How to issue electronic invoices in foreign currencies in Italy

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  1. Introduction
  2. Regulations on e-invoicing in a foreign currency
  3. Filling out a foreign currency e-invoice
    1. Filling out the “Currency” field with “euros”
    2. Filling out the “Currency” field with a foreign currency
    3. A summary of how to issue a foreign currency e-invoice
  4. The recipient code for electronic invoices to foreign customers
  5. Currency conversion for electronic invoices in foreign currencies

If your company does business with individuals or companies located outside the Eurozone, or those located in Italy but that are part of multinational corporations (MNCs), it’s customary to display amounts in foreign currencies on your invoices. And since electronic invoicing is now mandatory in Italy for most VAT payers, it can be helpful to understand how to issue an electronic invoice in a foreign currency to ensure full compliance. This article will explore regulations around e-invoicing, how to fill out foreign currency e-invoices, and more.

What’s in this article?

  • Regulations on e-invoicing in a foreign currency
  • Filling out a foreign currency e-invoice
  • The recipient code for electronic invoices to foreign customers
  • Currency conversion for electronic invoices in foreign currencies

Regulations on e-invoicing in a foreign currency

At the regulatory level, there is no specific guidance on issuing electronic invoices in foreign currencies. In fact, Directive No. 2010/45/EU states in Article 230:

“The amounts which appear on the invoice may be expressed in any currency, provided that the amount of VAT payable or to be adjusted is expressed in the national currency of the member state, using the conversion rate mechanism provided for in Article 91.”

This effectively means it is possible to issue an invoice in a foreign currency, so long as both the tax amount and taxable amount are in Italy’s national currency, the euro. Also, the exchange rate for the foreign currency must be the most recent rate published by the European Central Bank on the tax due date.

That said, Italy has not fully transposed Directive No. 2010/45/EU into national law. In fact, Article 21, paragraph 2(l) of Presidential Decree No. 633/72 specifies that businesses in Italy must round the required invoice information (the tax rate, amount of tax, and taxable amount) "to the nearest euro cent." Based on this article, it is reasonable to think that businesses in Italy need to issue e-invoices in euros, but this is not the case—e-invoices can indeed be issued in any currency.

Filling out a foreign currency e-invoice

The Agenzia delle Entrate website provides detailed answers to frequently asked questions about invoicing foreign entities. This includes information about filling out e-invoices in foreign currencies.

Based on this information, a business has two options when issuing an electronic invoice:

  • Fill out the “Currency” field with “euros.”
  • Fill out the “Currency” field with a foreign currency (i.e., the currency used in the customer’s country).

Let’s look at these options in more detail.

Filling out the “Currency” field with “euros”

You can issue an electronic invoice by filling in the “Currency” field with “euros.” If you choose this option, the values in section 2.2.2.5., “Taxable Amount,” and 2.2.2.6., “Tax,” must also be in euros. For accounting purposes, you can then enter the invoice amount in the foreign currency by:

  • Using the optional fields of section 2.2.1.3—"Item Code" and "Type Code"—to specify the currency according to the International Organization for Standardization (ISO) 4217 alpha-3:201 standard. This means the currency should be in a globally accepted three-letter format, such as GBP to represent the Great British Pound or JPY for Japanese Yen. Then use the "Value Code" field to report the invoice amount in the indicated currency; or
  • Using the optional fields in section 2.2.1.16., “Other Management Data,” to indicate both the foreign currency and the invoice amount.

Filling out the “Currency” field with a foreign currency

You can also issue an electronic invoice in a foreign currency by filling out the “Currency” field of the invoice with a currency other than the euro. However, you must convert the values in the "Taxable Amount" and "Tax" fields into euros, in accordance with Article 21 of Presidential Decree 633/1972. The Agenzia delle Entrate will automatically consider the amounts in these fields to be in euros, so it’s important to do the conversion.

Additionally, you will need to note in one of the descriptive sections of the XML file (the required invoicing format) that only the invoice total—which is a value that can’t be verified by the Agenzia delle Entrate’s Exchange System (SdI)—is shown in a foreign currency, while the "Taxable Amount" and "Tax" fields are in euros.

Remember that sending electronic invoices through the SdI is mandatory, including to customers in foreign countries. However, customers in foreign countries will not automatically receive the invoices; you must send them their invoices in a traditional format, such as PDF.

A summary of how to issue a foreign currency e-invoice

Option 1

  • Fill out the “Currency” field by putting “euros.”
  • Enter values in euros in the “Taxable Amount” and “Tax” fields.
  • Enter the foreign currency and invoice amount in the optional “Type Code” and “Value Code” fields, respectively, or enter both pieces of information in the “Other Management Data” section.

Option 2

  • Fill out the “Currency” field by choosing the foreign currency.
  • In the “Taxable Amount” and “Tax” fields, enter the values converted into euros.
  • In one of the descriptive sections, specify that only the invoice total is expressed in the foreign currency, while the “Taxable Amount” and “Tax” fields show the amounts in euros.

As your business expands, managing the invoicing process can become increasingly complex. Tools such as Stripe Invoicing, a comprehensive and scalable invoicing platform, can help automate this process. With this platform, you can create and send invoices for both one-time and recurring payments without writing a single line of code. Stripe Invoicing can help you save time and get faster payments, as Stripe users are able to collect 87% of invoices within 24 hours. Additionally, through collaboration with third-party partners, you can use Stripe Invoicing for electronic invoicing.

The recipient code for electronic invoices to foreign customers

The recipient code is a seven-digit alphanumeric code used to ensure the proper delivery of an electronic invoice to a business or professional through the Agenzia delle Entrate’s Exchange System. The recipient code identifies the recipient’s software, enabling them to receive invoices directly into their own electronic invoicing management system.

For foreign customers located both in and outside of the European Union (EU), and including both businesses and individuals without a VAT number, the recipient code is: XXXXXXX (seven Xs).

Currency conversion for electronic invoices in foreign currencies

For foreign currency conversions, you must use the historical currency converter service provided by the Bank of Italy. The exchange rate you use must be the one from the day of the transaction, if specified on the invoice, or, if not indicated, from the day you issued the invoice. The "Description" field of the XML file should include the exchange rate and the amounts converted into the foreign currency.

You can then attach the invoice in PDF format, expressed in the foreign currency, to the electronic invoice file. This PDF is not considered an official legal document by the Agenzia delle Entrate; rather, it is a courtesy to the invoice recipient meant to provide clarity.

The content in this article is for general information and education purposes only and should not be construed as legal or tax advice. Stripe does not warrant or guarantee the accurateness, completeness, adequacy, or currency of the information in the article. You should seek the advice of a competent attorney or accountant licensed to practice in your jurisdiction for advice on your particular situation.

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