to foreign entities or individuals who are neither residents nor fiscally established in Italy
  
• Healthcare providers who send data to the Health Card System (Sistema Tessera Sanitaria)
  
• Individuals who are not required to send data to the Health Card System but who provide healthcare services to individuals
  

The Milleproroghe 2025 Decree—approved by the Council of Ministers on December 9, 2024— has extended the e-invoicing exemption for the last category of health professionals until March 31, 2025. It prohibits them from issuing invoices in order to protect personal data. With electronic invoices, an individual’s data is transmitted through the Revenue Agency’s Exchange System, which does not guarantee compliance with the legislation on privacy. More information on the decree is forthcoming.

How electronic invoicing works for businesses

Italy was the first European country to implement electronic invoicing. An electronic invoice refers to a document in extensible markup language (XML) format created using software or a web service. Then, it is sent through the Exchange System (Sistema di Interscambio, or SDI) of the Italian Revenue Agency (Agenzia delle Entrate).

The SDI checks that the invoice includes the required tax information and then ensures its delivery to the customer, providing a delivery receipt to the supplier.

Remember, your electronic invoice is only issued once you have transmitted it to the SDI. Therefore, the issue date is not the date specified in the Date field of the invoice.

Recipient code in electronic invoicing for businesses

The information required for an electronic invoice for companies is identical to that of a paper invoice, except for the recipient code, also known as the “SDI recipient code” or “SDI code.” This code ensures the correct delivery of an electronic invoice to a business or professional. The recipient code links with the software or web service the recipient uses, enabling them to receive invoices directly into their electronic invoice management system.

What happens if the customer’s recipient code isn’t available? It is possible to issue an electronic invoice to a company even without the recipient code. In this case, the invoice recipient can receive it through the following methods:

• Certified email (PEC) address: Provide the recipient’s PEC address (if known) in the PEC Recipient field, and enter “0000000” in the Recipient Code field on the invoice.
  
• Recipient’s portal: Enter zero seven times (i.e., 0000000) in the Recipient Code field. In this scenario, the SDI will still process the invoice with a status of “Failure to Deliver,” and the invoice will be available in the Consultation area on the Italian Revenue Agency’s Invoices and Receipts portal. We recommend informing the client that the invoice is available in their reserved area.
  

Electronic invoicing for small businesses: Challenges and solutions

When Italy first introduced e-invoicing for businesses, small businesses and professionals below a certain turnover threshold were exempt. However, as of 2024, nearly all businesses must comply with the e-invoicing mandate. Therefore, small businesses and professionals could face some challenges in managing invoicing.

The main challenges involve adapting to the technology needed to manage electronic invoices while ensuring full compliance with the new regulations. All businesses must use e-invoice management software or a cloud-based service.

For this purpose, both free tools from the Italian Revenue Agency and paid services are available. The tools the Italian Revenue Agency provides are:

• A web-based process: This is used for compiling and sending electronic invoices and is accessible through the Invoices and Receipts (Fatture e Corrispettivi) portal.
  
• PC software: Available on the Italian Revenue Agency site, the software only allows you to create and save electronic invoices.
  
• FatturAE: An app available in the iOS or Android stores that you can use to send electronic invoices.
  

Commercial providers offer various e-invoicing management tools for businesses, with many providing plans at different price points to accommodate the needs and budgets of small businesses and professionals. To simplify the transition from paper to electronic invoicing, consider choosing a tool or service that:

• Is cloud-based and accessible from anywhere
  
• Offers easy management of electronic invoicing compared to downloadable software (which is often more complex and incurs higher costs for maintenance and updates)
  
• Has a simple, intuitive dashboard
  
• Offers dedicated technical support
  
• Can integrate with any other business management software
  

As your business expands, managing the business invoicing process can become increasingly complex. Some tools can assist in automating this process, such as Stripe Invoicing, a comprehensive and scalable invoicing platform that allows you to create and send invoices for both one-time and recurring payments without needing to write any code. With Stripe Invoicing, you can save time and get faster payments, as consumers pay 87% of Stripe invoices within 24 hours. Thanks to collaboration with third-party partners, you can also use Stripe Invoicing for mandatory electronic invoicing.

Trends and future developments in electronic invoicing

The scope of electronic invoicing in Italy could expand further in the coming years, particularly in relation to healthcare services for individuals. However, it remains unclear whether electronic invoicing will become optional or mandatory in this sector. Moreover, you can expect other EU countries to implement e-invoicing as well. For example, Romania became the second country after Italy to adopt this system, making electronic invoicing mandatory for all Romanian companies starting January 1, 2024.

Belgium will require issuing and receiving business-to-business (B2B) electronic invoices starting in January 2026. While in France, starting September 1, 2026, all companies must receive electronic invoices, though issuing them will only apply to medium and large companies. The issuing requirement expands to include small- and medium-sized businesses a year later, on September 1, 2027. Countries such as Croatia, Germany, Finland, Denmark, and Spain will likely require electronic invoicing for businesses in the coming years.

Although many countries are taking steps toward establishing a European electronic invoicing system, you can expect the process to take a considerable amount of time. Currently, legislation remains under the control of individual member countries, making e-invoicing management for businesses complex, particularly for those with international operations.

Direct outcomes include advancing robust software and cloud solutions designed to ensure compliance with regulations in individual European countries, enabling interoperability with other business management tools, and maintaining user-friendliness to simplify e-invoicing management for companies.