Proposal for a COUNCIL IMPLEMENTING DECISION amending Implementing Decision (EU) 2018/593 authorising the Italian Republic to introduce a special measure derogating from Articles 218 and 232 of Directive 2006/112/EC on the common system of value added tax
Date: 2024-10-10
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: Italy, VAT, derogation from EU law, e-invoicing, establishment, small business, tax exemption, taxpayer

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   EUROPEAN COMMISSION  Brussels, 10.10.2024  COM(2024) 447 final 2024/0246 (NLE)  Proposal for a COUNCIL IMPLEMENTING DECISION amending Implementing Decision (EU) 2018/593 authorising the Italian Republic to introduce a special measure derogating from Articles 218 and 232 of Directive 2006/112/EC on the common system of value added tax  
 
EXPLANATORY MEMORANDUM 

Pursuant to Article 395(1) of Directive 2006/112/EC of 28 November 2006 on the common 
system of value added tax1 (hereafter 'the VAT Directive'), the Council, acting unanimously 
on  a  proposal  from  the  Commission,  may  authorise  any  Member  State  to  apply  special 
measures  for  derogation  from  the  provisions  of  that  Directive  in  order  to  simplify  the 
procedure for collecting VAT or to prevent certain forms of tax evasion or avoidance. 

By  letter  registered  with  the  Commission  on  11 April  2024,  the  Italian  Republic  requested 
authorisation to continue to derogate from Articles 218 and 232 of the VAT Directive to be 
able to continue imposing mandatory electronic invoicing. The present derogation expires on 
31  December  2024.  In  accordance  with  Article  395(2)  of  the  VAT  Directive,  the 
Commission  informed  the  other  Member  States  by  letter  dated  12  September  2024  of  the 
request  made  by  the  Italian  Republic.  By  letter  dated  13  September  2024  the  Commission 
notified the Italian Republic that it had all the information necessary to consider the request. 

1. 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

• 
Following  Implementing  Decision  (EU)  2018/5932,  the  Italian  Republic  introduced  a 
generalised system of mandatory electronic invoicing, Sistema di Interscambio (SdI), also in 
accordance with the Council Recommendation of 11 July 2017 on the 2017 National Reform 
Programme  of  Italy  and  delivering  a  Council  opinion  on  the  2017  Stability  Programme  of 
Italy3.  This  measure  was  extended  by  Implementing  Decision  (EU)  2021/22514,  which 
included under the scope of the measure taxable persons who benefit from the exemption for 
small enterprises referred to in Article 282 of the VAT Directive. 

Italy  submits  that  the  measure,  aimed  to  combat  tax  fraud  and  evasion,  to  simplify  tax 
compliance,  to  make  tax  collection  more  efficient  and  to  modernise  Italian  production, 
thereby reducing administrative costs for businesses, has fully achieved its objectives. 

Regarding the fight against VAT fraud and evasion, the measure has enhanced the capabilities 
of the tax administration, reducing the time necessary to detect and react against VAT fraud 
and evasion and improving the possibilities for risk analysis. Further, the measure has proved 
effective  as  a  preventive  measure,  as  it  has  deterred  evasive  and  fraudulent  taxpayer 
behaviours.  

Even though it is not possible to quantify exactly how much recovery is directly attributable 
to the implementation of mandatory e-invoicing, Italy has provided some estimates. To verify 
whether  the  unaccounted-for  residual  is  specifically  attributable  to  the  introduction  of  e-
invoicing,  Italy  has  conducted  a  micro-type  of  analysis.  By  restricting  the  analysis  to  a  few 
economic sectors of particular relevance, a panel of taxpayers was constructed with a view to 
comparing  their  reporting  behaviors  before  and  after  the  introduction  of  e-invoicing.  An 
econometric  approach,  based  on  the  use  of  the  B2C  component  of  active  transactions  as  a 
counterfactual  assumption,  allowed  a  causal  link  to  be  established  between  the  increase  in 
VAT revenue and the introduction of mandatory e-invoicing. Extrapolating the results of the 
counterfactual  analysis  to  the  universe  of  taxpayers  leads  to  conclusions  that  are  not 
significantly  different  from  those  obtained  through  the  tabular  methodology.  The  positive 

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OJ L 347, 11.12.2006, p. 1. 
OJ L 99, 19.4.2018, p. 14. 
OJ C 261, 9.8.2017, p. 46. 
OJ L 454, 17.12.2021, p. 1. 

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residual  revenue  accruing  from  VAT,  which  is  not  accounted  for  by  the  economic  cycle,  is 
estimated between 1.7 and 2.0 billion euros.  

