The rise of mandatory e-invoicing – and why tax is critical for compliance

E-invoicing is rapidly becoming the norm in many of the world’s major countries, from the European Union to Asia, Africa and the Americas.

While some nations have already adopted e-invoicingElectronic invoicing - widely referred to as e-invoicing - is the exchange of a digital document between a supplier and a buyer. E-invoices are issued, transmitted and received in a structured data format that enabled automatic and electronic processing. They contain data in a machine-readable format so that an AP system can read an invoice without manual data entry, leading to faster and more efficient invoicing. for all or some of B2B, B2G and B2C transactions, many more have announced they will do so throughout the rest of 2022 and beyond.

Huge strides forward have been made in technology in recent years, empowering governments and tax authorities to take a more stringent approach to receiving and analysing financial data. Some of the earliest adopters of e-invoicing – such as Italy – have proved it can drive new levels of efficiency and customer experience while significantly reducing tax evasion.

Did you know these 10 countries are set to introduce e-invoicing in the next two years?

1: Poland

Poland has opted to introduce mandatory e-invoicing and e-reporting for all business transactions; however, the planned implementation date of 1^st January 2023 has recently been delayed by a year and will now occur in 2024. After this date, all businesses will have to use e-invoicing solutions for transactions, as well as software to receive e-invoices.

2: Ecuador

From 29^th November, businesses that issue invoices (albeit not yet in electronic form) will be required to run an e-invoicing system for all transactions.

3: Spain

Since 2015, B2G transactions have been subject to e-invoicing laws. But recently announced legislation, which is currently under public consultation, will make e-invoicing mandatory for B2B transactions too. All e-invoices must be processed through the national platform, known as FACe.

Businesses with an annual turnover of less than €8 million will have a three-year grace period from the date the law is published in the Official State Gazette to transition.

4: Belgium

A recent royal decree has set out Belgium’s intention to expand its e-invoicing system by making it mandatory for suppliers of public institutions to use e-invoices in the context of public contracts and concession contracts. It is the latest step in a series of measures designed to increase the use of e-invoices.

B2B e-invoicing is currently scheduled to come into effect on 1^st January 2025.

5: Italy

Italy, already home to one of the world’s most advanced e-invoicing systems, has announced further expansions to its regulations. From 1^st July 2022, e-invoicing will become mandatory for taxpayers who apply the flat-rate VAT regime, in addition to sports associations and third-sector organisations with income of up to €65,000.

From 1^st January 2024, micro-businesses with revenue of up to €25,000 will also need to issue and clear e-invoices.

6: France

Following the success of its e-invoicing system for B2G transactions, the French government is pushing ahead with plans to expand the regulations to cover other transactions. It believes e-invoicing is a key tool in its battle to reduce VAT evasion and to make process more efficient.

Although no date has yet been confirmed for the introduction of e-invoicing for B2B sales, draft text within the official ordinance relating to the reform states companies subject to VAT will be liable to use e-invoices from 1^st July 2024.

7: Ukraine

SAF-TSAF-T (Standard Audit File for Tax) is a file type based on the XML standard. It is created in a standard readable format from data exports taken from accounting records. SAF-T is used internationally to ensure the fast and secure digital transfer of tax information. It is known for its high level of security, ability to simplify the collection of tax data and simple readability due to its standardised format. will become mandatory for large businesses from 1^st January 2023. This is the first major step on a path to widespread electronic invoicing in the country.

All large organisations trading in Ukraine will be required to submit SAF-T reports within two working days of receiving a request for submissions. They will also be liable for owning and maintaining adequate software to create SAF-T files.

In the future, mandatory e-invoicing for all companies is likely to be added to the national legal framework.

8: Guatemala

The Guatemalan Tax Agency has confirmed that all businesses registered for VAT in the country will have to issue e-invoices from 1^st July. From this date, paper invoices will no longer be valid for any purposes.

9: Oman

The Sultanate of Oman Tax Authority has revealed plans to introduce e-invoicing on a voluntary basis, before it is subsequently made mandatory.

10: Luxembourg

Luxembourg recently the last of the Benelux countries to make e-invoicing mandatory for public authorities. Large Luxembourgian businesses are required to send e-invoices to public bodies as of 18^th May 2022; just five months after the legal framework for B2G transactions was ratified.

Why is accurate, compliant and real-time tax data so important?

With more attention focused on e-invoices and technology capable of quickly and seamlessly highlighting errors for authorities to investigate, businesses cannot afford to run the risk of filling invoices with inaccurate data.

That’s why we recommend investing in an automated tax solution to be integrated within a company’s ERP or other core systems and ensure tax is determined, calculated and reported correctly in every single transaction.

The inevitable result is that the data produced by a tax solution will be of optimum quality; ready to be entered into e-invoices with a guarantee of compliance that allows finance professionals to enjoy complete peace of mind.