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EXPLAINED: What is Italy’s digital invoicing rule for freelancers?

Italy has brought in rules that mean changes for freelancers on the 'flat tax' rate. Here’s what you need to know about the ‘fatturazione elettronica’, or digital invoicing system.

EXPLAINED: What is Italy’s digital invoicing rule for freelancers?
What you need to know about accounting changes to Italy's 'regime forfettario'. Photo by Kelly Sikkema on Unsplash

Italy has been slowly moving more of its bureaucratic systems online in recent years, and in many cases this has made it quicker and easier for residents to access services and get their considerable amounts of Italian life admin in order.

It was hoped that the new electronic invoicing rule would do the same for freelancers on Italy’s flat-tax regime, by doing away with the existing need to print out invoices and affix tax stamps by hand.

READ ALSO: Beat the queues: 19 bits of Italian bureaucracy you can do online

But a close look at the details of the new rules shows that it probably won’t make life easier for those on the flat tax rate, who have so far been spared the bulk of that infamous Italian red tape – but now need to get to grips with a new online system.

Known as the ‘regime forfettario‘, Italy’s flat-rate tax scheme for individuals and small businesses was introduced in 2015 to encourage more commercial activity by slashing tax rates and simplifying bureaucracy.

New freelancers who choose this tax system generally pay somewhere between just five and 15 percent tax on earnings, regardless of overheads.

READ ALSO: The pros and cons of Italy’s five percent flat tax for freelancers

Little has changed since its inception seven years ago, but freelancers using the scheme now need to be aware of new rules that came into force on July 1st, 2022.

How you invoice – how you send, receive and store receipts, therefore – is due to move from analogue to digital, bringing new requirements and know-how on digital invoicing software.

Here’s what changed for freelancers with the so-called ‘fattura elettronica‘.

Who is required to send electronic invoices?

While this was already a requirement for the self-employed on other tax regimes, those on the flat tax rate were included from July 1st.

They were previously exempt, but that changed under the PNRR (National recovery and resilience plan or piano nazionale di ripresa e resilienza) – the Italian government’s plan for using EU funding for post-pandemic economic recovery.

Digital invoicing is intended to fight Italy’s major problem with tax evasion, as well as to further automate accounting processes.

For now, not all freelancers under this tax scheme need to move to digital accounting – only those who received an income in excess of €25,000 in the previous year are required to comply with the new rule.

It will then extend to all freelancers using the flat-rate scheme from January 1st, 2024.

From that date, everyone subscribed to the ‘regime forfettario’ will have to switch to electronic invoicing and there are hefty penalties in place for those who don’t.

How will electronic invoices work?

Italy’s tax authority has defined a couple of notable differences between the digital or electronic invoice (fattura elettronica) and a paper invoice (fattura di carta) in its updated guidelines.

Firstly, the digital invoice has to be created using a digital device (a computer, tablet or smartphone), and secondly it has to be sent to the client via an ‘Interchange System’, the so-called Sistema di Interscambio (SdI).

READ ALSO: ‘Smart working’? Here’s what you need to know about going self-employed in Italy

Italy’s flat-rate tax scheme is going digital. Photo by Christian Dubovan on Unsplash

This electronic postal system checks whether the invoice contains the required data for tax purposes, as well as checking the verified e-address (or the so-called PEC address) of the recipient.

In doing so, the electronic invoice automatically checks that the VAT number (partita IVA), or the tax code (codice fiscale) depending on who you send the invoice to, really exist.

Once the checks are completed, the system sends the invoice to the client, which will trigger an alert to the freelancer with a delivery receipt, showing the date and time the document was delivered.

How can you send an e-invoice?

There are a few accounting software options on the market if you’re now faced with having to send electronic invoices.

Some charge a fee of around €1-€4 per month or come at a cost per transaction.

Platforms such as ‘Aruba‘ or ‘Fatture in Cloud‘, are competitive and may offer you a free trial before you deciding to buy.

The Italian revenue agency (Agenzie delle Entrate) has also created free-of-charge services to help send and receive e-invoices. These include websites as well as apps for completing the required steps, which are detailed in their guide here.

You can access their Invoices and Receipts (‘Fatture e Corrispettivi‘) portal to benefit from these free services.