Furthermore,  while  in  2019,  the  first  year  of  application  of  the  measure,  the  Agenzia  delle 
Entrate, thanks to timely controls on invoice data, had detected and blocked fraud and false 
VAT credits amounting to almost EUR 1 billion, in 2022 the figure rose to EUR 9 billion.  

Regarding the simplification of tax compliance, the implementation of mandatory e-invoicing 
has  allowed  the  tax  authority  to  make  available  for  taxpayers  pre-filled  purchase  and  sales 
records,  the  scheduling  of  the  periodic  VAT  settlement,  pre-filled  annual  VAT  returns  and 
pre-filled payment forms including the taxes to be paid, offset or claimed for refund (where 
priority is given to those using e-invoicing). E-invoicing has allowed to eliminate a number of 
obligations,  such  as  the  reporting  of  invoice  data  on  domestic  transactions,  the  filing  of 
Intrastat declarations on purchases, the obligation to provide details of contracts entered into 
by  leasing,  rental  and  hire  companies  and  the  obligation  to  report  transactions  involving 
supplies of goods from the Republic of San Marino to Italy. 

As of 10 February 2023, the Agenzia delle Entrate made available the first pre-filled annual 
VAT return, referring to transactions carried out in 2022, for all the taxable persons covered 
by  the  scheme  (approximately  2.3  million),  who,  in  addition  to  being  able  to  view,  amend, 
supplement and send the return through a special application software, as well as to pay the 
VAT  due,  can  also  just  download  the  data  and  compare  them  with  those  in  their  own 
application software. 

Other  functionalities  have  recently  been  made  available  allowing  interaction  with  the 
management systems of operators or their intermediaries thus enabling, in an immediate and 
massive  manner,  the  download  of  pre-filled  data  and  the  exchange  of  information  useful  to 
complete the entries in the registers and the information to be reported in the return forms. 

At the same time, the  Agenzia  delle Entrate has  been offering a web service enabling VAT 
taxable persons to check, amend if necessary, and automatically pay the stamp duty shown on 
sales invoices subject to such levy. 

According to Italy, the implementation of mandatory e-invoicing has provided other benefits, 
as it has simplified the invoicing process, both for issuers and recipients, and has allowed the 
development of related services which make possible to monitor business performance in real 
time, including, for example, cash flow management. Further, in the context of the COVID-19 
pandemic,  the  data  from  mandatory  electronic  invoicing  has  proved  to  be  of  great  help  in 
analysing  the  changes  in  the  economy  associated  with  the  health  crisis  and  in  putting  into 
place the most appropriate support measures. 

The Implementing Decision (EU) 2018/593 applies until 31 December 2024, and this is why 
Italy has requested to continue to derogate from Articles 218 and 232 of the VAT Directive to 
be able to continue imposing mandatory electronic invoicing. 

However,  a  Proposal  for  a  Council  Directive  amending  Directive  2006/112/EC  as  regards 
VAT rules for the digital age5 (VAT in the digital age proposal), is currently being discussed 
in the Council. This Directive will amend Article 218 and will delete Article 232 of the VAT 
Directive. This reform,  once adopted, will allow Member States to implement mandatory e-
invoicing,  eliminating  the  need  to  request  further  derogations  from  the  VAT  Directive  in 
order  to  implement  such  systems.  Therefore,  the  authorisation  allowing  Italy  to  continue  to 

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derogate from Articles 218 and 232 should only be extended for the period needed until such 
reform enters into force. 

Thus,  it  is  proposed  to  prolong  the  authorisation  until  31  December  2025.  Given  the  short 
period  for  which  this  extension  is  given,  in  case  Italy  needs  to  prolong  further  this 
authorisation no report should be needed. 

• 

Consistency with existing policy provisions in the policy area 

Article  218  of  the  VAT  Directive  puts  paper  and  electronic  invoices  on  equal  footing  by 
providing that Member States shall accept documents or messages on paper or in electronic 
form as invoices. Following Article 232 of the VAT Directive, the use of an electronic invoice 
shall  be  subject  to  acceptance  by  the  recipient.  The  obligatory  electronic  invoicing  as 
implemented by Italy indeed derogates from these two provisions.  

The  derogation  can  be  authorised  based  on  Article  395  of  the  VAT  Directive  in  order  to 
simplify  the  procedure  for  collecting  VAT  or  to  prevent  certain  forms  of  tax  evasion  or 
avoidance. Given that, based on the elements provided by Italy, the derogating measure has 
contributed to  both  fight  tax fraud and evasion  as well as to  simplify the tax collection, the 
derogation is consistent with the existing policy provisions.  

