Dematerialisation and retention of expense reports. New guidance from the Italian Revenue Agency 

In its Response to Application for Ruling no. 142 of 2024, the Italian Revenue Agency was once again called upon to provide guidance on the processing, in terms of retention, of documentation relating to expense reports and supporting attachments for employees’ travel expenses, with specific reference to taxis normally paid for with a company card.  

The Application for Ruling dealt with the applicant Company’s intention to dematerialise the aforementioned documentation, through an appropriate computer system, to streamline the preparation, management and monitoring of expense reports.  

The dematerialisation process  

To explain the dematerialisation process for the expense reports to the Italian Revenue Agency, the Company explained the different dematerialisation phases, starting from the scanning of the paper expense document by workers, through a special application installed on the company smartphone, to the transfer in a “form”, through the support of Optical Character Recognition (OCR technology), of the data contained in the document such as: the name of the operator, the date and time, the city, the amounts and reason for the expense (e.g.: food, taxi etc.). The “company form” would contain all the information collected from the paper version of the expense reports and the scanned image of the same. The applicant Company guaranteed the integrity, inalterability and legibility of the document thus digitised and that it would be automatically archived in accordance with the law. The document would therefore no longer be editable by the employee. 

The Company added that consistency between the scanned document and the digitised information would be further ensured by the use of Artificial Intelligence tools that would highlight any anomalies and by a final check by the approving manager. 

The expense report and its supporting documents, thus processed, would be archived. 

Purpose of the Application  

Following the description of the process, the Applicant asked the Agency if, once compliance with Article 4, Italian Ministerial Decree of 17 June 2014 on the dematerialisation and archiving of documents had been confirmed: (i) paper documents issued to employees, digitised and attached to expense reports also digitised, considered “original non-unique documents” can be destroyed; (ii) original non-unique documents can also include taxi receipts, not documented by invoice, but by mere accounting entries made by staff in transit at the time of payment by company card, which can also be dematerialised by the process set out above. 

The Italian Revenue Agency’s Response  

The Italian Revenue Agency’s Response to the Application emphasised what has been clarified several times in the past regarding dematerialisation procedures for seconded employees’ travel expense reports, namely that in relation to electronic documents, “any issue must have regard for Italian Legislative Decree no. 82 (so-called ‘Digital Administration Code’ or ‘CAD’ (Codice dell’ Amministrazione Digitale) and its implementing decrees (the Italian Prime Ministerial Decrees of 22 February 2013, 3 December 2013 and 13 November 2014, and the Italian Ministerial Decree of 17 June 2014)”. 

In this regard, the Italian Revenue Agency stated that any tax-relevant electronic document (defined in Article 1, letter p of Italian Legislative Decree no. 82/2005 as “an electronic document that contains the electronic representation of documents, facts or legally relevant data”), such as the expense reports under consideration, must possess, among others, the characteristics of inalterability, integrity and authenticity, as set out in Article 2 of Italian Ministerial Decree of 17 June 2014 and in Article 3 of Italian Prime Ministerial Decrees of 13 November 2014 and 3 December 2013, without prejudice – added the Italian Revenue Agency – to the additional requirements, identified by Italian Presidential Decree no. 917 of 1986 (Italian Income Tax Consolidation Act (Testo unico delle imposte sui redditi, ‘TUIR’), for the purposes of including those expenses in deductible costs. 

Only if the electronic documents have the characteristics of inalterability, integrity and authenticity mentioned, can they completely replace the paper copies, and can be duplicated under Article 23-bis of Italian Legislative Decree no. 82. 

With respect to the supporting documents attached to the expense reports, in relation to which the Applicant was applying to include them as original non-unique documents, the Italian Revenue Agency referred to its previous Resolution no. 96 of 21 July 2017, stating that “generally the receipts attached to expense reports correspond to the accounts of the suppliers or providers, who are required to fulfil their tax obligations, which makes them identifiable as non-unique original hard copy documents, within the meaning of the definition in Article 1, letter v of the CAD”. 

The ability to trace the content of the supporting documents through other records or documents the retention of which is mandatory, even if in the possession of third parties, makes the electronic retention of the supporting documents possible without the need for a public official to attest the conformity of the electronic copies to the original (Article 4, Italian Ministerial Decree, 17 June 2014). This in turn makes it possible to completely dematerialise and destroy the document. 

Finally, with regard to the classification of documents issued to travelling workers by taxi drivers as ‘non-unique analogue original documents’ and deductible expenses, the Italian Revenue Agency does not believe that mere accounting receipts delivered by the service provider following electronic payment with a company card can be considered as such. Rather, to be considered non-unique analogue documents and for the expense incurred to be considered as a deductible cost, it will be necessary to issue an invoice or other tax document accompanying the accounting receipt from which the essential data of the expense made (date, name of the service provider, route, consideration). In this regard the Italian Revenue Agency recalled that taxi providers must produce an invoice at the request of the client, under Articles 1 and 2 letter l) of Italian Presidential Decree no. 696/1996, and that the issuance of such a tax document in duplicate, one of which is kept by the service provider, either on paper or electronically, makes the analogue document non-unique. 

Finally, the Italian Revenue Agency noted, with reference to the supporting documents accompanying the expense reports, that if they are original unique analogue documents, “as it is not possible to trace the content through other documents the retention of which is mandatory, including from third parties” then the intervention of a public official will be required for correct dematerialisation.    

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