Across the European Union, countries are trying to reduce VAT gaps and increase VAT revenue by modernizing their invoicing and VAT collection processes. The goal of the July 2021 EU VAT reform is also similar: to increase the traceability of the flows of money, goods and services in the EU, simplify tax compliance for businesses, and prevent VAT fraud and evasion.
Along with high-level initiatives, such as the EU VAT reform, countries are taking additional measures, such as
- Real-time reporting (RTR)
- Standard Audit File for Tax (SAF-T).
B2G (Business-to-Government) e-invoicing is already a fact in many countries, resulting from the E-invoicing Directive from 2014; all EU countries will introduce mandatory B2G e-invoicing in the next few years. Many member states are planning to make B2B e-invoicing mandatory, as well, and some already have done that. For this, each EU country needs to request a derogation from the European Commission, allowing them to make B2B e-invoicing an obligation.
Let’s look at some examples.
E-invoicing in Italy
B2B e-invoicing has been mandatory in Italy since the beginning of 2019 for Italian taxpayers, i.e. local businesses or international companies, who are also established in Italy, with the exception of some small businesses. The Italian government is planning to make B2B e-invoicing mandatory also for non-Italian businesses, starting from January 1, 2022.
Italian e-invoices need to comply with specific formatting requirements and are subject to system checks. Businesses need to issue and send them through the dedicated portal of the tax office, Sistema di Interscambio.
E-invoicing in Poland
Poland is also introducing e-invoicing for B2B transactions, which will be optional at first, but will become mandatory in 2023. Businesses will need to use the Polish KSeF portal (Krajowego Systemu e-faktur) to submit and send their invoices to recipients, and will receive automatic updates on the invoices’ status.
E-invoicing in Spain
In Spain, the FACe platform that is used for B2G invoices can now also be used for B2B transactions as well, if businesses choose to do so, under the name FACeB2B. E-invoicing will become mandatory for B2B transactions in the next few years, but a timeline hasn’t been defined yet.
E-invoicing in France
France is planning to make e-invoicing mandatory for B2B transactions by the end of 2024, at least for French businesses. The implementation process will begin in 2023, and the government will provide additional information in September 2021.
Businesses will need to send invoices to an appointed agent, who will then standardize them and upload them to the Chorus Pro e-invoicing portal (which is already used for B2G e-invoicing).
E-invoicing in Germany and in Ireland
Germany is likely to implement a system similar to the Italian model, but B2B e-invoicing is not likely to become mandatory in the next few years.
Ireland is currently using the Pan European Public Procurement Online (PEPPOL) system for B2G e-invoicing, which is used by 18 EU member states. B2G e-invoicing is not mandatory yet, but public administrations need to enable the reception of e-invoices.
For now, e-invoicing rules vary from country to country, which makes it challenging for businesses to ensure compliance to local rules. There isn’t a single, harmonized EU system that would allow for the submission and reception of B2B invoices, and in the next few years, it’s unlikely that there will be one.
Businesses need to adapt their processes to country-specific regulations, and make sure they stay on top of local requirements.
Fonoa E-Invoicing Solution
We are aware that new regulations have a substantial impact on how businesses operate. That’s why we built Fonoa Invoicing, a solution that issues locally compliant VAT invoices in more than 80 countries. Moreover, if transactions need to be reported to tax authorities, we've got you covered. Fonoa Reporting automatically reports sales transactions to tax authorities around the world.
If your business is affected by e-invoicing or real-time invoice reporting obligations anywhere in the world, reach out to us, and we will help you automate your invoicing processes.