The  derogation  for  mandatory  electronic  invoicing  is  also  in  line  with  the  Council 
Recommendation6 on the 2017 National Reform Programme of Italy recommending that 'Italy 
take  action  in  2017  and  2018  to,  inter  alia,  broaden  the  compulsory  use  of  electronic 
invoicing and payments'. 

Similar  authorisations  allowing  France,  Poland,  Germany  and  Romania  to  derogate  from 
Articles  218  and  232  of  the  VAT  Directive,  in  order  to  implement  mandatory  electronic 
invoicing,  were  granted  by  Council  Implementing  Decision  (EU)  2022/1337,  Council 
Implementing Decision (EU) 2022/10038, Council  Implementing  Decision  (EU) 2023/15519 
and Council Implementing Decision (EU) 2023/155310. 

The Commission adopted in 2020 the “Communication from the Commission to the European 
Parliament  and  the  Council:  an  Action  Plan  for  fair  and  simple  taxation  supporting  the 
recovery strategy”11. One of the actions envisaged in  this  action plan is the  adoption by the 
Commission  of  a  legislative  proposal  aimed  at  modernising  VAT  reporting  obligations.  As 
indicated  in  the  Action  Plan,  this  proposal  should,  amongst  others,  help  streamline  the 
reporting  mechanisms  that  can  be  applied  for  domestic  transactions.  The  need  to  further 
expand e-invoicing is also examined in this context.  

As a result of this Action Plan, the Commission adopted on 8 December 2022 the VAT in the 
digital  age  proposal,  which  is  being  discussed  in  the  Council.  This  Directive  will  amend 
Article 218 and will delete Article 232 of the VAT Directive. This reform, once adopted, will 
allow  Member  States  to  implement  mandatory  e-invoicing,  eliminating  the  need  to  request 
further  derogations  from  the  VAT  Directive  in  order  to  implement  such  systems.  For  that 
reason,  once  this  proposal  for  a  Directive  is  transposed  by  the  Member  States,  this  Council 
Decision would no longer have any useful effect.  

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OJ C 261, 9.8.2017, p. 46. 
OJ L 20, 31.1.2022, p. 272. 
OJ L 168, 27.6.2022, p. 81. 
OJ L 188, 27.7.2023, p. 42. 
OJ L 188, 27.7.2023, p. 48. 
https://taxation-customs.ec.europa.eu/system/files/2020-07/2020_tax_package_tax_action_plan_en.pdf  

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2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

Article 395 of the VAT Directive. 

• 

Subsidiarity (for non-exclusive competence)  

Considering the provision of the VAT Directive on which the proposal is based, subsidiarity 
principle does not apply. 

• 

Proportionality 

The  proposal  complies  with  the  proportionality  principle.  The  Decision  concerns  an 
authorisation  granted  to  a  Member  State  upon  its  own  request  and  does  not  constitute  any 
obligation.  

The  implementation  of  mandatory  electronic  invoicing  has  taken  place  smoothly,  without 
raising  any  particular  problems.  According  to  the  information  submitted  by  Italy,  it  has 
contributed  to  achieve  the  objectives  pursued  regarding  the  fight  against  VAT  fraud  and 
evasion, while simplifying tax collection.  

The  scope  of  the  measure  covers  all  transactions  carried  out  within  the  Italian  territory 
between  taxable  persons  established  in  Italy.  Therefore,  intra-Community  transactions  are 
excluded from the scope of the measure, as stated in recital 7 of Implementing Decision (EU) 
2018/593.  Further,  taxable  persons  registered  in  Italy  but  not  established  within  its  territory 
are also excluded from the scope of the measure, so the transactions where they intervene are 
not subject to mandatory electronic invoicing. 

Italy  considers  that  the  extension  of  the  scope  to  taxable  persons  benefitting  from  the 
exemption  for  SMEs  has  allowed  to  complement  the  system,  avoiding  inconsistencies  and 
information  gaps,  while  improving  the  dialogue  of  small  enterprises  with  tax  authorities,  as 
well as their digital capability and competitiveness. The burdens entailed by the introduction 
of the obligation were mitigated by the support offered by the Agenzia delle Entrate in terms 
of free services to generate, transmit, receive and digitally store electronic invoices. 

