From January 2026, a new law will require Italian retailers to report daily sales and the corresponding digital payments to tax authorities, cutting opportunities for VAT evasion and off-the-books sales. While the new rule offers benefits to both accountants and retailers, the Italian tax authorities will be the biggest winners, says Giancarlo Attolini, deputy president of Accountancy Europe and founding partner of Attolini Spaggiari Zuliani, a law and accountancy firm based in Reggio Emilia.
The new law builds on the 2020 requirement for retailers to use electronic cash registers (RTs, or registratori telematici) to transmit sales data daily to Italy’s tax authority, the Revenue Agency (Agenzia delle Entrate). It also follows on from the 2019 introduction of e-invoicing, a model that many countries are now considering under the VAT in the Digital Age (ViDA) package, approved by the EU Council of Ministers in March 2025.
‘What Italians hate more than paying taxes is fines for not paying taxes’
Introduced under Italy’s 2025 Budget law, the new rule requires retailers to fully integrate all forms of accepted e-payment methods – including physical point-of-sale (POS) systems, mobile payment apps and online payment methods – with their electronic cash registers and to report digital payments alongside sales data to the tax authority.
The system will be simple to set up and use, according to Attolini. He explains that aggregated daily sales and digital payment data from POS terminals and the register will be sent to the Revenue Agency, enabling it to automatically detect fraud and irregularity at the end of each business day. Retailers will not need new software for the system – they simply have to register the serial number of their RT and the POS terminal ID on the tax authority’s portal.
Sanctions
The new requirement includes sanctions for non-compliance, which accountant and auditor Silvia Barbieri, founder of the accountancy firm EssebiStudio in Cinisello Balsamo, Milan, expects will push non-compliant retailers into adjusting their reporting behaviour. ‘Because what Italians hate more than paying taxes is paying fines for having not paid their taxes,’ she says.
Each omitted or incorrect data transmittal can trigger fines of €100 up to a maximum of €1,000 per quarter. More serious violations – including repeated failures, non-compliant devices, transmitting incorrect data or for an unconnected POS terminal – can result in fines ranging from €1,000 to €4,000 per violation, with a possible business licence suspension (of between three days and a month) in the event of four separate violations committed on different days over a five-year period. Business licences can also be suspended for a period of one to six months if the total amount of contested payments exceeds €50,000.
Barbieri says the penalties will be a strong deterrent, making clients more careful in reporting. They will also free her and her colleagues up from doing manual reconciliations to focus more on strategic tasks such as tax planning and cashflow forecasting.
Italy’s compliance gap is 10.6% of total VAT liability
The new rule comes into force on 1 January 2026, but in its latest guidance document the Revenue Agency allows a generous compliance timeline. The digital connection with the tax authority becomes mandatory only once a retailer’s digital payment software has been registered and associated with an RT on the tax authority’s portal.
The next set of guidelines will be issued in early March 2026, and tax authorities will probably allow a grace period for compliance with this advice too, Attolini says.
Despite its already mature model of fiscal digitalisation, Italy still has a considerable VAT gap. According to the latest available figures from the European Commission, Italy’s VAT compliance gap hit an estimated €16.3bn or 10.6% of the VAT total tax liability in 2022.
Italy’s VAT gap
Italy’s VAT gap is primarily caused by poor integration between sales receipts and POS payments, rather than discrepancies between e-invoicing and corresponding payments, according to Paola Olivares, director of the Politecnico di Milano’s B2B digital observatory research centre.
It will help determine how far retail data can be integrated into ViDA
She says: ‘From a compliance standpoint, minimising accounting errors, streamlining compliance processes and implementing penalties for non-compliance are all positive factors [of this new provision].’ While the new law will help recover VAT, she believes policymakers should also aim to reduce the use of cash in retail to restrict the part it plays in tax evasion.
Although the new law is not directly related to the EU’s ViDA package, it is closely aligned with its principles, says Stefania Lotito Fedele, an Amsterdam-based senior tax associate at tax and policy advisory firm Noema Global. ‘The Italian model will be closely monitored as a test case to determine how far retail-level data can be integrated into the broader ViDA architecture and the level of support businesses require to ensure the shift is sustainable,’ she says.
The wider perspective
Italy’s model differs slightly from other European digital initiatives on cash registers. Hungary’s VAT compliance model, for example, requires the issue of B2C receipts (exceptions include occasional and small-scale sellers) via a certified online cash register that automatically reports every sale to the national tax authority. Meanwhile Spain has a VAT management system for large, high-turnover retailers that immediately sends VAT invoice data (issued and received invoices, and other records) to a platform linked to the Spanish tax authority.
‘Accountants are becoming architects of data flows’
The Hungary and Spain systems are primarily invoice-centric, whereas Italy’s new law places greater emphasis on payments, Lotito Fedele says. She adds: ‘What Italy brings to the EU policy debate is not simply another national model, but a real example of how payment data, fiscal receipts and VAT controls can converge. This is highly relevant for Brussels as discussions increasingly focus on interoperability and cross-border consistency of data flows.’
As fiscal digitisation increases, Lotito Fedele says the role of accountants is evolving from pure ex-post compliance. ‘They are becoming architects of data flows, understanding how cash registers, invoicing platforms, enterprise resource planning systems and tax authority interfaces interact. They are advising clients on vendor selection, data protection and cybersecurity. The more complex the system, the more strategic their role becomes – but also the greater the responsibility and liability they carry.’
