All countries in the world have tax and invoicing regulations, but in some countries, suppliers must also report all sales transactions to tax authorities immediately.
Real-time invoice reporting (RTIR) means that businesses must report sales transactions electronically in real-time or near real-time to the tax authority of the respective country.
In practice, real-time invoice reporting is tightly related to invoice issuance. It implies that business entities are obliged to report sales transactions to tax authorities immediately. There are two different scenarios:
- In some countries like Italy or Hungary, it is enough to simply report the transaction to tax authorities, who then send a confirmation to acknowledge receipt.
- In other countries like Mexico, Chile, and Croatia, tax authorities must authorize the transaction before an invoice can be issued. Once the seller receives an authorization, they can invoice the end customer.
This reporting process might seem long and confusing, but in practice it only takes milliseconds.
Some countries where RTIR is mandatory are Argentina, Bolivia, Brazil, Chile, Colombia, Croatia, Czechia, Ecuador, Greece, Guatemala, India, Italy, Kazakhstan, Mexico, Peru, Romania, Slovakia, Slovenia, Taiwan, Turkey and Uruguay.
The Real-Time Invoice Reporting Process
For countries that require real-time invoice reporting, invoices must be reported immediately after a transaction occurs. However, tax authorities know that not all sellers can implement sufficiently advanced solutions to report sales transactions automatically. Therefore, there are three common ways to report sales transactions to tax authorities:
- Manually: In most countries, it’s possible to report sales transactions manually, using the tax office’s portal within a prescribed timeframe. This means that tax authorities allow sellers to report sales transactions within a few days.
- Automatically, using a direct integration with tax authorities: In other countries, it’s possible to use a software tool to establish a direct connection between the seller’s company and the tax office, allowing instant data exchange. This solution is advanced and requires more resources in terms of development.
- Automatically, using a 3rd party solution: This is usually the simplest and the most straightforward solution for most businesses, and the one that Fonoa provides to its clients. Fonoa has developed direct integrations with the tax authorities in various countries and can report sales transactions on behalf of the seller. This allows sellers to automate the reporting of their sales transactions and doesn’t require as many resources as the development of direct integrations.
How Do You Know If An Invoice Has Been Reported To Tax Authorities?
In countries where authorization is necessary before issuing an invoice, tax authorities usually provide a unique authorization code (or, sometimes, a QR code), which the seller must add to the invoice.
This code is used to prove the invoice’s authenticity and the end customer can double-check it online.
Which Commercial Transactions Are Subject To Real-Time Invoice Reporting?
Local tax regulations define the transactions that are subject to RTIR.
Every country has its own regulations. For example, in Italy or in some Latin American countries like Argentina, Mexico, or Chile, both B2C, and B2B transactions are subject to real-time invoice reporting. On the other hand, in Croatia only B2C transactions need to be reported in real-time.
If you want to find out more about real-time invoice reporting in your country, contact us.
Which Businesses Must Report Sales Transactions In Real Time?
The answer to this question is also country-specific. In most cases, only domestic entities or entities with a local tax registration are obliged to report sales transactions in real-time. In some cases, foreign entities are also obliged to report their activities.
Contact us if you need help with real-time invoice reporting. We’ll help you assess whether you need it, and will help you automate the RTIR process.