VAT invoices and accountancy in Italy
Rules on invoices and accountancy in Italy
How is done an invoice in Italy
The invoice in Italy is the mandatory tax document that is drawn up by the seller, who is the holder of the VAT ID, to prove the sale of goods or services and the right to deduct the price.
The invoice must be issued by all the VAT ID holders when they sell a good or service, depending on the activity they are doing.
However, there are some exemptions: if it is not expressly requested by the customer at the time of the transaction, in Italy the seller is exempt from the obligation to issue the invoice in the following cases:
farmers selling their own products
supply of foods and drinks to the public
road transport of people
transit on motorways
peddlers of services at client’s home
However, these operators are obliged to release to the customer also other documents for tax audit, such as the tax receipt and the tax tickets.
About the invoice content, the invoice must be issued in two copies: the original one, to be delivered or shipped to the customer, and the copy to be kept by the issuer (for a period not less than 10 years).
Bills must be dated and numbered in progressive order.
The invoice must contain the following items:
- the date of issue and the progressive number attributed (which at each beginning of the year must start from one)
- the identity of the issuer: the name or company name and, in the case of a company, the address
- the number of VAT ID (partita IVA), the tax code (codice fiscale) and the registration number of the company register
- buyer's identification data, which are: the name or company name and, in the case of a company, the address
- the type of payment
- the data of the transport documents (date and progressive number if it is a deferred invoice)
- the nature, quality and quantity of the assets sold
- the unit price of the goods and the total price (obtained by multiplying quantities per unit price)
- any discounts
- the rate and the amount of VAT
- the total invoice, which is the total debt amount of the buyer.
The so-called deferred invoice (fattura differita) is the invoice issued at a time after the delivery or shipment of the asset. This type of invoice must be issued by the 15th of the month following the delivery of the goods; in this case, the goods must have been delivered using a document proving the transport (Documento di Trasporto, DDT).
VAT accounting in Italy
A company that purchases raw materials has to pay the supplier the VAT amount of these purchased goods.
The amount of VAT already paid represents for buyer's a credit towards Italian state, this amount of VAT is due to the state (VAT Revenue Agency) by the seller.
When a company sells goods or services to its customers, the amount of goods or services sold will be increased by the VAT. The VAT collected by the seller is a collection made on behalf of the state, so that a debt ratio is created and the seller has to pay this amount to the state. The company has to pay to the state the difference between VAT on debt and VAT on credit.
In order to easily calculate the VAT balance, each invoice must be issued in 2 copies, one remains to the seller and the other is to the buyer.
In addition, the amounts of the various invoices must be recorded on the required statutory registers.
The mandatory VAT registers in Italy are:
- VAT registers that are compulsory accounting books for entrepreneurs and professionals;
- register where to record the purchases;
- register where to record sales invoices;
- register where to record the daily cash.
Accounting records of periodic VAT liquidation
The company which has an ordinary accountancy regime must record periodic VAT liquidation. The first thing to do is to turn the amount of VAT on Purchases to the account of VAT of Revenue Agency.
The right accounting writing to do is the following:
The account of VAT of Revenue Agency displays a debt of € 2.000 for the concerning period; then will be necessary to do registration of payment of VAT.
The parameter applicable to VAT liquidation is the turnover carried out by businesses and professionals, regardless of corporate form, in the previous solar year.
The turnover for VAT purposes consists of the total amount of supplies of goods and services provided in the calendar year, excluding the depreciation of depreciable assets and internal transactions.