Sequential number
Often neglected, the local and unique sequential numbers for your invoices relative to operations abroad is a must. Italian authorities recently showed how inflexible they are on the issue.
A taxpayer intended to adopt an electronic invoice numbering system, which avoids showing customers and collaborators information about the total number of invoices issued. In order to guarantee the uniqueness and progressiveness of the numbers, that taxpayer had chosen to insert within the electronic invoice number the day of issue (e.g. 20200601) followed by a daily partial code in hexadecimal format (e.g. 000A).
The taxpayers asked the Italian tax authorities whether the daily partial numbering can be considered sequential even if it contains hexadecimal digits and if, with the changeover to the next day, the jump in the numbering of the daily partial code can be considered valid (by way of example, it is possible to change directly from invoice no. 20200601001F to invoice no. 202006020000).
What is the EU VAT rule?
Based on article 226 of EU VAT Directive 2006/112/EC, an invoice should include : “a sequential number, based on one or more series, which uniquely identifies the invoice”. It is therefore necessary that the sequential numbering identifies the invoice “uniquely" and avoids overlapping with other invoices issued on the same date.
What is the position of Italian VAT authorities?
According to the Italian authorities, although the system proposed by the taxpayer seems in principle adequate to guarantee the uniqueness of the invoices, it however appears unsuitable in terms of sequence on a monthly or yearly basis. It should for instance be possible to check that in some days no invoice were issued and that therefore a "date jump" therefore occurred.
As a consequence, the tax inspectors could be prevented from verifying that the numbering of invoices corresponds to the relevant entries in the accounting records, which is necessary to avoid unjustified intervals.
The Italian tax authorities therefore came to the conclusion that the proposed numbering system does not comply with the national and community rules.
(Source : Riposta 505 dated 29/10/2020)