Indeed,  the  Italian  Revenue  Agency  has  made  available,  free  of  charge,  different  solutions, 
such as a software package for installation on computers or an application for mobile devices, 
which  allow  taxpayers  to  easily  prepare  and  transfer  electronic  invoices.  These  measures 
alleviate these companies from their current costs of issuing and processing invoices, such as 
printing or archiving costs, while reducing the possibilities of mistakes.  

Furthermore, the mandatory electronic invoicing has allowed the Italian Revenue Agency to 
offer  different  online  services  to  taxpayers.  In  addition,  several  reporting  obligations  were 
eliminated due to the implementation of mandatory electronic invoicing. 

The  derogation  is  also  limited  in  time  until  harmonised  rules  allow  Member  States  to 
implement mandatory e-invoicing.  

Therefore, the special measure is proportionate to the aim pursued, i.e. to combat tax evasion 
and simplify tax collection.  

• 

Choice of the instrument 

Proposed instrument: Council Implementing Decision.  

Under  Article  395  of  the  VAT  Directive,  derogation  from  the  common  VAT  rules  is  only 
possible  upon  authorisation  of  the  Council  acting  unanimously  on  a  proposal  from  the 

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Commission. A Council Implementing Decision is the most suitable instrument since it can be 
addressed to an individual Member State. 

3. 

• 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Impact assessment 

Italy  requested  an  authorisation  to  continue  applying  obligatory  electronic  invoicing  for  all 
invoices issued to other taxable persons or to final consumers by taxable persons established 
on the Italian territory. Also simplified invoices, documents issued based on Article 219 of the 
VAT Directive and invoices relating to exempt transactions should fall under the mandatory 
electronic  invoicing.  Non-established  taxable  persons  may  opt  for  the  transmission  of  their 
invoices through the SdI.  

Taxable  persons  have  already  adapted  their  systems  to  comply  with  the  requirements  of 
mandatory electronic invoicing. The non-extension of the authorisation would imply that the 
costs incurred for such adaptation would be sunk costs for taxable persons, while they would 
probably have to incur additional costs related to the adaptation to a new reporting system that 
could be implemented to replace mandatory e-invoicing. 

According to Italy, e-invoicing has brought effective results in the fight against tax fraud due 
to the greater comprehensiveness, timeliness and traceability of the information. The measure 
has  also  had  a  preventive  measure,  as  a  deterrent  to  evasive  and  fraudulent  taxpayer 
behaviour. Dispatching invoices through the SdI has provided the Agenzia delle Entrate with 
timely and automated access to any invoice information that is relevant for tax purposes. The 
extension  of  the  measure  to  taxable  persons  benefitting  from  the  exemption  for  SMEs  has 
allowed  to  complement  the  system,  avoiding  inconsistencies  and  information  gaps.  As  a 
result, tax authorities can carry out timely and automatic checks on the consistency between 
the VAT declared and the VAT paid.  

According to the data submitted by Italy,  the positive residual revenue accruing from VAT, 
which is not accounted for by the economic cycle, can be estimated between EUR 1.7 and 2.0 
billion. Furthermore, while in 2019, the first year of application of the measure, the Agenzia 
delle Entrate, thanks to timely controls on invoice data, had detected and blocked fraud and 
false  VAT  credits  amounting  to  almost  EUR  1  billion,  in  2022  the  figure  rose  to  EUR  9 
billion.  

Thanks  to  e-invoicing  data,  the  Agenzia  delle  Entrate  is  providing  different  services  to 
taxpayers, such as pre-filled purchases and sales record, pre-filled periodic VAT settlements 
communication,  pre-filled  annual  VAT  return  with  the  relevant  schedule  of  the  calculations 
made  and  pre-filled  payment  forms  including  the  taxes  to  be  paid,  offset  or  claimed  for 
refund.   

Further,  the  introduction  of  electronic  invoicing  has  allowed  to  remove  several  obligations, 
including  some  not  strictly  in  the  field  of  VAT,  such  as  the  reporting  of  invoice  data  on 
domestic  transactions,  the  filing  of  Intrastat  statistical  declarations  on  purchases,    the 
obligation to provide the details of contracts entered into by leasing, rental and hire companies 
and the obligation to report transactions involving supplies of goods from the Republic of San 
Marino to Italy. 

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4. 

BUDGETARY IMPLICATIONS 

The measure will have no adverse impact on the Union's own resources accruing from VAT. 