You’ll either need a Spid ID (‘Sistema Pubblico dell’Identità Digitale‘), a Carta Nazionale dei Servizi (CNS) or accounting credentials known as Fisconline/Entrate, which are issued by the Agenzie delle Entrate.

You can also delegate this task to an intermediary, such as an accountant (commercialista) who would do this on your behalf, the revenue agency stipulates 

What about the Italian tax stamp?

Until now, freelancers issuing invoices under the ‘regime forfettario‘ have had to attach a €2 stamp, called a ‘marca da bollo’, to every invoice over the value of €77,47.

So what happens when e-receipts go digital and you can’t physically stick a stamp on a document? Well, that goes digital too and the Inland Revenue has issued a 16-page guide on how you need to go about it.

It seems the previously attractive ‘light’ accounting of this regime is about to get bogged down by time-consuming bureaucracy too.

Authorities will systematically check that the fee has been paid each quarter for all the invoices that require it.

As a general rule, you can see if there are any discrepancies by the 15th day of the first month following each quarter on their Invoices and Receipts portal.

You or your intermediary have until the end of that month to fix any accounting errors, but make sure to check with an accountant if you have any difficulties or need specific advice for your personal circumstances.

Once you receive your final stamp duty bill for each quarter, you can pay either via IBAN, which you set up on the portal, or by filling out an electronic F24 form – details of how to do that are included in the guide.

For further information and FAQ’s, see Italy’s Inland Revenue Agency website on the electronic invoice here.

Please note The Local cannot advise on personal cases and seeking expert financial advice is recommended.

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WORKING IN ITALY

How many work permits will Italy grant in 2023?

The Italian government is drawing up plans to allocate next year's batch of work permits under the new 'decreto flussi'. Here's what we know so far.

How many work permits will Italy grant in 2023?

Italy’s government is working on the next annual decree governing how many and which types of workers will be allowed to move to Italy next year for employment reasons.

At the end of every year, the Italian Labour Ministry publishes the next year’s decreto flussi, which translates as ‘flows decree’; the piece of legislation which governs the number of work permits available to those coming to Italy from outside of the European Union and the European Economic Area (EEA).

READ ALSO: How many people does Italy grant work permits to every year?

The government has not yet confirmed any details about the next decree, but the number of permits available is widely expected to be cut under the new Italian government, which has a strongly nationalist, anti-immigration stance.

Italian Foreign Minister, Antonio Tajani, confirmed on Saturday that the government was working on a “strategy” for the 2023 decreto flussi, which is expected to be published at the end of December.

“We would like to have workers arrive in our country already trained” and with a job already lined up, he told reporters.

The Italian government is expected to offer a larger quota of work permits to countries that agree to sign repatriation agreements with Italy for irregular migrants, according to reports in Italian newspaper La Repubblica.

The new decree is also expected to extend some types of work permit to two or three years – rather than permits having to be renewed after one year, as is currently the case.

READ ALSO: Visas and residency permits: How to move to Italy (and stay here)

It’s hoped that this change could ease the workload at Italian government offices which have reportedly faced problems in processing work permit applications due to a chronic shortage of staff.

The number of permits available to different categories of worker is subject to change under each decree, but the government has not given any indication as to which groups may be allocated a greater or lower number of permits this time.

The last decree, covering work permit applications for 2022, sharply increased the number of foreign workers allowed to come to Italy, to a total of 69,700, up from 30,000 in 2021.

Most of those permits (42,000) were for temporary seasonal workers, such as those working in agriculture or tourism.

However, the number of permits issued for some categories, such as self-employed workers, did not increase at all in 2022.

READ ALSO: What happened to Italy’s planned digital nomad visa?

Applications for work permits usually open at the end of January. Further details about the application process for 2023 will be available when the new decreto flussi is published.

Getting one of these permits is just the start. As a non-EEA citizen, there are three main documents you’ll need to live and work in Italy: a work permit (nulla osta), a work visa (visto) and a residence permit (permesso di soggiorno).

Find out more information about the types of Italian work visa available here.

Please note that The Local is unable to advise on individual cases or assist with job applications.

For more information about visa and residency permit applications, see the Italian Foreign Ministry’s visa website, or contact your embassy or local Questura (police headquarters) in Italy.

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