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BUREAUCRACY

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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For members

ITALIAN LANGUAGE

TEST: Is your Italian good enough for citizenship?

To become an Italian citizen, you may need to prove your language skills. Do yours make the grade?

TEST: Is your Italian good enough for citizenship?

From being able to confidently order a gelato to total fluency, there’s a huge variation in the levels of Italian attained by foreigners in Italy.

But there are certain bureaucratic processes that require formal qualifications. When applying for Italian citizenship through marriage or residence (but not via ancestry), you must prove proficiency in the Italian language at B1 level or higher.

READ ALSO: What you need to know about Italy’s language test for citizenship

In most cases, getting a carta di soggiorno residency permit has no formal language requirement, though some non-EU nationals may need to sit a language test at the lower A2 level. Read more about that here.

This article relates solely to language ability for obtaining citizenship; the application process has several other requirements depending on which route you take. Read more about this here.

So what does B1 mean?

A B1 level certification is a ‘lower intermediate’ level and means you are proficient enough in the language to manage everyday interactions, according to the Common European Framework of Reference for Languages (CEFRL).

This level of proficiency allows you to “communicate in most situations that arise while travelling” and to understand topics “regularly encountered in work, school, leisure, etc.”

So there’s no need to write with perfect grammar, have an extensive vocabulary, or be able to recite Dante’s Inferno in the original language – but people at this level should be able to make themselves understood in most everyday situations.

It should also be enough to follow most conversations and TV shows or get the gist of what’s in Italian newspapers.

If you’ve lived in Italy for a while, there’s a good chance you’re already at this level or close to it. After all, a decent grasp of Italian really is necessary for everyday life in the country outside of the main city centres and tourist hotspots.

If not, it might be time to sign up for Italian language classes – if you haven’t already. 

If you want to check, there are numerous Italian language level tests available online, such as this one.

What does the B1 language test involve?

The exact structure of the test varies between the four administered by educational institutions approved by the Italian Education Ministry or Foreign Ministry.

They are: The University of Siena for Foreigners (CILS); The University of Perugia for Foreigners (CELI); The Dante Alighieri Association (PLIDA); and The University of Rome 3 (CERT)

These tests can be taken at language schools around Italy and abroad. If your language school advertises B1 testing for citizenship, make sure they are accredited by one of the above institutions.

The structure of the test also differs depending on whether you’re taking the B1 cittadinanza exam or a regular B1 level Italian language certification.

READ ALSO: 12 signs you’ve cracked the Italian language

Could you pass an Italian language test at B1 level? Photo by Green Chameleon on Unsplash

Both tests involve answering similar questions at the same level, but the B1 cittadinanza is essentially a shorter version which costs less to take. The downside is this certificate can only be used for your citizenship application and not for other purposes, such as for university applications.

And though it’s shorter, it may not actually be easier to pass; if you fail on one section you will have to retake the entire test (as opposed to just retaking that section under the standard B1 level tests listed above.)

If you’re fairly confident of passing and don’t need it for anything else, it may be the more convenient option.

In any case, the test will involve at least four sections; a written test, reading tests, listening test and an oral test where you have a conversation with an examiner.

Listening 

For this section you will have to listen to two recordings; one of a conversation, and another of a short monologue.

The format varies and each section will be played at least twice.

Here is a sample question from a past paper, after the candidates had listened to a short clip of someone talking about the southern region of Puglia – click here for the audio and transcription.

Ascolta il testo. Poi leggi le informazioni. Scegli le informazioni presenti nel testo (3 per testo).

A) Il programma radiofonico riguarda la cucina tradizionale italiana.
B) Gli ascoltatori partecipano a un quiz e possono vincere un viaggio.
C) La regione Puglia ha ricevuto un importante premio.
D) Questa estate in Puglia è diminuito il numero dei turisti.
E) In Puglia ci sono paesi tranquilli dove ci si può rilassare.
F) La Puglia offre un’ampia scelta di sistemazioni turistiche.

Reading and grammar

This section involves reading two pieces of text, testing your reading comprehension and grammatical knowledge.

Here are some sample questions from a past B1 paper, relating to a report about new public services from the regional government in Tuscany.

A) La Regione Toscana vuole migliorare i servizi online per i cittadini e i turisti.
B) Attraverso un numero verde i cittadini possono segnalare difficoltà, chiedere informazioni, dare consigli sui trasporti pubblici.
C) L’attivazione del numero verde ha lo scopo di limitare i danni ai viaggiatori nell’ambito del trasporto locale.
D) Il numero verde 800-570530 non è attivo il sabato e la domenica.
E) Se il numero verde riceve una telefonata di protesta su un servizio deve informare la ditta responsabile di quel servizio.

See the text and further questions here.

Writing

For the writing test, you’ll need to choose between two prompts and then write 80-120 words.

In this example, you’re asked to write to your landlord to tell them you’re moving out because you have problems with the neighbours.

You’re asked to explain the problem and ask what you need to do, and whether you need to pay rent for the next few months.

Hai dei problemi con i vicini e hai deciso di cambiare casa. Scrivi un messaggio al proprietario del tuo appartamento per chiedere cosa è necessario fare. Spiega perché vuoi trasferirti e chiedi se devi pagare l’affitto dei prossimi mesi.

Do you understand the prompt? Now you need to prove your ability to get the double letters and accents in the right place when writing.

Speaking

The speaking section is in two parts.

The examiner will ask you to begin by introducing yourself and talking about your work, family or hobbies – the examiner will then ask you some questions about yourself.

It should be a discussion, with the examiner asking questions and giving other responses which you are expected to understand. This part will last 6-7 minutes.

Then you’ll be given a choice of several topics to talk about for 7-8 minutes. These topics can be almost anything; you won’t see exactly what they are in advance, but the examiner should give you some time to read through the options and may help you decide which one to choose.

Your answer should include certain grammar points and involve giving your opinion. Again, the examiner will prompt you with questions and it should become a discussion.

Some examples of topics you may be asked to talk about:

    • Preferisci vivere in città o in campagna? Quali sono i vantaggi e gli svantaggi?
    • Quali sono gli aspetti della cultura italiana che senti più lontani rispetto alla tua cultura?
    • L’assistenza sanitaria in Italia e nel tuo Paese: somiglianze e differenze.
    • Quali documenti ti servono per ottenere la cittadinanza italiana? Quali sono le procedure?

Translation:

    • Do you prefer to live in the city or in the countryside? What are the advantages and disadvantages?
    • What are the aspects of Italian culture that you feel are most distant from your culture?
    • Healthcare in Italy and in your country: similarities and differences.
    • What documents do you need to obtain Italian citizenship? What are the procedures?

Could you keep a simple conversation going on these topics in Italian? Then you might be ready for the citizenship test. 

These sample questions are from the CILS B1 cittadinanza exam – see more details on the university’s website here. Exam questions will vary and the structure of exams from other institutions may differ.

READ ALSO: Which italian verb tenses are the most useful?

It usually costs €100 to sit the B1 cittadinanza exam, though some schools also add a default charge for a preparatory course.

Even if you already have a higher level of Italian, exam preparation courses could be useful as they explain the exam structure and likely content.

Find out more about taking the exam in a separate article here.

Speak to your local Questura or consulate, or see the Interior Ministry’s website (in Italian), for the latest information on the process and requirements when applying for citizenship.

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