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2024/0246 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

amending Implementing Decision (EU) 2018/593 authorising the Italian Republic to 
introduce a special measure derogating from Articles 218 and 232 of Directive 
2006/112/EC on the common system of value added tax 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty on the Functioning of the European Union,  

Having  regard  to  Council  Directive  2006/112/EC  of  28  November  2006  on  the  common 
system of valued added tax1, and in particular Article 395(1) thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

(5) 

By  Council  Implementing  Decision  (EU)  2018/5932,  Italy  was  authorised  until  31 
December  2021  to  introduce  a  measure  derogating  from  Articles  218  and  232  of 
Directive  2006/112/EC  (‘the  special  measure’)  in  order  to  implement  mandatory 
electronic invoicing for all taxable persons established in the territory of Italy, except 
for taxable persons benefiting from the exemption for small enterprises referred to in 
Article 282 of that Directive.  
By  Council  Implementing  Decision  (EU)  2021/22513,  Italy  was  authorised  to  apply 
the special measure until 31 December 2024 and its scope was broadened to include 
taxable  persons  benefitting  from  the  exemption  for  small  enterprises  referred  to  in 
Article 282 of the VAT Directive. 

By  letter  registered  with  the  Commission  on  11  April  2024,  Italy  requested 
authorisation  to  continue  to  derogate  from  Articles  218  and  232  of  Directive 
2006/112/EC in order to continue applying mandatory electronic invoicing.  

By  letters  dated  12  September  2024,  the  Commission  informed  the  other  Member 
States  of  the  request  made  by  Italy.  By  letter  dated  13  September  2024,  the 
Commission  notified  Italy  that  it  had  all  the  information  necessary  to  consider  the 
request. 

Italy  submits  that  the  implemented  mandatory  electronic  invoicing  system,  which 
channels all issued invoices through the system ‘Sistema di Interscambio’ managed by 
the  Italian  Revenue  Agency,  has  fully  achieved  its  objectives,  namely  to  combat  tax 
fraud  and  evasion,  to  simplify  tax  compliance  and  to  make  tax  collection  more 
efficient, thereby reducing administrative costs for businesses. 

(6) 

On  8 December  2022,  the  Commission  adopted  a  proposal  for  a  Council  Directive 
amending  Directive 2006/112/EC  as  regards  VAT  rules  for  the  digital  age4  (VAT  in 

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OJ L 347, 11.12.2006, p. 1. 
OJ L 99, 19.4.2018, p. 14. 
OJ L 454, 17.12.2021, p. 1. 
COM/2022/701 final. 

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the  digital  age  proposal).  The  Commission  proposes  to  amend  Article 218  and  to 
delete  Article 232  of  Directive 2006/112/EC.  It  is  therefore  possible  that  a  directive 
amending  those  Articles  will  be  adopted  which  would  allow  Member  States  to 
implement  mandatory  electronic  invoicing  and  eliminate  the  need  to  request  further 
special  measures  to  derogate  from  Directive 2006/112/EC.  Therefore,  from  the  date 
Member  States  would  be  required  to  apply  any  national  provisions  transposing  the 
Directive amending those Articles, this Decision should cease to apply.  

The progress made in Council on the discussions on the VAT in the digital proposal 
make  advisable  to  extend  the  special  measure  only  for  the  period  necessary  to 
guarantee the continuity of the current mandatory electronic invoicing system until the 
amendment  of  Directive  2006/112/EC  concerning  Articles  218  and  232  enters  into 
force.  If  the  continuity  of  such  system  requires  a  further  extension  of  the  special 
measure,  such  extension  would  as  appropriate  be  granted  upon  request  for  an 
additional period.  

The special measure should not affect the right of customers to receive paper invoices 
in the event of intra-Community transactions. 

The  special  measure  will  not  negatively  affect  the  overall  amount  of  tax  revenue 
collected  at  the  stage  of  final  consumption  and  will  have  no  adverse  impact  on  the 
Union's own resources accruing from VAT. 

(7) 

(8) 

(9) 

(10) 

Implementing Decision (EU) 2018/593 should therefore be amended accordingly, 

HAS ADOPTED THIS DECISION:  

Article 1 

Implementing Decision (EU) 2018/593 is amended as follows: 

Article 4 is replaced by the following: 

'Article 4 

This Decision shall apply until the earlier of the following two dates: 

(a) 

31 December 2025; or 

(b) 
the date from which Member States are to apply any national provisions that they are 
required to adopt in the event that a directive is adopted amending Directive 2006/112/EC as 
regards VAT rules for the digital age, in particular Articles 218 and 232 of that Directive.’ 

This Decision is addressed to the Italian Republic. 

Done at Brussels, 

Article 2 

For the Council 
The President 

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