Billing a client in Milan, Turin or Bologna is a standard services export from India: you invoice in euros, list the invoice on your monthly EDF with "Italy" as the recipient's country, and realise the money within 9 months. Because Italy uses the euro, the payment route matters more than usual: a SEPA transfer cannot land directly in an Indian bank account, so the client either sends a SWIFT wire or pays a euro account set up through a provider. Settle that before the first invoice goes out.
Key takeaways
- Invoice Italian clients in euros (EUR) in most cases; show EUR in Part 2B of the EDF.
- SEPA works only within the euro payments area, so Indian accounts are paid by SWIFT or through a provider's euro account.
- Italian clients often need precise supplier details for their own e-invoicing and VAT reporting; give them exactly what they ask for.
- India and Italy have a DTAA; if any tax is withheld, keep the certificate and talk to your CA.
- Each invoice is one Part 2B row with Italy as the country, and realisation is due within 9 months of the invoice date.
Before the first invoice: a short checklist
| Item | Why it matters | Who to ask |
|---|---|---|
| Invoice currency agreed (usually EUR) | Drives Part 2B and your FX exposure | Client |
| Payment route agreed (SWIFT or provider euro account) | Decides fees, speed and payment evidence | Client, your bank, provider |
| Client's full legal name, address and VAT number | Needed on your invoice and for the client's records | Client |
| What the client needs from you for its reporting | Italian clients may need specific details | Client's accounts team |
| Whether any tax will be withheld | Affects what you actually receive | Client, your CA |
| LUT in place for the financial year | Lets you invoice without IGST | Your CA |
Currency and payment routes
Italian businesses work in euros, and most expect a euro invoice. You can bill in USD if your client agrees, but euro invoicing avoids a conversion on their side and usually speeds up approval.
The payment route is where Italy differs from, say, a US client. SEPA transfers are cheap and fast within the euro payments area, but they cannot be sent to an account in India. So your client has two broad options:
- A SWIFT international transfer from its Italian bank to your Indian current account, using your bank's SWIFT code. This is the classic route, and your bank issues a FIRA or advice on receipt.
- A SEPA transfer to a euro account (often called a virtual IBAN) that a payment provider sets up for you in Europe, after which the provider sends the funds on to your Indian bank.
Our guide to SEPA transfers from Europe covers the second route, including what to check about payment evidence. For the first, make sure your invoice carries complete bank details; our note on bank details on an export invoice explains what an Italian bank will need.
What Italian clients may ask for
Italy runs a mandatory electronic invoicing system for domestic transactions, and businesses there also report cross-border purchases. In practice, that means an Italian client's accounts team may be particular about your invoice: your exact legal name, full address, tax identification details, invoice numbering and dates may all need to match what they enter in their system.
For B2B services bought from outside the EU, the Italian client typically accounts for VAT itself. Some clients ask suppliers to add a reverse-charge note to the invoice. That relates to their VAT, not your GST, so follow their request if it is reasonable, but do not let it replace your own LUT wording, "Supply meant for export under LUT without payment of IGST".
Requirements vary by client and change over time. Ask the client's accounts team for a written list of what they need, and keep invoices consistent with it.
DTAA and withholding
India and Italy have a double taxation avoidance agreement. Whether anything is deducted depends on the type of payment, and certain types of payment to non-residents can attract withholding under Italian rules. Do not assume either way.
If a client says it will withhold tax, ask which provision applies and what rate, and ask your CA whether the DTAA reduces it and what documents, such as a tax residency certificate, you should provide. Keep any certificate of tax deducted; it supports a foreign tax credit claim in India. Our explainer on DTAA basics for service exporters covers the principles.
Putting Italian invoices on the EDF
Each invoice to an Italian client is a row in Part 2B: the recipient's name and address, Italy as the country, invoice number and date, EUR as the currency, the amount, the net realisable value, a description, the SAC code, and contract reference. Field 1.17, country of final destination, is Italy if all your exports that month go there; if not, ask your bank how it wants a multi-country month shown.
If you expect SWIFT charges or provider fees to be deducted, reflect that in the NRV and keep the bank advice. The 9-month realisation window runs from each invoice date, and Italian payment terms of 60 or 90 days, sometimes counted from month-end, still fit comfortably inside it.
A worked example
Corvo Engineering Design LLP, a Coimbatore firm, produces CAD drawings and simulation reports for a machinery manufacturer near Bologna. In February 2027 it raises two invoices:
- CE/118, dated 10 February: EUR 12,600 for detailed drawings of a packaging line module.
- CE/119, dated 24 February: EUR 3,100 for a structural simulation report.
Both go on the February EDF, due by 30 March 2027, as two rows with Italy, EUR and the relevant engineering SAC code. The client pays by SWIFT on 60-day terms from month-end, in late April. Corvo's bank issues advices showing the client as remitter and a technical-services purpose code, consistent with P1009 for engineering work.
CE/118 is above ₹10 lakh at Corvo's book rate, so Corvo sends its bank the invoice, advice and a matching instruction. CE/119 goes on the quarterly realisation declaration. When the client's accounts team asks for Corvo's full registered address to be shown exactly as on its tax registration, Corvo updates its invoice template so future invoices match.
This is general information, not legal or tax advice. Italian and Indian rules both change, so confirm the current position with your CA, your bank and your client.
Frequently asked questions
Can an Italian client pay me by SEPA transfer?
Not directly into an Indian bank account, since SEPA covers the euro payments area. The client can send a SWIFT transfer to your Indian bank, or pay a euro account set up for you by a payment provider, which then forwards the money to India.
What currency should I use for Italian invoices?
Euros are the norm and make approval easier for Italian clients. Use EUR on the invoice and in the currency column of Part 2B on your EDF.
Will my Italian client withhold tax from my payment?
Some payment types to non-residents can attract Italian withholding, while others do not. If your client plans to withhold, ask for details in writing and check DTAA relief and documentation with your CA.
What do I enter as the country on the EDF?
Enter Italy as the recipient's country in each Part 2B row. In field 1.17, enter Italy if it is the only destination that month; otherwise ask your bank how it wants a mixed month presented.
How long do Italian clients have to pay under the EDF rules?
The rule applies to you, not the client: you must realise the full value within 9 months from the invoice date. Normal Italian payment terms fit within that, and your AD bank can extend it on a reasoned request if needed.
Bottom line
Italian work runs smoothly once the euro payment route and invoice details are agreed. List each invoice with Italy as the country, watch the 9-month window, and prepare your monthly declaration with our free EDF form generator.
This guide is general information for Indian businesses, not legal or tax advice. Rules and bank processes change — confirm specifics with your AD bank or chartered accountant.